Industry advisors to government upbeat about new energy vehicle policy

A special advisor to the Industrial Development Corporation (IDC) and Department of Trade, Industry and Competition (dtic) has expressed confidence that the government policy for South Africa’s transition to new energy vehicles (NEVs) will “be a decent result” to take the domestic automotive industry forward in the country’s transition to NEVs.

Volkswagen Group South Africa chair and MD Martina Biene said on Thursday she is “keeping her fingers crossed” that a NEV policy announcement will be made during the Medium-Term Budget Policy Statement on 1 November.

Biene stressed that a pronouncement by the government on the policy is “urgent, urgent”, adding that the Volkswagen Group is already five years down the line in terms of its product and investment planning for NEVs.

Riaz Haffejee, a special advisor to the IDC and dtic, expressed confidence the government policy announcement will be very balanced and provide the certainty to allow the automotive industry to “make the plans it needs to make”.

Haffejee said there had been “really meaningful progress” in the past few months on the policy and “a lot of push” from the dtic, with support from the IDC and National Treasury.

“There is a lot of commitment in getting this right. I know there is a lot of commitment in finding the right balance and the best version of this [policy] for South Africa.

“I think that the way the White Paper will approach this topic is around where the priorities are for the industry, balanced with how much the country can afford. That’s where we are going to see the biggest impact on the auto industry.”

Battery manufacture

Haffejee said there is a huge opportunity for South Africa to get involved in mineral beneficiation that could possibly eventually support investments into local battery manufacturing in the country for electric vehicles (EVs).

“We have in South Africa the ability to be a meaningful player in beneficiated battery metals,” he said.

He added that discussions have taken place with leading battery companies in the world about their views of South Africa and establishing a battery cell manufacturing facility in the country.

He said these companies mentioned a few things the country needs to consider first – one of the major issues being that SA has little to no supply chain of battery components.

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Haffejee said this means that if a battery cell manufacturing facility is built in South Africa, all the gear needed to assemble the battery cells would have to be imported and the majority of them then exported out of the country again in vehicles.

He stressed the need for the country to “play towards its strengths” and consider how to take mine ore and refine it.

Haffejee said the IDC has some pilot projects that are successfully working on nickel and manganese plus a few other projects that will work with other battery metals.

He said the need is to refine those metals to the point that battery companies around the world can be supplied with battery grade quality metals.

However, Haffejee said the missing element between that refining stage and battery cell manufacturing is that South Africa has to invest now in battery components.

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“Once we start to have that supply developed in South Africa, not only do we take away the risk of having China have 95% of the capability of the world and a structural strength for the next decade, we start to have our strength in South Africa,” said Haffejee.

“By the way, the rest of the world is very interested in derisking from China, so it makes our South African strength even stronger. That part of it is a very important element,” he said.

But Haffejee said the immediate opportunity in the next few years is to strengthen the battery assembly process in South Africa to start to develop skills to allow the country to move in the direction of battery cell manufacturing.

Opportunity for mineral-rich SA

Sihle Mdluli, a business development executive at African Rainbow Minerals, said there is a great opportunity for cooperation between the mining and automotive sectors.

“If you look at South Africa as a country, we are well endowed with many minerals that empower the transition to new energy vehicles,” he said.

“On the EV side, South Africa has manganese, nickel and through the PGMs [platinum group metals], copper and iron … but also on the hydrogen side through the PGM bucket, we have palladium and iridium that can power the fuel cells for green hydrogen.

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“So we really think it’s high time for South Africa to turn this industry that has been termed and dubbed a sunset industry into a sunrise industry in the value chain,” she said.

Perfect timing?

Mark Raine, co-CEO of Mercedes-Benz South Africa (MBSA), said more urgency is required on the government NEV policy and although South Africa may be late to the NEV party, this also has its advantages.

Raine said this means SA can learn from other markets about what worked and did not work.

“But the right level of urgency is required. If you are late to the party, you have to accelerate to get going,” he said.

Raine said it is important that the government NEV policy announcement covers all bases, is clear and the policies are across the entire value chain to stimulate demand.

He said the policy must also be of immediate effect.

“Let’s not create policies which will come into effect in 2028. That’s not going to help because you are [already] late to the party,” he said.

Raine added that the government does not need to be scared about the transition to NEVs because “it’s a huge opportunity”.

“Take it as a chance and not as a threat, and let’s learn from other markets and immediately implement policies which stimulate the market,” he said.

Read: Mercedes-Benz SA expects surge in electric vehicle sales