Jeep Maker Considers Producing New-Energy Vehicles in South Africa

(Bloomberg) -- Stellantis NV, which will start building its first auto plant in South Africa this month, is considering expanding into the production of so-called new-energy vehicles in the country.

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The decision, which would involve expanding the planned 3 billion rand ($158 million) plant on the south-east coast, depends on whether a local market for the vehicles emerges, said Mike Whitfield, managing director of the South African unit of the global automaker that produces cars such as Alfa Romeo and Jeep. Those could include electric vehicles, hydrogen-powered cars, or hybrids, he said.

In five years “it’s a high probability but there’s no final decision,” he said in an interview on Thursday at an investment conference in the city of Gqeberha.

At the moment neither EVs nor hydrogen vehicles are produced in South Africa.

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The African nation’s car industry, which accounts for more than 5% of gross domestic product and employs over 116,000 people, is in danger of being left behind by the global switch to EVs especially in its biggest export market, the European Union.

The government has only just put in place a framework for investment in local production of new-energy vehicles and there are still prohibitive duties on the import of EVs. In addition, the local network of charging stations has barely been developed.

“You need a local market” for the plant to be viable, Whitfield said, adding that the government needs to encourage building of charging stations because a significant proportion of output could be sold locally.

South Africa, the continent’s most industrialized nation, should also look to make components for new-energy vehicles for export rather than shipping abroad minerals needed for the cars, he said. Whitfield gave the example of rare earths, which are produced in South Africa. They are used in magnets in electric vehicles, which are made extensively in China.

The African country, he said, should learn from its experience with exporting raw platinum for use in the manufacture of the pollution-curbing auto-catalysts fitted to internal combustion engines. Few are made in South Africa.

The plant, which will be built in the special economic zone between the ports of Ngqura and Port Elizabeth in the Eastern Cape province is expected to start production of Peugeot Landtrek pick-up trucks by the end of 2025. The aim is to reach production of 50,000 vehicles per annum within 18 months and ramp up to 90,000 units after that, Whitfield said. It’s also exploring sourcing some of its power from renewable energy, he said.

Stellantis will join Mercedes-Benz, Volkswagen AG, Isuzu Motors Ltd. and Ford Motor Co. in operating auto plants in the Eastern Cape.

Isuzu has no immediate plans to look into new energy vehicle manufacture in South Africa, Billy Tom, its local chief executive officer said. Martina Biene, the managing director of Volkswagen in South Africa, said the range of vehicles the company makes in South Africa doesn’t include hybrid or electric vehicle variants.

(Updates with Isuzu, Volkswagen in last paragraph)

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