26 April 2023: It is evident that the global automotive industry recognises that the transition to New Energy Vehicles (NEVs) goes beyond simply substituting traditional internal combustion engines (ICE) with recent technologies. The automotive industry has other, far-reaching responsibilities in contributing to the global goal of achieving overall carbon neutrality by 2050.
WesBank, RMB and FNB partnered with naamsa I The Automotive Business Council to host a thought leadership roundtable recently where industry experts and key government policymakers addressed the key challenges and benefits to drive the transition to NEVs. This was in terms of what the future holds for this important and valuable manufacturing sub-sector of the South African economy.
“We are heartened to hear that the Minister of Trade, Industry, and Competition, Ebrahim Patel, who wasn’t able to attend the conference, announced that his department would finalise its EV strategy for the country by the end of the current financial year, which runs to the end of March 2024,” said Ghana Msibi, CEO of WesBank.
“RMB encourages public-private collaboration to enable the transition to NEVs and, in so doing, to positively impact on the future of South Africa’s automotive industry. We are encouraged by government’s willingness to promulgate regulation and create a framework within which our domestic, export-led automotive sector can secure investment and ensure the continued viability of the automotive sector in South Africa. RMB is committed to funding sustainable projects that will fuel the NEV supply chain and enable reliable and efficient national infrastructure to support South Africa’s NEV footprint,” said Nana Phiri, Head of Corporate Client Segment RMB.
Msibi noted that WesBank recognises that the shift towards decarbonisation is not limited to vehicle finance or finance in general. “We are committed to contributing to a sustainable future beyond our core business operations.”
He added that South Africa has a unique opportunity to lead the continent in mitigating climate change, given its rich natural resources, including coal, natural gas, wind, and solar power. The country’s automotive industry is one of the largest in Africa and a significant contributor to the domestic economy so it needs to transition quickly and successfully to NEVs.
Africa currently has a small share in global vehicle manufacturing, despite the potential to add value to the minerals required for battery electric vehicles (BEVs). It is said that Africa’s local demand for vehicles is set to grow threefold in the next decade, which presents a significant opportunity for all involved.
NEVs face other challenges in gaining wider acceptance among South African consumers. These include constraints on product availability, a lack of awareness around range anxiety and the cost of ownership, uncertainties around the reliability of electricity supply, and a limited understanding of the technology, all of which impede sales and adoption of NEVs.
“The lack of education among customers on the benefits of NEVs, particularly BEVs, remains a significant challenge for all stakeholders. Another primary obstacle to wider adoption of NEVs in South Africa has been the significant initial investment required to establish a reliable and efficient national charging infrastructure.
“While we see noteworthy growth in hybrids being financed, the sale of pure electric vehicles remains slow. The hurdle we face in finalising policies and regulations pertaining to the long-term future and sustainability of the South African automotive industry is an imperative one to overcome, to enable us to make decisions with confidence and kickstart progress,” Msibi concluded.