South Africa’s automotive industry, a crucial pillar of the national economy, is facing a major transition challenge as global markets rapidly shift towards electric vehicles (EVs). Traditionally dominated by internal combustion engine (ICE) vehicle production, the sector now faces declining exports, stricter emissions regulations in key markets, and growing competition from Chinese EV manufacturers.
Auto Industry’s Economic Impact
According to the National Association of Automobile Manufacturers of South Africa (naamsa), the automotive industry remains a significant contributor to the country’s economy:
- Accounts for 5.3% of GDP (3.2% manufacturing, 2.1% retail).
- Generated R270.8 billion in vehicle and component exports in 2023 (14.7% of total exports).
- Contributes 21.9% to manufacturing output.
- Supports 148 international markets through exports.
- Directly employs 116,000 workers, with an estimated 498,000 jobs supported indirectly.
Despite these strengths, the industry is highly dependent on ICE vehicle production, leaving it vulnerable as global regulations tighten around emissions.
Export Decline Signals Trouble
For the first time since 2020, South African vehicle exports dropped sharply in 2024, plummeting 22.8% to 308,830 units, compared to 399,594 in 2023. The decline was attributed to:
- Economic slowdowns in the EU, South Africa’s primary export region.
- Stricter emissions regulations that favor lower-emission vehicles.
- Increased competition from cheaper Chinese EV imports.
- Delays in new model rollouts by local manufacturers.
With 99% of South African-manufactured exports being ICE vehicles, the nation faces growing risks if it does not increase production of plug-in hybrid (PHEV) and battery electric vehicles (BEV).
PHEV Production on the Rise
There are early signs of progress in shifting toward electrification. Major automakers such as BMW and Mercedes-Benz have started producing PHEVs in South Africa. The number of locally produced PHEVs grew by 121% in 2024, reaching 11,406 units, up from 5,168 in 2023. If all of these were exported, PHEVs would account for 3.7% of total vehicle exports—a small but notable improvement.
Locally produced PHEV models include:
- Mercedes-Benz C-Class PHEV
- BMW X3 PHEV (assembled in Pretoria)
- Upcoming Ford Ranger PHEV (to begin production later in 2025)
However, the domestic market for PHEVs remains limited, with only 737 units sold in South Africa in 2024—just 0.14% of total vehicle sales. BMW and Volvo dominated PHEV sales, with the BMW X1 PHEV leading the market (145 units sold), followed by the BMW X3 PHEV (97 units).
Is South Africa Falling Behind on BEVs?
While the growth in PHEV production is encouraging, full battery electric vehicles (BEVs) are the long-term future of the industry. Experts argue that PHEVs are only a temporary transition technology, as modern BEVs now offer better range, lower costs, and improved infrastructure compatibility.
Some countries, particularly China, are investing heavily in long-range PHEVs (200–300 km electric range) as a bridge to full electrification. These models feature larger battery packs (over 50kWh) and more efficient engines, making them viable alternatives in markets where charging infrastructure remains underdeveloped.
For South Africa, this raises crucial questions:
- Could local manufacturers scale up PHEV production to align with global trends?
- Will they accelerate BEV production to future-proof the industry?
- How can the government support a stronger EV transition, both for exports and the domestic market?
The Road Ahead: A Call to Action
To remain competitive in a rapidly evolving global auto market, South Africa must adapt quickly:
- Expand EV production, including both PHEVs and BEVs, to align with global demand.
- Develop EV charging infrastructure to support domestic adoption.
- Introduce policy incentives to make EVs more affordable for South African consumers.
- Encourage automaker investments in EV supply chains, including battery manufacturing.
With global markets moving swiftly toward electrification, South Africa’s auto industry faces a critical choice: embrace the transition now or risk long-term decline.