Is our car industry the capital of the new Combustion Belt?
The South African motor industry is among country’s premier assets. Producing more than half a million vehicles a year, a large proportion of those are exported globally. To Europe, Asia, and the Americas, to Australia and more. The 18th biggest motor industry in the world, it contributes to around 6.8% of South Africa’s GDP and accounts for 14.3% of all SA exports.
South Africa has a huge car industry
Did you know that Toyota builds and exports Hiluxes, Fortuners, Corolla Cross and more out of Prospection in Durban? A few hundred kilometres south, Mercedes supplies most of the world market with its C-Class cars out of the hamlet of East London. A little further south still, Volkswagen satisfies much of the global Polo population out of Kariega.
Just 50 km away, Isuzu builds the D-Max, BAIC Beijing is setting up for SA production, and Ford has a huge engine plant in Gqeberha. That supplies its Silverton in Pretoria with all the engines necessary for its 200,000 a year plus Ranger production, most of which is exported to over 100 countries. Silverton now also builds every VW Amarok for world consumption.
Moving across to Rosslyn to the west of Pretoria, BMW manufactures most of the X3s that grace roads across the globe. And Nissan produces a handsome share of the Navaras you can buy anywhere on earth. Each of the above major car plants is supported by a sophisticated and advanced supply chain industry. And local content just keeps on growing.
The SA car industry is in a most interesting position
There’s also a healthy specialised car industry. Backdraft in Durban, Superformance in Gqeberha and Bailey Cars in Jozi, among others, build Cobra, Ford GT40, Porsche 917 and other classic sportscar recreations for the global market. And of course, South African built race cars dominated at the Dakar in January. But those are both stories for another day.
Now, the South African car industry finds itself in a most interesting position as the car world moves to electrification at shocking pace. And unlikely as it seems, South Africa’s challenges of loadshedding, government slow to pick up on the shift to battery power and a rather combustion based industry, seem to be working very much in the country’s favour.
See, rather than being an insurmountable challenge, the rest of the world racing towards electrification is playing right into SA’s hands. Why? Well, that’s because South Africa is far from alone in its need to keep ploughing the combustion engine furrow. A great proportion of the world population will still need piston power for a very long time to come.
Third world countries cannot keep EV pace
So, while Europe, the UK, California, and others ban combustion engines quicker than they can build electric cars, or their power grids can keep up with rocketing car charging demand, other, let’s call them third world countries, will never keep pace with that power need. This article was for example written on a typical 8-hour load shedding African day.
South Africa is by no means alone in this dilemma. The rest of Africa, South and Central America, much of the Middle East, Asia and most of the developing world are in the same boat. So, if they cannot switch over to electric cars in just a matter of years, where will the combustion vehicles come from, to keep their already fragile economies rolling?
Well, that’s where South Africa, and a few other strong carmaking, yet developing countries come in. They’re calling it the Combustion Belt. It’s an apt description for the surprisingly significant rest of the world that cannot justify just jumping into the EV fire. And SA’s top carmakers are already full steam ahead towards servicing Combustion Belt production.
“We are the Combustion Belt” — Volkswagen
“Europe, America and China will progress to BEVs, but we expect Africa, South America and possibly India, will remain in what is called the Combustion Belt,” newly appointed VWSA chief Martina Biene points out. “In the Volkswagen group, we look at this Belt with ICEs in mind for another model cycle or two. “Europe will mainly use EVs after 2030.
“VW will not convert Kariega to an EV plant yet. “There are still European plants producing combustion vehicles and they must switch first. “Volkswagen aims to be a zero-carbon manufacturer, so shipping vehicles to Europe does not help our footprint either. “To bring batteries and the like in from Asia or Europe, and then ship vehicles back, is even worse.”
Which is why Volkswagen South Africa is rather plotting a third model, plausibly a Polo-based half-ton bakkie geared for SKD assembly alongside other models in sub-plants through Africa. “We do not want to rely on exporting to Europe,” Biene concludes. “We’d prefer to do business at home first. “Our long-term future is in Africa.”
“Our infrastructure cannot support EV tech” – Toyota
Biene is certainly not alone. “BEVs may be the answer for some markets, but not others like South Africa.” Toyota SA boss Andrew Kirby adds. “Our infrastructure simply cannot support EV technology at scale. “Our very limited 267 station charging grid is mostly metro based. “Add our obvious energy crisis, and a one-size-fits-all strategy is just not feasible.
“Toyota takes a holistic approach to Carbon Neutrality. “We address carbon in a lifecycle perspective throughout the value chain, rather than just a zero emissions vehicle end product. “From sourcing materials, to building our cars and their powertrains, how we sell them and even to how we dispose of the cars at the end.”
“Hybrid technology has a very important role to play in this carbon journey. “Three Hybrid Electric Vehicles equal one Battery Electric Vehicle in carbon savings. “By 2025, at least 20% of vehicles sold in South Africa will be New Energy Vehicles. “We also aim to generate 100% renewable electricity at Prospection by 2028 and to be carbon neutral by 2035.
Africa has the lowest EV ownership rate
“The Department of Trade, Industry and Competition published a Green Paper on incentivising the local manufacture and purchase of new energy vehicles two years ago,” Kirby added. “We are still waiting, but we hope that this policy will kick off soon after a white paper is adopted in due course.”
Battery vehicle sales indeed rose 108% worldwide to 6.75-million units last year. Yet very few EVs were sold in South Africa, despite huge campaigns to move them. “Africa has the lowest EV ownership rate,” Legacy Motor Group Chair Mpho Dipela concludes. “25% import tax and a lack of direction to invest keeps EVs out of the average motorist’s reach.”
All of which leads to one or two obvious conclusions. While it has a world leading auto industry, South Africa is nowhere near ready to switch to EVs. With that in mind, it is clear that the SA car industry, along with those in a few other developing nations, will have to take care of their own combustion based motoring needs, for the foreseeable future.
SA’s car industry outlook is bright
There are indeed several other minefields the first world motor industry must still navigate in its flight to this apparent EV future. If that indeed actually transpires. California, for instance, urged its population to avoid charging EVs in the heatwave. The very day after lawmakers promulgated the same state’s 2030 ban on combustion cars!
Where will the necessary electricity come from to charge those several million EVs, there and elsewhere? That is but one of so many such significant EV questions that nobody seems able to coherently answer…
The Combustion Belt will meanwhile continue to build the cars most of the world knows it can still rely on. And with South Africa leading that developing markets combustion charge, its motor industry stands to benefit more than handsomely going forward.
Indeed, far from dark in the face of electrification, the SA motor industry’s future seems brighter than ever. Albeit still based on good old combustion technology… – Michele Lupini