The Automotive Business Council (naamsa) expressed its disappointment at Enoch Godongwana, the Minister of Finance’s announcements regarding new energy vehicle (NEV) policy during his Medium-Term Budget Policy Statement (MTBPS).
“Like no other industrial policy intervention in SA, the inevitable road to NEV policy announcement has been long and hard, not just to sustain but to also grow the automotive industry in the country,” says Mikel Mabasa, naamsa CEO.
“While we are disappointed that the Minister has decided to kick the NEV policy announcement ‘can’ down [the road] until February next year, naamsa is pleased to hear that National Treasury plans to implement tax and expenditure measures to support the industry’s transition to NEVs,” says Mikel.
“We expected more from the Minister after numerous engagements we had with Government on this topic leading to the budget announcement. Government understands our challenges as a vehicle-producing country with bigger ambitions to grow our global influence as we move to NEVs. Effectively, the Minister has bought himself more time to announce details for NEV policy, which will now be during the 2024 Budget Review with considerations to domestic market demand stimulus measures, establishment of renewable energy-based charging infrastructure, and production support,” he says.
“South Africa has procrastinated far too long, and we believe that the NEV policy pronouncement should be made by President Cyril Ramaphosa during his State of the Nation Address and supported by fiscal measures the Minister of Finance promised to announce in the 2024 National Budget Review. This is crunch-time for the South African automotive industry, and we can no longer afford to be silent on policy choices the country should make about the future of this important sector in the economic life of South Africa and her people.”
He says the economic muscle of the SA auto sector cannot be underestimated nor underplayed. “From 1995 to 2022, vehicles exported from South Africa into 152 different markets around the world totalled 5 641 644 units with an export value of R1.55 trillion. Additionally, automotive component exports amounted to R892.6 billion. Last year alone, the automotive export value amounted to R227.3 billion, which consisted of a record R157 billion for vehicle exports and a record R70.3 billion in component exports. As one of the most visible sectors attracting foreign direct investments, vehicle and component sector investment in 2022 amounted to R11.6 billion.
“Consumer interest in NEV products in our market is gaining some welcoming traction. In 2022, total NEV sales reflected a significant year-on-year increase of 421.7% at 4 764 units from 896 units in 2021. Sales of battery electric vehicles breached the 500 units a year mark in South Africa for the first time, with sales of 502 units last year. It is our considered view that a clearly articulated Government support intervention would undoubtedly go a long way in stimulating more demand and it will also accelerate investment and much greater interest in NEV technology and solutions”.
Based on the new vehicle sales records released by naamsa the year-to-date [YTD] September total NEVs increased by 67.0% year-on-year, at 5 165 units. The September 2023 YTD total NEV production increased by 112.4% at 5 670 units, and NEV Imports increased by 179.7%, recorded at 3 393, compared to the same period last year.
Passenger and extra heavy commercial NEV production increased by 382.3%, and passenger traditional hybrid production increased by 10.2%. While the total NEV sales remain negligible as a percentage of total new vehicle sales, the NEV policy finalisation will give the industry a much-needed injection of confidence as an export-orientated industry whose 60% of production is for the global market.