THABO SHENXANE Our research continues to monitor export opportunities in Africa with a view to providing the Eastern Cape with scientific and evidence-based interventions
Local automotive industry body the Automotive Industry Development Centre Eastern Cape (AIDC EC) has aligned its strategy and resources to facilitate the attainment of the South African Automotive Masterplan targets in the Eastern Cape, states AIDC EC CEO Thabo Shenxane.
These targets include growth, localisation, transformation and skills development, as well as the development of local electric vehicle (EV) skills and capabilities of local automotive and component manufacturers.
“The AIDC EC will contribute to the development of a roadmap that will identify areas where the local supply chain can compete globally in the manufacturing of new EVs. Collaboration with local original-equipment manufacturers (OEMs) is key, as the local automotive sector is largely export-oriented, and a partnership with the provincial government is important in the development of EV infrastructure in the Eastern Cape.”
He notes that the AIDC EC is developing innovation networks in the province to develop these opportunities.
The AIDC EC’s partnership with the Nelson Mandela Metropolitan University, in the Eastern Cape, is “vital” for this development, as the university has one of Africa’s most advanced electric-mobility research laboratories, including EV and battery research capabilities.
This partnership will also include the Walter Sisulu University, also in the Eastern Cape, as well as technical and vocational education and training (TVET) colleges, where the AIDC EC’s project is creating links between local manufacturers and the TVET curricula, its lecturers and students.
“We are working with private and public innovation partners, including OEMs, to ensure that we optimise current production volumes while preparing for future production demands.”
While South Africa’s largest market for vehicles and automotive components is Europe, many European countries have announced policy plans to phase out vehicles driven by the internal combustible engine.
This presents a “looming deadline”, stresses Shenxane.
The Eastern Cape is vulnerable to technology shifts in the global automotive sector and rapid consumer demand for EVs, as the province is South Africa’s largest exporter of vehicles. The province contributes 54% of vehicle exports, with almost two out of every three of its exported vehicles destined for Europe.
He says the Eastern Cape has the largest percentage of component suppliers that are members of industry body the National Association of Automotive Component and Allied Manufacturers, with the majority supplying traditional components to OEMs.
“The local automotive industry has an opportunity to enter the space of battery storage and the manufacturing of cells. Technologies will change rapidly, and the response to battery pack assembly and software giants will become the new ‘edge’ for the automotive sector.”
Further, he asserts that approach for the local automotive industry will also need to consider local preparation for the growth of EVs and EV vehicles on local roads, which will provide opportunities for charger manufacturers, charging point operators and mobility operators that will work with information technology companies in creating EV charging technology and payment systems.
Manufacturing Challenges
Shenxane emphasises that local manufacturers are under significant pressure to remain profitable while dealing with several challenges.
“Global vehicle production is impacted on by the shortage on microchips that has been caused by the Covid-19 pandemic, and South Africa will feel the pressure on its path to achieving 1% of global vehicle production target it set itself. Component suppliers face delays and double shipping costs of raw materials, as the global supply chain is still recovering from the Covid-19 pandemic.”
He highlights electricity, water unreliability and port inefficiencies as the challenges for investment and growth in the local automotive and component manufacturing sector.
He explains that a “day-zero” scenario in Nelson Mandela Bay – the heart of automotive production and exports – where municipal water supply would be shut off, would be “catastrophic” to Eastern Cape vehicle and component production.
Shenxane argues that there is much room for improvement regarding port development and efficiency, which are crucial for South Africa’s global automotive competitiveness.
The AIDC EC is engaging with local, provincial and national structures to raise concerns on these challenges and gather necessary resources for infrastructural development.
“Our focus area is mobilising resources by developing an integrated business plan for the Port of East London. Automotive manufacturer Mercedez Benz South Africa (MBSA) is currently the only major user of this port, and a plan needs to be put together to invite other industries to use it for export purposes to complement MBSA. Only then can the port be guaranteed to justify the investment needed to widen it.”
He adds that water and electricity management, and new methods of production, may be required to mitigate risks and sustain reliable, quality and cost-effective production.
The AIDC EC’s energy management team is working with industry to implement these production changes.
Further, Shenxane contends that transformation challenges in the supply chain are exacerbated by the dominance of Tier 1 companies. The AIDC has focused its strategy and resources on providing support for Tier 2 and 3 suppliers to increase participation of lower-tier suppliers.
He believes that the Localisation Supermarket – a freely accessible online directory of imported parts used in local production and for which substitutes are sought – is proving useful in this localisation drive.
The directory is linked to the AIDC website, and has attracted bids from local, broad-based black economic-empowerment companies.