THE ELECTRIC CAR AND ITS ECONOMIC IMPACT ON SA

The world is starting to race away from cars powered by fossil fuels. Where does that leave South Africa, which makes hundreds of thousands of gas guzzlers?

- Glenda Williams

Global focus on zero-emission vehicles is reshaping mobility. It is also changing the way carmakers operate and invest. And the trend towards electric vehicles in developed countries will reshape the economies of developing markets like ours.

The issue for South Africa, which only manufactures cars with internal combustion engines, is that the markets for fuel-burning vehicles are shrinking rapidly. The green movement, accelerated by Covid-19, is speeding up.

In the UK and EU, regulation is moving rapidly towards the adoption of electric vehicle. After 2030 the sale of cars as we know them will be banned in the UK. Furthermore, the sale of hybrids (a combination of a petrol or diesel engine with an electric motor) will be banned by 2035. Thereafter the UK will become a market for purely zero-emission vehicles (electric or hydrogen), primarily battery-electric vehicles.

SA relies heavily on the revenue derived from the exports of “old-fashioned” vehicles and automotive components made here. In 2019, before the pandemic, the market totaled R201.7bn, with SA-made cars exported to more than 150 countries. But here's the kicker; 66% of the exports are to Europe; the largest portion of that to the UK.

It means SA’s main markets for its petrol- or diesel-powered vehicles will essentially have dried up by 2030. It will have a devastating effect on the country’s vehicle exports and revenue.