How the new 2035 ban will affect South Africa’s automotive industry

With its export growth, South Africa has established itself as a key player in the global automotive market. Last month, the European Parliament formally approved a law banning the sale of new fossil-fuel cars until 2035 to fight climate change and switch to electric cars. Automakers are required to reduce carbon dioxide emissions by 100 percent by that date.

South Africa’s vehicle exports grew by almost 10% in 2021, to a total of 298.020 units, compared to 271,287 units last year, according to the 2022 Automotive Export Handbook. This increase in export volume had a significant impact on the country’s economy, as the value of exports increased by 17.1 billion rubles to a total of 138.3 billion rupees.

“But South Africa’s thriving automotive industry is facing a new challenge as the global market shifts increasingly to electric vehicles.” “Our country’s largest export destination, namely Europe, is at the forefront of this change, which could significantly impact our automotive industry,” says Edward Makwana, CEO of Legacy Motor Group.

“The transition to electric vehicles will significantly change the demand for traditional internal combustion engine vehicles, which South Africa has exported in large quantities to Europe.” The transition to electric cars will also bring new competition from established electric car manufacturers, which could make it difficult for South African companies to compete in the European market.
“Despite this challenge, the South African automotive industry remains well positioned to respond to a changing market.” He adds that the country has a skilled workforce, a strong manufacturing base, and a history of innovation that gives it the opportunity to play a significant role in the electric vehicle market.


What must be done?

“To achieve this, the industry must quickly adapt to changing market demands and invest in research and development to stay ahead of the competition.” With the right investment and support, South Africa has the potential to become a major player in the EV market and continue to grow through car exports.
South Africa’s electric car market currently lags behind the rest of the world, with only a handful of electric cars on the road, while none of the country’s original equipment manufacturers (OEMs) produce vehicles locally. Although some are producing hybrid vehicles locally, the electric car market in South Africa is still in its infancy.


EVs are still expensive for consumers.

Mpho Dipela, president and shareholder of LMG, added that one of the main obstacles to the growth of the electric vehicle market in South Africa is the 25 percent import tax on electric cars, which is significantly higher than the 18 percent import tax for conventional internal combustion engine vehicles. This, combined with the fact that electric cars have not yet caught up with their fuel-powered counterparts, makes importing electric cars an overwhelming choice for most consumers.
However, the global market for electric vehicles is developing rapidly, and price parity between electric cars and internal combustion engine vehicles is expected to be reached by 2024.

“This means that if South Africa does not adapt to a changing market, its auto industry could be left behind and its export markets closed.” “The consequences of inaction can be dire, and the country must take steps to catch up and remain competitive in the global auto market,” warns Dipela.

“The electric car market in South Africa is small and urgently needs investment and development to remain competitive in the global market.” High import taxes and a lack of price parity with internal combustion engine vehicles significantly hinder growth, but with the right investments and support, our country has the potential to become a major player in the electric vehicle market.

In order to maintain competitiveness in the rapidly developing automotive industry, the country must take rapid measures to create a favorable business environment, invest in extensive electric vehicle infrastructure, and maintain preferential trade with key partners. These measures ensure the country’s competitiveness and a sustainable future for the automotive industry.

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