HomeIndustry SectorsBusiness and marketsWhat’s shaping the South African electric vehicle value chain?

What’s shaping the South African electric vehicle value chain?

In an effort to curb greenhouse gas emissions, a report compiled by the City of Cape Town’s Department of Enterprise and Investment along with GreenCape conveys insights about the electric vehicle value chain and ecosystem.

The report, The Electric Vehicle Ecosystem and Associated Value Chains, further explores the South African associated value chain for electric vehicles and the role the City can play within this ecosystem. 

The transport sector has been identified as a key contributor to global greenhouse gas (GHG) emissions because of its reliance on fossil fuels. Of global greenhouse gas emissions, 15% can be attributed to the transport sector.

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E-mobility already exists in SA and business opportunities abound

There is now a global consensus that the climate targets that have been set, particularly for the automotive sector by 2030, cannot be met without EVs being incorporated into the transport system. Internal combustion engine (ICE) improvements alone are insufficient to achieve these targets.

A variety of key players are competing to shape the nascent South African EV market, drawn from both the public and private sectors. The private actors are, however, currently more active, and dominant in the build-up of this ecosystem and its operation. The exact dynamics of the industry are still emerging, and the timing of key tipping points remain largely unknown.

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Report highlights: South African electric vehicle value chain

The report consists of a matrix system that measures the potential opportunity that a specific sector could bring within the value chain ecosystem. The sectors which showed the highest ratings are the automotive manufacturing sector followed by research and development. These two sectors in the value chain reflect positive outcomes for potential job creation and economic development in South Africa.

The report elaborates on the potential opportunity each sector can bring:

Automotive manufacturing

The automotive manufacturing sector is a key player in the country’s economic landscape, contributing 6.4% of the gross domestic product (GDP), $14,12 billion (R201,7 billion) in export revenues, and 27.6% of manufacturing output in 2019. Total revenue from this sector was more than $35.6 billion (R500 billion) in 2019, with the industry employing up to 900,000 people directly and indirectly – including downstream in wholesale, retail trade, and maintenance.

Research and development network

The shortage of technical skills remains a major concern. This is an area in which the public sector and academic and training institutes could play a role to develop the necessary training materials and courses and provide funding for the related technical courses such as engineering.

Energy supply and electricity grid

By the end of 2020, South Africa had 51.6GW of wholesale/public nominal capacity, according to the CSIR. In the same year, loadshedding occurred for 859 hours of the year (9.8%) with an upper limit of 1,798GWh relative to an achieved energy shed of 1,269GWh – the worst the country has experienced. However, with the recent procurement from Independent Power Producers and the desire to produce renewable energy has changed the landscape.

The report also highlights other key components needed within the electric vehicle value chain such as charging infrastructure, financing and electric vehicle consumer demand etc. Read more insights on this The Electric Vehicle Ecosystem and Associated Value Chains report

Join our industry experts at Smarter Mobility Africa Digital (5-7 Oct) to be part of key defining conversations around electric vehicles.