A power crisis in Elon Musk’s birthplace of South Africa is killing its switch to EVs—and putting 100,000 auto jobs at risk

February 1, 2023, 1:34 PM UTC
An illuminated signboard on display outside the Eskom Regional Office in Braamfontein, Johannesburg during load-shedding (rolling blackout) on 31 January, 2023.
An illuminated signboard on display outside the Eskom regional office in Braamfontein, Johannesburg, during load-shedding (rolling blackouts) on Jan. 31, 2023.
AFP/Getty Images

These days, the talk in South Africa is all about “load-shedding”, the official euphemism for nationwide rolling blackouts that have been around for years but have drastically worsened in recent months—and are leaving millions without power for up to six hours a day.

“A lot of people are suffering,” said Rodney Banda, a barista at the Village Hub in the surfing enclave of Scarborough near Cape Town, where the inability to prepare food has led many customers to stay away.

Even worse, few expect the situation to improve in the next couple years, and President Cyril Ramaphosa said Monday that he may declare a state of disaster over the energy crisis.

It is against this backdrop that South Africa and its automotive industry are attempting to enter the era of the electric car.

South Africa may be the birthplace of electric vehicle (EV) pioneer Elon Musk, but numerous hurdles lie in the way of its adoption of the technology. First, there’s the aforementioned load-shedding, which is the result of a toxic brew of corruption and sabotage within the state power monopoly Eskom—that’s according to Eskom’s own outgoing CEO André de Ruyter, who survived a cyanide poisoning attempt after he resigned in December—plus chronic underinvestment in an aging power grid. Most recently, the intensification of load-shedding is down to Eskom being unable to afford diesel to power its emergency generators during power-station breakdowns.

“Imagine a world where you rely only on a battery-electric vehicle and you’re being told you’re not able to move,” said Mikel Mabasa, CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa).

There’s also the fact that, because Eskom’s grid largely runs on coal and diesel, it’s actually more polluting to charge an electric vehicle on it than it is to run a gasoline-powered vehicle. And then there are the cost barriers in a country that, as a protectionist sop to its auto sector, refuses to allow most imports of secondhand cars—and that slaps higher import duties on EVs than it does on internal combustion engine (ICE) cars.

No option but change

However, South Africa has no choice but to embrace the EV.

The global auto industry is inexorably shifting away from fossil fuels, and the sale of internal combustion engine (ICE) cars will end in the U.K. in 2030 and the European Union in 2035. South Africa exports most of its cars to Europe, so tardiness in following the electrification trend could soon cost South Africa’s own auto sector more than 100,000 jobs, minister Mondli Gungubele warned in December. The sector is responsible for nearly 7% of national GDP, and South Africa already has an unemployment rate of around 33%.

Wealthier citizens—the only members of the world’s most unequal society who can even contemplate purchasing EVs at the moment—will also want to keep buying their Mercs and BMWs after the German auto industry ends its transition.

EV sales are steadily increasing in South Africa, though the numbers are marginal—a mere 502 were sold last year, out of a total of 529,000 new passenger and commercial vehicles (that said, the figure in 2021 was just 218). Experts are worried that the country won’t be able to keep pace with the global shift away from fossil-fuel–powered cars.

“South Africa and a lot of African countries will adopt new-energy vehicles at a slower pace” than Europe, China, and the U.S., said Mabasa of Naamsa. “In 15 to 20 years we will still have ICE engines in South Africa.”

Much of the sector’s frustration is aimed at the government, which has for years been promising subsidies for EV manufacturers and buyers alike, but has yet to deliver. In November, Ford’s Africa president, Neale Hill, demanded to see a policy within six months. Mabasa expressed fears about countries such as Ghana and Morocco tempting manufacturers to decamp from South Africa. He is also incensed by the government’s policy (unique among major markets, according to Mercedes-Benz) of levying heavier duties on EV imports—25% versus 18% for gas-powered cars and hybrids.

“It doesn’t make sense that government is charging more for vehicles…that are arguably contributing positively to the net-zero [goal],” Mabasa said. “We want South Africans to start socializing with the technology sooner rather than later, and the best way currently is to be able to import battery EVs into the market.”

The Naamsa boss also urged the government to promote the building of battery factories in South Africa, so the country can benefit more from local and regional mineral resources—South African manganese and nickel, Mozambican graphite, Congolese cobalt—that are currently exported to create jobs in China.

The government had, at the time of publication, not provided answers to Fortune’s questions about its EV policies.

Private sector moves

Meanwhile, the private sector is making some progress in making South Africa more EV-friendly. Local companies such as GridCars and Rubicon have for several years been building out networks of fast charging points, in partnership with the likes of Audi and Jaguar. However, these largely tap into Eskom’s dirty, unreliable grid.

A new company called Zero Carbon Charge, or ZeroCC, is planning a network of ultrafast charging points that cut Eskom out of the picture, as they will all be powered by South Africa’s copious sunshine and wind. The firm says it has a pipeline of 400 sites, largely on the country’s 50,000 miles of major highways, with 85 already agreed to by landowners (who will get to use any surplus energy) and in the permitting process.

“What we’re doing is part of a trend in South Africa with load-shedding and Eskom’s performance at the moment. Everybody is being forced to generate their own electricity,” said cofounder Joubert Roux. “We think people will charge at home and work in urban areas, so we’re purely focusing on addressing the need in rural areas.”

ZeroCC needs funding to get off the ground—it is currently talking to climate-focused NGOs—but claims it would be profitable by 2026…if there are sufficient EVs out there to make the charging network viable. “The business model is strong,” said cofounder Andries Malherbe. “The point is, it’s a chicken-and-egg situation. We can’t sell enough cars until there’s a national network.”

South Africa’s auto industry is only too happy to see new companies entering the market and potentially, through competition, driving down the cost of owning an EV. “The more the merrier,” said Mabasa.

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