Commie Ebrahim Patel recently said government anticipates the first locally produced electric vehicles by 2026. I won’t hold my breath.
South Africa’s minister of trade, industry and competition can better be described as the minister of trade barriers, deindustrialisation and punishing winners.
He recently took some time out of his busy schedule overseeing a shrinking economy to tell journalists how he plans to direct the R128 billion he believes ‘would be needed from 2023 to 2027 for the transport sector to contribute meaningfully to South Africa’s decarbonisation commitments’.
He did not mention whose money he was proposing to invest, but I’m fairly confident it isn’t his own. His 68-page Electric Vehicles White Paper, dated November 2023, doesn’t specify either, but talks a lot about ‘investment support’ and ‘incentives’, and says both government and industry are to be responsible for ‘increasing levels of investment and investment funding’.
The unions rejected the Green Paper (green refers to discussion papers, and white to policy papers) released in 2021. At the time of writing, we don’t yet know whether they like the White Paper more.
Protectionism
I’m not sure whether Patel really cares about ‘decarbonisation’, but he probably is a little uneasy about mandates in various export markets to prohibit the sale of internal combustion-engined vehicles by 2035, since that is all South African automotive plants are capable of producing.
These plants, which mainly do assembly work for international manufacturers, have been heavily protected since 1995.
Initially, tariff protection and other incentives under the Motor Industry Development Plan were supposed to get the industry in competitive shape within seven years.
When that didn’t happen, in 2012, the government concocted a new support plan, called the Automotive Production and Development Programme, which would run to 2020.
Of course, protected ‘infant industries’ are destined to remain infant forever, never being weaned off the taxpayer teat, and this programme was replaced by the Automotive Industry Master Plan to 2035, which was optimistically titled Geared for Growth.
A key objective of these very expensive plans was to increase employment, but not many jobs materialised. The automotive assembly sector employed 38 600 workers in 1995, but only 29 926 in 2020. The components sector did increase employment from about 60 000 in 1995 to 80 000 in 2019, but realising just over 11 000 jobs in 25 years is hardly a triumph of industrial planning.
Structural cost
South Africans paid heavily for all this protection. They are forbidden, except in exceptional circumstances, to import second-hand vehicles altogether.
For new vehicles, both passenger and light commercial, they once paid a premium of 40%. This has been reduced to 25%, and that import duty is set to stay until at least 2035. Locally manufactured vehicles are, of course, priced accordingly; that is, at 25% more than they should have been priced.
Perversely, rich Europeans can buy South African-built vehicles for less than poor South Africans pay, thanks to Patel’s masterly planning.
The duty on vehicles alone is a massive structural cost built into the entire economy, raising the prices of everything else, and making every other industry less competitive.
On top of that, automotive manufacturers also enjoy massive tax incentives, including a 150% deduction for research and development conducted in South Africa.
Not geared for growth
In the year that that Master Plan was written, 2016, South Africa produced 599 004 vehicles. Two years later, when it was published, the industry produced 610 854 vehicles. In 2022, the industry produced a mere 555 889 vehicles, 12% off its 2019 peak. To be fair, global vehicle production showed an equivalent decline, which was attributed to a chip shortage.
However, another key target of the Master Plan was to increase South Africa’s share of global vehicle exports, which evidently did not happen. ‘Geared for growth’ it was not.
International motor manufacturers were cushioned, however, by significant growth in electric vehicle (EV) sales, which, bucking the overall trend, were 39% higher in 2022 than in 2019. EV sales were led by China and Germany, with the US rounding out the top three.
South Africa failed to take advantage of this boom, and is now scrambling to catch up. Patel says his department expects the first electric vehicles to roll off local assembly lines by 2026.
Joule: electric vapourware
That reminded me of a piece I wrote for ITWeb in December 2011, almost exactly 12 years ago, entitled Joule: electric vapourware. (‘Vapourware’ is a term used in the technology industry, modelled upon terms like hardware and software, to refer to products that have been announced but have not seen the light of day, and may never do so.)
In 2008, a company named Optimal Energy, under CEO Koos Meiring, unveiled a prototype made-in-SA electric vehicle at the Paris Motor Show. They named it the Joule.
Clever, is it not, naming it after a unit of energy? Just like the Chevrolet Volt, which was launched less than a year earlier. Great minds must think alike.
Initially, it was slated for full production in 2012. Then, the manufacturer said 2013. An update in 2010 said that 2014 was more likely. In 2011, it was exhibited at that year’s COP17 climate jamboree in Durban, and a release date of 2015 was announced.
The Department of Science and Technology’s Innovation Fund threw R250 million at the project. Optimal Energy needed more, though. First, it said it needed R500 million more to start production. Then, R1.5 billion more. Then, R7 billion more. Eventually, it asked for R9 billion. Most of that was to come from the Industrial Development Corporation.
Promises, promises
Early on, the Joule’s range was announced as 200km with a standard battery, and 400km using a double pack. Later, that became 150km and 300km, even while battery technology was improving.
They promised to build 50 000 vehicles, which, at the time I wrote my article in 2011, would have doubled the total global market for EVs.
‘The government and the makers of the Joule will continue to miss deadlines, but they will spin the story and shamelessly fudge the numbers,’ I wrote. ‘The taxpayer will pay and pay. Maybe, one day, after having already paid over the odds for the research, development and manufacture of the vehicle, they might get to buy it at retail, where they can pay again for what promises to be an overpriced, outdated, underpowered piece of junk with a Proudly South African bumper sticker on it.’
I was too optimistic. South Africans would never be able to buy it at retail. Only four and a half months after I penned that story, even before they could miss the 2012 deadline, the project was cancelled, having swallowed a reported R300 million in taxpayer money.
Optimal Energy said it would change direction to electric buses, but it was never heard from again.
A more appropriate name for the Joule would have been Ohm, a unit of resistance. This is what happens with government-funded ‘innovation’.
So, when Commie Patel promises us electric vehicles by 2026, forgive me if I say I’ll believe it when I see it.
PS. The author has taken a rare holiday, and will be unable to respond to comments. Enjoy not being argued with for a while.
[Image: The Joule electric vehicle, as unveiled at the Paris Motor Show in 2008. Photo supplied by Optimal Energy.]
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