The demand for battery electric vehicles (BEVs) is driven largely by government incentives in regions such as the European Union (EU), which aims to become a zero-carbon economy, as well as increased consumer demand for greener products and a change in technology, says Metair CEO Riaz Haffejee.
This means that original-equipment manufacturers (OEMs, or vehicle manufacturers) have little choice but to launch BEV product offensives.
“However, there is not enough capacity overall in Europe, America or Asia for the BEVs governments and OEMs want to sell,” says Haffejee.
“Worldwide, we are going to be slightly behind the demand curve in terms of available battery energy supply until 2030, and then it really starts to kick in substantially, because of the European Green Deal, from 2030 onwards.”
From 2035, regions such as the EU have proposed a ban on internal combustion engine (ICE) vehicles.
Haffejee imagines the world will go through a “broad hybrid era” until this happens.
“It’s really halo models coming out as BEVs now. The bulk of [the] volume will go through as ICEs, then a range of hybrids, and then, in the early 2030s, we’ll start going more into BEVs, until in 2035, when we have a hard stop – certainly for the EU – and I think many other countries will follow.”
Haffejee does not believe it’s possible to move forward faster, given the amount of battery storage available.
“No-one can build it quickly enough.”
Metair’s lead-acid battery volumes remain strong in the aftermarket, in exports from South Africa, and in OEM production volumes, says Haffejee.
“We’ll still see good growth ahead.”
Haffejee believes Metair will participate in the move to BEVs in auxiliary batteries, and not necessarily the battery packs powering the vehicle.
“The format of battery which we are really good at is the auxiliary battery – [an] SLI battery – a starter, lights, ignition battery.”
He says most BEVs, bar Tesla’s, use lead-acid batteries for this purpose.
Eventually, however, these batteries will also move to lithium-ion, similar to the technology used in BEV battery packs.
“The format – the size, the function they perform –will stay the same. Every BEV car will have one or two of these batteries in future,” says Haffejee.
“For us, we would like to maintain our relevance in that kind of format.”
Haffejee says it will be difficult to be competitive and relevant in supplying BEV power packs to OEMs.
“For most OEMs, if they lose that, they give away 60% of the cost of the car. They won’t do that, which is why they are forming joint ventures with battery companies.”
Between 50% and 60% of the cost of a BEV consists of the battery and battery management system.
Aftermarket
Metair supplies primary batteries for ICE models to most OEMs, and has work in place for a number of different models in South Africa and other territories between now and the early 2030s.
“We view that as secure business,” says Haffejee.
The bulk of Metair’s business, however, is in the aftermarket.
The first aftermarket battery is typically the first battery sold at year five or six into a vehicle’s life cycle, with the second one at around year ten, and with some ICE cars even requiring a third battery at year fifteen.
“The cars sold today are only really moving into the aftermarket in 2026, 2027,” says Haffejee. “This means we still have a decent amount of growth coming through in the years ahead.”
Metair CFO Sjoerd Douwenga adds that all Metair’s aftermarket geographies, such as the Middle East, Turkey and Africa, should trail the leading technologies by “at least one or two model cycles”, leaving room for the group to still have a healthy pipeline of work in the years to come using existing technologies.
Where lithium-ion batteries will, however, start to play a role is in the vehicles exported from South Africa and Turkey to markets such as the EU and the US, with about 80%-plus of vehicle production exported from Turkey and 60%-plus from South Africa.
This will require a balancing act in terms of the aftermarket and leading technology demands from OEMs for export markets.
Already, Douwenga expects an increase in hybrid vehicle production in South Africa in the immediate future because of the local market’s European exposure.
However, he believes that Metair can cover both local and export market demand, also from an automotive components perspective.
“If we were in ICE engines or catalytic converters, we’d be very exposed. “We’ve done a deep analysis of each of our businesses, and while some products may become a different format in BEVs, we are well positioned to follow the trends along with our OEM customers.”