VW Is Working To Grow Its Footprint In Africa, & Electric Mobility Is Part Of The Vision
VW is working to grow its footprint on the African continent. VW has a factory in Port Elizabeth, South Africa, where it has capacity to produce 162,000 vehicles per year. Currently, 75% of the vehicles produced in South Africa are exported to global markets such as Germany, UK, and Japan. VW produces the ICE VW Polo and the Polo Vivo in South Africa. All right-hand drive Polos are made in South Africa. The plant also builds left-hand drive Polos for the export market. The South African plant is also the sole producer of the VW Polo GTI in the world for the global export market. VW South Africa employs about 3600 people across all divisions.
In 2022, VW sold about 45,000 of these locally produced Polos and Polo Vivos in the South African market. This was made up of about 23,000 Polos and 22,000 Polo Vivos. VW is now looking to ride on the new African free trade agreement to grow its presence on the continent. The African Continental Free Trade Area (AfCFTA) promises broader and deeper economic integration and would attract investment, boost trade, provide better jobs, reduce poverty, and increase shared prosperity in Africa. Africa could see FDI increase by between 111% and 159% under the AfCFTA.
The AfCFTA, which makes trade within the continent much easier, will enable VW to increase the share of vehicles produced in South Africa that are exported to markets on the African continent. VW already has a presence in a number of countries such as Rwanda, Kenya, Ghana, Ivory Coast, Senegal, and Mauritius where it currently sells ICE vehicles.
VW has a very strong connection with South Africa and is a major contributor to the auto industry. The VW GTI and R vehicles have a cult following in the country. The Chairperson and Managing Director of Volkswagen Group South Africa (VW SA), Martina Biene, says this is due to their attention to detail connecting with the lifestyle of the brand’s customers in the market.
“There has always something that people have loved about the VW Golf and our other vehicles. For example, in the GTi, the style of the fabric on seats, the golf ball on gear stick and the general attention to detail in car is something that resonates well with the market.” She also thinks that this connection with the local VW fans will carry that over to the EV era. “For example, the Play and Pause icons on the accelerator and break pedal in VWs ID series is something in the same VW style that people love.” In the future, the connection the local fans have with the much loved GTi and R Series could also be continued with the electric GTX series.
Commenting on VW South Africa’s plans to introduce electric vehicles to the local market, Martina says that the current EV market in South Africa has been characterized by the more premium vehicles. There is currently only one electric vehicle model in South Africa that costs less than R1 million ($54,000). It is probably one of the reasons VW has not introduced the ID.3 in South Africa. VW South Africa is looking into the possibility of introducing the ID.4. and ID.5, which would be more in line with the current EVs being offered by other OEMs in South Africa. This is also more inline with the global and local trends where consumers now want more crossovers and SUVs.
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In terms of adding EVs to the lineup of vehicles produced in South Africa, Martina says there is quite a lot of work to be done in preparation of launching any local EV production. The things to consider and tackle include:
- Will batteries be shipped from an overseas battery factory, incorporated into vehicles locally, and then the vehicles are exported overseas? The carbon footprint of this needs to be evaluated and tackled. Also, the European market may consider sourcing EVs from factories that are closer to Europe logistically.
- A local battery factory may require a production capacity of at least 300,000 vehicles per year, which is double VW’s current production capacity in South Africa. VW would need to grow the market to these levels to make a battery factory viable. This ties into its plans to grow the African market. Having 10 markets that could off-take 30,000 or so vehicle per annum in Africa could be a pathway towards this.
- South Africa’s grid is also still mostly coal dominated (above 80% of the electricity generated in South Africa is from coal). Increasing the penetration of renewables and low carbon electricity generation sources will make a bigger impact on the global emissions footprint and not just on tailpipe emissions.
- EV charging infrastructure is still not yet widespread in South Africa. To help address this, VW South Africa is evaluating the Autonomous Flexible Charger. It is a DC Fast Charger that can charge up to 150kW. It comes with a 194kWh battery pack and has two plugs to charge two EVs at the same time. This is a real gamechanger for the South African and African market in general. The battery storage will ensure that the chargers will be up during load-shedding in South Africa and in areas with weak and intermittent grids. It will also help better integrate fast charging stations and assist with investment deferrals for grid infrastructure upgrades. The Autonomous Flexible Charger will also be trialed in South Africa for bidirectional applications for feeding into the grid. The Autonomous Flexible Charger has a huge screen where users can see all activity during charging. This screen will also be used to incorporate advertising for additional revenue for operators. A wider roll-out of these in future could also help support demand for a local battery factory.
- As the general market for vehicles in this part of the world is dominated by vehicles in the same class as the VW Polo, therefore, the introduction of a smaller EV by the VW Group, perhaps an “ID.1,” in future could be present a more appropriate model for VW SA to produce on the African continent.
- More supportive electric mobility policy is required. Currently South Africa has been a bit slow in terms of adopting policy to catalyze the growth of the electric vehicle market. However, there are several countries on the African continent that have made tremendous strides in this area. These include Cape Verde, Mauritius, and Rwanda.
I look forward to seeing VW’s EV strategy and implementation plans for the African continent.
Images courtesy of VW SA
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