Of the entire manufacturing output from South Africa, the automotive sector contributed the most in 2022, despite being the third-largest manufacturing sector in the country. Automotive exports account for a significant portion of locally-produced vehicles and components, with Europe currently taking 44% of our exported products.
However, the European Union (EU) has announced a total ban on internal combustion engines from as early as 2030. This means that only electric vehicles (EVs) and new energy vehicles (NEVs) will be sold in Europe from the next decade onwards. This will have a large impact on South Africa’s automotive exports.
As a leading manufacturer and supplier of automotive components and assemblies, Formex Industries recognises the importance of shifting to EV production in South Africa. The company recently opened its new Struandale facility with state-of-the-art manufacturing equipment that will enable us to produce components destined for EVs and NEvs.
As a whole, the South African automotive manufacturing sector needs to ramp up its EV production timeline to avoid a potentially disastrous decrease in exports and sales in the 2030s. Some local original equipment manufacturers (OEMs) have already put plans into place to shift to EV production.
EV production can benefit local consumers too
A shift to EV production will not only keep South Africa competitive in the global manufacturing sphere and ensure that export volumes remain high, but it can also benefit local consumers. Currently, there are high import duties and tariffs on EVs, which makes them expensive for local buyers.
With no local EV production, the only option is to import these cars at the moment. Locally-produced vehicles are more affordable than imports. In addition, a large portion of the population do want to reduce their environmental impact, but the current market for EVs is too expensive.
With world-class manufacturing facilities operating at full capacity in South Africa, importing EVs seems unnecessary. Some of the more modern factories, such as Ford’s Silverton plant, have the necessary equipment and facilities to manufacture EVs. Other factories should start to extend their capabilities soon.
Geographical location is important
South Africa is ideally placed for exports, especially to Asia, South America and Europe. Establishing an EV manufacturing hub in the country would certainly benefit the local economy. However, this needs to be done sooner rather than later, otherwise the country could fall behind its competing nations and lose out on a significant portion of exports.
There is massive potential for EV production in South Africa. Charging infrastructure is being rolled out nationwide, the mining sector is placing a focus on lithium, battery production facilities have been opened up in the Western Cape and the country is showing signs that it is ready to make the shift too. However, this will require close collaboration between the government, OEMs and suppliers.
Significant investment is still needed to upgrade facilities and machinery, and workers will need to be trained and upskilled in preparation for any shift. Many of the components that we manufacture can be used on EVs already, but our customers should also speed up their transition to EV production. 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).
Follow us on Facebook for the latest industry news and features relating to our products and services.