The future mobility ecosystem will be completely disrupted by technological innovation.
Why South Africa can't afford to take a back seat
The South African automotive manufacturers have exclusively produced Internal Combustion Engine (ICE) powered vehicles for the past few decades. They export almost half of its production to Europe and the USA. However, this demand is expected to decrease significantly in light of the restrictions on pollution emitting ICE vehicles in favour of electric vehicles (EV), which are considered more environmentally friendly. Similarly restrictive environmental legislation is expected to be enacted across an increasing number of countries in these regions. Coupled with the improvement in electrical power train technologies and the consequence drop in cost of production, electric vehicles are expected to pose a significant substitution threat in these markets. This poses a stark threat to the SA automotive industry whose traditional strength is in the production of ICE vehicles.
However, the African market is not expected to embrace electric vehicles in the medium term due to several factors including the affordability of electric vehicles, unreliable electricity generation as well as a lack of supporting infrastructure. Hence, the rest of Africa could be an alternative market for the export of South African ICE vehicles in the medium term, while they transition to participating in the electric vehicle production value chain.
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SA is one of the world’s leading mineral-rich countries, possessing minerals and metals which will play a pivotal role in future of mobility. If there is a declining demand for catalytic converters in the future, where do we see our platinum industry fitting into the value chain? A potential opportunity lies in hydrogen fuel cell technology for electric vehicles.
With the global shift to a mobility ecosystem – which will ultimately change how people and goods move in the future – it is a critical time for SA to consider what role it will play in shaping the future of mobility, both domestically and globally. How does this impact the manufacturing sector? The short answer: In more ways than one.
With the proposed legislation changes and partnerships with private sector to create a favourable environment for mobility, it is evident that government is embracing e-mobility. Besides for boosting the economy and creating jobs, e-mobility will help government tackle a few issues.
There is growing consensus that there will be a decline of the number of vehicles on the road. This has mostly negative implications for providers of financial services with their current products, viz. asset finance. However, there are also opportunities to create appropriate products and services, especially with the availability of big data and the technologies to analyse them.