EV White Paper provides some clarity

Electric vehicles (EVs) will be produced in South Africa by 2026.

Possessed photography Puwf Rak C Jvk unsplash

Minister of Trade, Industry and Competition, Ebrahim Patel, confirmed this during a briefing this week on the release of the government’s Electric Vehicle White Paper.

Patel said some domestic original equipment manufacturers (OEMs) were already producing hybrids but each OEM has its own strategy and that OEMs were busy looking at decisions from their head offices.

He added that quite a sharp growth in domestic EV production was expected between 2026 and 2030.

However, Patel confirmed there was one OEM that would be a bit of an outlier and only anticipated moving into battery electric vehicle (BEV) production early after 2030.

“But they too will be relooking their dates depending on the speed with which the market globally and locally moves to a greater consumption of EVs,” he said.

Patel added that although the White Paper refered to EVs, it covered different technologies, including BEVs and fuel cell technologies and even made provision for synfuels or smart fuels that Europe was looking at as an additional energy source.

He said the purpose of the White Paper was to provide a public policy commitment that went beyond a single budget cycle or the announcement of one ministry.

Six core principles underpinned the policy goals and the actions that needed to be taken in the transition to EVs, he said.

They were:

  • The transition to EVs was necessary and the pace at which key decisions were required was urgent given the speed at which markets were developing, and the long lead-times for investment decisions.
  • Attracting investment required a technology agnostic approach, which included embracing a range of clean energy sources to ensure an appropriate transition.
  • Investment support was required to boost productive capacity.
  • Policy actions had to reflect cost-effective and fiscally sustainable solutions.
  • Deepening localisation of the auto supply chain, including through beneficiation of critical minerals through the development of regional value chains, was essential.
  • Policy actions should reflect the need for a just transition in the automotive industry.

Patel said the government has adopted a two-phased approach to the transition to EVs in South Africa.

The first phase will focus on the production and export of EVs and the second on domestic demand and sales.

Patel anticipated a period of seven to eight years between the production and export phase and the consumption and market development phase.

However, the Minister of Finance was expected to put the first incentives in place in the next tax year despite the transition taking place over a longer period, he said.

Patel added that the pace of South Africa’s transition to EVs would be influenced by several factors, including the current electricity shortage and lack of energy generation capacity, which meant there was a need to avoid a sharp increase in energy demand on the grid from EVs as the grid capacity increased.

He highlighted the importance of domestic EV production as part of South Africa’s transition to new technologies.

Patel said South Africa wanted to continue to be a vehicle producer with a long future and did not want to be relegated to only being a producer of internal combustion engine (ICE) vehicles.

He warned that there was a danger that if the transition to EVs was poorly managed, EVs could be imported into the domestic market and ICE vehicles produced for the domestic and export market, resulting in South Africa in 2030 sitting with a declining asset base that was purely an ICE-based vehicle production capability.

Patel added that as consumers then transitioned more actively and aggressively towards EVs in anticipation of the 2035 ICE vehicle ban in the European Union and the UK, South Africa “would sit with an stranded industry”.

He said the forward roadmap for EVs had three components.

They are:

  • The White Paper, which covers the framework for the transition to EVs and provides a broad time horizon and identifies the means by which the transition will be achieved.
  • The Department of Trade, Industry and Competition (dtic) guidelines, which will spell out the implementation framework that will follow the discussion the government will now have with industry players following the finalisation and White Paper announcement.
  • The Minister of Finance’s budget speech, which will provide details about the fiscal elements.

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