The South African Minister of Trade and Industry, Ebrahim Patel, recently said that the country does not need a domestic electric vehicle (EV) market to start producing plug-in hybrid vehicles and EVs. There is an opportunity to start producing these environmentally-friendly vehicles locally before a domestic market has been established, he told attendees at the National Association of Automobile Manufacturers of South Africa (NAAMSA) conference held in Johannesburg recently.
Numerous vehicle brands are already exploring the EV market, including Volkswagen and Jaguar Land Rover, who have both expressed their intention to launch electric models in the next year or two. Formex Industries supplies automotive components to both of these brands.
South Africa’s market for EVs will grow quickly in the near future
South Africa sold around 150 EVs in 2018, however, these vehicles are projected to account for half of all global passenger vehicle sales by 2040. Industry experts estimate that in 2020, EVs will make up three percent of global vehicle sales. Minister Patel argues that the South African automotive industry cannot ignore EV production and needs to develop the means to manufacture these vehicles in order to remain globally competitive.
“We should not build the industry of the past in a world that is changing fast,” says Minister Patel. South Africa has the natural resources and minerals needed to manufacture lithium-ion batteries and hybrid fuel cells. Our reserves of platinum, palladium, nickel and vanadium are enough to establish a robust local EV industry.
Transformation is critical
The South African government has placed a strong focus on inclusion in the automotive sector. Formex Industries agrees that transformation is the key to unlocking the full potential of the industry and opening up job creation for the benefit of all South Africans. “[Transformation] is a national project. It is a critical imperative to the success and sustainability of the industry,” says Minister Patel – especially when it comes to competing in the EV market of the future.
“We must also bring young South Africans into the supply chain; young black South Africans and young white South Africans,” he explains. The Minister will soon start engagements with automotive industry leaders to set up a transformation fund that will help the sector to change more rapidly. This will accelerate the benefits to South Africans and help to boost the economy.
This fund will be financed by South Africa’s seven biggest vehicle manufacturers. Around R4-billion is expected to be raised and held in the fund. “We need to change our market structure both through industrial funding and through competition policy,” adds Patel. By updating the Competition Act, the Minister will enable greater cooperation and coordination between large vehicle brands. This should boost production and promote economic inclusion.
The future of automobiles lies in electrification. South Africa needs to think about manufacturing EVs sooner rather than later, in order to stay ahead of the curve and remain globally competitive in the automotive industry. Despite not having a booming EV market at the moment, South Africans are likely to turn towards EVs in the near future.
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 specialises in producing components for the catalytic converter industry, as well as metal components and assemblies for the various vehicles. Formex aims to become one of the foremost suppliers for the South African automotive industry by 2035, aligning itself with the South African Automotive Masterplan (SAAM) which takes effect in 2020.
Formex is a Level 2 B-BBEE supplier with over 80% black ownership, of which more than 40% are black women. 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).