While Volkswagen South Africa (VWSA) is remaining focused on internal combustion engines for the foreseeable future, the company’s new chief executive officer (CEO), Martina Biene, has expressed interest in electric vehicles (EVs). She believes that South Africa will produce EVs by 2035, but for the regional and local markets only.
VWSA is unlikely to export EVs if it does start producing them, nor will it ship parts and batteries to overseas markets for the sake of manufacturing EVs. Biene states that the brand will need to bridge the gap that currently exists between current production and EV manufacturing by 2035. “We have to find a locally produced product and increase our [regional] footprint,” she says.
South Africans are starting to see more EVs on the roads and charging infrastructure is currently being developed across the country. However, they remain an expensive mode of transport with high import duties. VWSA is hoping to introduce more affordable EVs to the local market before it looks into manufacturing them onshore. “My priority is to get EVs to South Africa. I’ll be very pushy to get them from the VW brand,” states Biene.
Formex Industries is a leading manufacturer and supplier of automotive components to local original equipment manufacturers (OEMs) and Tier 1 suppliers. VWSA is a direct customer of ours and the parts we produce are currently used on the vehicles produced in the Eastern Cape. If VWSA steps into the EV production market, it will be a welcome opportunity for Formex to continue supplying high-quality components for these vehicles.
Why VWSA won’t export EVs
Currently, VWSA exports its vehicles around the world – Europe being one of the biggest markets for the brand. However, Europe cannot be viewed as a sustainable export market as the entire region is set to ban internal combustion engines in 2035. This means that the current vehicles being sent to Europe every month will cease once the ban comes into effect.
Former VWSA CEO and current VW passenger car global CEO, Thomas Schäfer, argues that VWSA could start exporting EVs by then, but it doesn’t make sense as a long-term business model. It would require a lot of materials to first be imported into SA, where they would be assembled on EVs and then exported to Europe again.
This creates a massive carbon footprint, which would not be acceptable to Europe. The main aim of outlawing combustion engines is to promote zero emissions and minimise the carbon footprint across the supply chain. “Logistics are also becoming more and more expensive, so in the long term, we need to change the business model itself,” he explains.
Schäfer states that the current focus for VWSA should be on its domestic and regional markets. “As a group, we believe in building cars where we sell them, not shipping them around the world,” he says. This, coupled with new EU regulations on emissions and safety, could easily add thousands of Euros to the price of cars imported from SA. “On small cars, this is a lot,” he adds.
VWSA hopes to add another car to its production
In the meantime, VWSA is exploring the possibility of adding a new model to its assembly line in Kariega, Eastern Cape. This car will fall into the A0 segment, which is the smallest body type – typically used for city cars like the VW Up. According to Biene, it will have an “SUV-ish body style”, but this is still being discussed.
The production of this new model will not necessitate added capacity at the Eastern Cape plant, which currently produces around 160 000 units every year. Instead, the assembly lines will be optimised to accommodate the new car, if the go-ahead is given. This car will be purely for the local and regional markets, not for overseas export.
Formex will continue to supply assemblies and individual parts to VWSA for its current production of Polos and Polo Vivos. For more information about our components and products, please contact us today.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a Level 2 B-BBEE supplier. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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