The world is at the beginning of the biggest disruption to the automotive industry in 100 years with the transition to new energy vehicles (NEVs), and, in turn, considerable upheaval in the supply chain ecosystem – however, this could present opportunities if properly leveraged and capitalised on.
This was noted by consultancy EVAdoption CEO Loren McDonald, delivering the keynote address on the first day of the National Association of Automotive Components and Allied Manufacturers (Naacam) 2023 show, in Pretoria, on August 30.
McDonald pointed out that NEVs were gaining traction, with automakers investing billions in NEV battery plants, factories, technology and supply chains. It was expected that, by 2030, there would be $1.3-tillion invested in electric vehicles and batteries, he noted.
McDonald said battery electric vehicle (BEV) adoption, in terms of new sales, varied widely depending on the market. For example, he pointed out that Norway’s 2022 BEV sales share is 881 times that of South Africa’s, with the latter only having 0.09% market share.
However, he pointed out that South Africa was adopting hybrids more, with the country’s sales of these outgrowing BEV sales 9.5 to 1 since 2018, while plug-in hybrid electric vehicle sales were relatively flat.
McDonald said hybrid as a focus for the country could present an economical choice, given that these did not require the fast-charging infrastructure that BEVs did, which would mean that they cost about one-tenth of the price.
McDonald said Chinese original-equipment manufacturers (OEMs) dominated the market, and owing to a saturated domestic market and overproduction, were looking to expand globally.
In terms of challenges, he mentioned that, with vehicles becoming more technologically advanced, component manufacturers needed to be able to build the hardware to match and work with the software, with there currently being a disconnect here. This, he said, would lead to a fundamental shift in the nature of the supply chain.
Another challenge was that EVs were often unaffordable for legacy OEMs, McDonald noted.
He elaborated that this was because it could entail launching new factories and supply chains, as well as requiring new talent, as well as the earlier mentioned software issues.
McDonald mentioned that the transition would lead to the emergence of new players and the shifting of market leaders, however, there were also new opportunities for suppliers.
Given that the change was imperative, McDonald said that OEMs must move quickly and be flexible. He called for suppliers to accelerate their own change agenda immediately to seize new opportunities and to secure a strong position in the future.
Also, with the electrification of “everything”, McDonald said there were options to diversify and consider markets beyond just autos, such as trucks, buses and tractors, among other vehicle types.
During a panel discussion elaborating on this topic, it was highlighted that the country’s industry could indeed evolve and transition, however, what must be considered was how to do this sustainably, in a way that engendered growth, and in a manner that did not impede local content.
Moreover, it was averred that the country should focus on where it could be globally competitive and leverage its established strengths as well.
It was emphasised that the country must know where it was going and be able to prepare for this, with a focused approach.
From an associated perspective, that of of the mining industry, Anglo American Platinum sustainability head Stephen Bullock mentioned that developments in the automotive sector had a considerable impact on the mining sector and demand for metals and minerals.
He said that, directionally, the company had seen electrification of the automotive sector occurring, which was impacting on the demand for the company’s resources into the future.
To position itself for this, therefore, he said that the company was investing in the hydrogen environment and ecosystem, to stimulate the production of hydrogen and the use of fuel cell electric vehicles.
Bullock said that this was being done through policy advocacy globally to promote hydrogen as an energy source, especially green hydrogen; investment in startup ventures in the hydrogen space; and the implementation on the ground of several hydrogen projects.