Slow mover, fast future — how SA can leap-frog the global EV transition

South Africa’s slow pace of transitioning local manufacturing to new energy vehicles, battery propulsion and renewable energy storage technologies can be played to our advantage – if we shift from thinking about how to catch up, to how to meet the next disruption.

Delays in adapting and implementing industrial policy to global market shifts and technology advances have left local manufacturers hamstrung against more agile and faster-moving competitors, heightening the threat of local de-industrialisation in an environment of factory closures, downscaling and rising unemployment.

Yet this has also given us the luxury of watching and learning from the mistakes and new technologies being developed in early-adopter countries.

While SA’s grid-connected renewable energy generation is growing and there has been progress on policy to support areas such as new energy vehicle (NEV) and battery manufacturing, we are still effectively playing catch-up while the early stages of NEV technology development are already closed and the world is moving on.

This is a key issue for Nelson Mandela Bay, as the hub of SA vehicle and components manufacturing and exports, with employment concentrated in the auto sector and the surrounding ecosystem of value chains that it supports.

Methods of achieving low carbon emissions, initially and still predominantly focused on lithium-ion batteries in fully electric vehicles, are now being re-thought as new evidence emerges of the environmental impacts of mining and manufacturing, and concerns move to the full life-cycle costs of an electric vehicle rather than tailpipe emissions alone.

A further dilemma

From a cost point of view for consumers, it is becoming more affordable to replace the entire vehicle and gain more up-to-date technology and features, rather than just replacing the battery. Thus, creating a further dilemma of how to sensibly dispose of the old vehicle, since the high costs of battery replacement limit the second-hand market for electric vehicles.

It remains questionable whether the carbon emissions involved in manufacturing an electric vehicle are lower than those in manufacturing a vehicle powered by an internal combustion engine, be it powered by petrol, diesel, hydrogen or new carbon-neutral fuels from renewable sources.

It is still cheaper to mine lithium than to recycle and repurpose it, creating concerns around the environmental impact of mining and the associated low-income employment in the lower-income countries where it is mined, and what to do with spent batteries in the higher-income countries where they are used.

Alternative methods for achieving low-carbon manufacturing and mobility are reaching proof stages, such as hyperefficient internal combustion engines using traditional or biofuels, on their own or providing propulsion assistance to hybrid vehicles powered by sodium, hydrogen or ammonia batteries or fuel cells, as alternatives to lithium-ion batteries.

At the same time, economic pressures on the traditional auto manufacturing giants, amid tariff wars and erosion of their market share by the rise of more affordable Chinese-made electric vehicles, threatening the sustainability of manufacturing and its high employment, have led to a softening of targets for the removal of all internal combustion engine vehicles within the next decade in significant territories such as the European Union.

South Africans have no shortage of innovative thinking, but we often lack support for implementation. We now need to be looking at the unsolved problems, no matter how small, and how to support them from idea to commercialisation so they don’t drown in the “valley of death of good ideas”.

As a country and consumer market, we are too small to bet on one big idea as players such as China can. We now need to avoid trying to follow one big player or one big idea and to look at multiple possible futures, to look at the gaps and the problems no one else has yet tried or bothered to solve.

This is where real innovation lies – not in coming up with solutions for problems that we don’t have, but in solving in the gaps where there is a need but no current practical solution. In a sense, creating demand for a market that will exist tomorrow.

Leap-frogging

This is what we mean by leap-frogging.

Finding small-scale problems and proposing solutions also means the opportunity to fail small, pick yourself up and start again.

There is no doubt South African consumers will continue adopting electric and hybrid vehicles – the sales figures are there to prove it – and there is still a need for policy to support the transition of local manufacturing, protect local jobs, and to incentivise consumers to buy local.

However, when it comes to manufacturing, there is a strong case to forget trying to achieve full local manufacturing of EVs and rather look at how we can fill gaps that aren’t already plugged by more advanced and faster-moving competitors, with local innovations to solve local problems, using local and renewable resources, that can be scaled globally.

While it is highly unlikely that South African manufacturers could ever find a business case to compete with China on the manufacture of plug-in and full EVs, and the lithium-ion battery market that they own, we have a proven ability to make electric motors and internal combustion engines to global standards.

This opens a door to thinking about adapting our internal combustion engine manufacturing capacity to be powered by fuels other than petrol or diesel, such as hydrogen, ammonia, green methane or, as Brazil does, with carbon neutral, sugarcane-derived fuel.

We have the capacity in existing vehicle manufacturing plants to shift to the new mode of “propulsion-assisted hybrids” – a smaller battery, with a smaller hyper-efficient fuel-burning engine – that uses existing infrastructure and reduces issues of range anxiety and limited charging infrastructure for vehicle owners.

There is further opportunity for local auto component manufacturers to think about building range-extenders, a small petrol or ammonia engine as an aftermarket add-on to an electric vehicle, that charges the battery while driving. (Given that, even in countries with far better charging networks than SA, drivers spend more time planning their trips around charging stations than on the actual trip, this would offer a great peace-of-mind selling point.)

There is also opportunity for local entrepreneurs to get involved in areas from battery pack assembly to charging infrastructure, provided that policy support is there for them to do so.

A key opportunity

Trade, Industry and Competition Minister Parks Tau’s comment in his address at the recent SA Auto Week, that the government recognises that the automotive industry is a key opportunity to connect a minerals beneficiation strategy with industrial development, is a welcome recognition of the interconnectedness of the country’s primary and secondary industrial sectors that is often unacknowledged and unleveraged.

Equally welcome is his statement that government has begun work on an end-of-life vehicle policy to position SA at the starting point of the new industry of recycling and repurposing new energy vehicle batteries.

If we can get this right, we can leverage a slow-mover advantage of learning from the mistakes of others, and not only build an industry around repurposing spent lithium-ion vehicle batteries into static renewable energy storage for homes and schools, for example, but also leapfrog to a future of manufacturing fuel cells with alternative and renewable energy sources.

South Africa needs to be looking at new battery contents such as sodium, or iron-air batteries for energy generation and long-duration storage, and the possibility of reviving older nickel-zinc batteries with new technology – all of which would support greater local minerals beneficiation.

Our strength in catalytic converter production is another opportunity. While global demand for catalytic converters is declining, we already have advanced technology in place for platinum-based hydrolisation to convert hydrogen for vehicle or battery storage use, and refuelling hydrogen-powered vehicles in a conventional filling station setting.

This in turn supports the overall goal of beneficiating South Africa’s mineral wealth rather than exporting raw materials.

Further, South Africa needs to look at market realities.

If we focus on Europe, we are competing with China. In the US, we are competing with the US itself and it has made it clear it doesn’t want to play. Opportunities in Asia are limited, due to the tech dominance of China and India, and our lack of free-trade agreements with BRICS partners.

However, as the dominant and most industrialised economy in Africa, we have an opportunity to develop technological and manufacturing solutions for the continent we inhabit.

Across the Global South, the transition from internal combustion engine to new energy vehicles is likely to be slower, and there are opportunities to expand South African-made solutions such as micro-mobility and battery-powered last mile delivery.

It is possible for South Africa to manufacture the small 10kwh battery packs needed for micro-mobility, powered by rooftop solar which could also be locally manufactured and rolled out, together with locally manufactured capacitive battery technology.

These components are possible by drawing on the capabilities of local auto component manufacturers, needing no reliance on imported components.

It is also vital that these initiatives around innovation and localisation incorporate development of regional value chains – building on particular national strengths in raw materials, manufacturing capability and logistics, so that the SADC region, or Africa as a whole, becomes an interconnected hub of markets and output that can compete globally.

At the same time, we need to develop the skills that South Africa will need in the next 10 to 20 years – flexible and adaptable rather than just focusing on labour absorption.

This will take a leapfrog in education similar to a leapfrog in manufacturing, developing learners who don’t necessarily know how to build or code artificial intelligence, but know how to use it.

Future needs

In addition to maths, basic science and engineering understanding, we need to develop problem-solving skills and people able to look into the blind spots – in other words, to solve for the gaps where future needs exist.

If we play our cards right, this could be a unique situation in which South Africa’s slow pace of industrial policy keeping up with global market developments works to our advantage.

This will take a shift in mindset by both the government and industry. Rather than planning for keeping up, or worse, for catching up, we need to be making greater use of futures thinking to identify and prioritise the most likely future scenarios, and translate this into policymaking geared to leap-frogging ahead.

Equally vital is that we move with speed to develop and implement these polices so that we don’t get left behind again. DM