South Africa’s automotive industry faces a growing threat after the European Parliament in February approved a law to effectively ban the sale of new petrol and diesel cars in the European Union from 2035.
This is predominantly due to high costs associated with importing EVs, non-existing legislation to enable local production of EVs and supply constraints in SA, say experts., believes that although leading vehicle manufacturers such as Mercedes-Benz, Volkswagen and BMW report they are on track to phase out internal combustion engine vehicles, it’s been a real challenge for traditional original equipment manufacturers to fundamentally change their way of thinking about producing vehicles.
The global automotive investment community has said it will not give any value for the old vehicle architecture that historically has been produced and it wants these OEMs to produce EV vehicles. The proof is in the valuations − you see the difference between the valuation for a company like Tesla versus Ford, as an example, adds Lacey.
To date, more than 20 countries have announced the full phase-out of combustion vehicle sales over the next 10 to 30 years, including countries such as Germany, France, Netherlands, Sweden and Italy, which have national policies and targets to encourage the EV shift, according to a, the local industry will need to adapt quickly to the changing demands of the vehicle market, and invest in research and development to stay ahead of the competition.
“The shift towards EVs will significantly alter the demand for traditional internal combustion engine vehicles, which South Africa has been exporting in large quantities to Europe. The transition to electric cars will also bring new competition from established electric vehicle manufacturers, which could make it more challenging for South African companies to compete in the European market,” explains Makwana.