Ford, the U.S. auto giant, announced on Wednesday that it will invest 5.2 billion rand ($281 million) to produce a hybrid vehicle in South Africa, as it urged the government to move fast on an electric vehicle policy. The investment will go into producing the Ranger Plug-in Hybrid Electric Vehicle, which will be rolled out from its factory in Pretoria in late 2024. Ford plans to export about 70% of the 44,000 Ranger cars to Europe, Australia and New Zealand.
The announcement comes as South Africa’s auto industry, which accounts for 5% of gross domestic product and over 100,000 jobs, faces an existential threat from the global shift to electric vehicles. Three-quarters of cars produced by the industry are exported, mostly to European countries, which have set ambitious targets and deadlines to phase out fossil-fuel-reliant vehicles. The UK and Europe plan to ban the sale of new petrol cars from 2035.
Ford’s operations director of the international market group, Andrea` Cavallaro, told Reuters that the government needs to finalise its policy and get it out there because other countries are moving fast. He said that in the meantime, the company is focused on producing hybrid vehicles, which can run on petrol or electric charge, as a transition to fully electric vehicles.
The South African government has been working on a green paper on advancing new electric vehicles, released in May 2023 for public consultation. The paper aims to establish a clear policy foundation that will enable the country to coordinate a long-term strategy that will position it at the forefront of advanced vehicle and vehicle component manufacturing, complemented by a consumption leg. The paper also proposes various incentives and support measures for electric vehicle production and adoption, such as tax breaks, subsidies, rebates, and infrastructure development.
The green paper is part of the broader automotive industry master plan launched in 2019 and seeks to increase local production, employment, and exports by 2035. The master plan also includes workstreams on technology changes and deeper localisation, which are expected to align with the electric vehicle policy.
Ford is not the only automaker investing in electric vehicles in South Africa. In October 2023, Toyota announced that it would invest 2.4 billion rand ($130 million) to produce its Corolla Cross hybrid vehicle at its plant in Durban from 2024. Toyota said the investment will create 1,500 jobs and increase its annual production capacity by 15,000 units.
The investments by Ford and Toyota show that South Africa has the potential to become a leading and competitive location for electric vehicle production in Africa and beyond if the government and the industry work together to ensure the safety and benefits of the transition. The electric vehicle market is expected to grow rapidly in the coming years as more countries and consumers embrace the technology for its environmental and economic advantages. According to the International Energy Agency, the global electric car market will reach 10 million in 2022 and grow to 35% of total car sales by 2030.
Source: Reuters
