South Africa looking to Egypt to save its car factories

As global automotive manufacturing shifts to new energy vehicles (NEVs), South Africa’s car factories risk being left behind if they cannot adapt and keep up with the ever-changing sector.

In his address at the Africa Automotive Investment Forum, Trade Minister Parks Tau explained that the local automotive sector must collaborate with other African nations to reach its targets.

He explained that Africa produced about 1.23 million vehicles last year, representing only 1.3% of global production, against worldwide output of approximately 96.4 million vehicles.

South Africa contributed 618,077 vehicles, with Morocco adding over 1 million, as the two countries accounted for more than 91% of the continent’s vehicle production.

According to the minister, Afreximbank has earmarked $1 billion (nearly R17 billion) for local content development to allow a continental output of between 4 and 5 million vehicles by 2035, including new energy vehicles.

Tau explained that for Africa to build a viable and competitive automotive manufacturing sector, leading automotive economies like South Africa, Morocco and Egypt need to cooperate.

“The Southern African Customs Union (SACU) has noted the increasing importance of developing resilient African production systems in light of heightened protectionism, supply chain vulnerabilities, and growing market access uncertainty in traditional markets,” he said.

“Against this backdrop, SACU sees value in exploring structured partnerships with major African economies such as Egypt to strengthen developmental integration and expand intra-African trade.”

Tau highlighted Egypt as a critical player in the proposed pact, as one of Africa’s largest economies, thanks to its industrial capacity, large domestic market, and strong geographic position linking Africa, the Middle East, and Europe.

“Egypt is an established automotive market with significant scope for further growth in assembly, components, feeder industries, and emerging electric mobility segments,” he said.

The minister outlined that a SACU-Egypt Automotive Pact would support economies of scale in production and trade, and increase intra-Africa trade in new vehicles and components.

He added that it would strengthen Africa’s position in future-oriented automotive segments, including batteries, electric vehicles, and new energy vehicle value chains.

Investing in NEV production

Addressing the forum, Tau highlighted that South Africa is seeking investment across the full automotive value chain as it transitions to NEV production.

“South Africa recognises that global automotive demand is shifting towards electric, hybrid and hydrogen-enabled mobility,” he said.

The International Energy Agency reports that electric car sales exceeded 20 million in 2025, while 2024 production reached 17.3 million units, with over 70% originating in China.

The minister noted that EVs represented about 5% of global car stock and displaced 1.2 million barrels of oil per day, while sales are projected to reach 55 million units by 2035.

“For Africa, this underscores the need to build capacity in EV assembly, battery beneficiation, components, charging infrastructure, grid readiness and skills,” he said.

Proposed investments include vehicle assembly for passenger vehicles, light commercial vehicles (LCVs), buses and trucks, as well as tier-one, tier-two and tier-three component manufacturing.

Broader investments to facilitate the transition include tooling, moulds, dies, precision engineering, electronics, software, telematics and mobility services, testing, homologation and standards infrastructure.

According to the minister, South Africa is seeking investment in segments such as tyres, glass, wiring harnesses, catalytic converters, drivetrain components, body panels and plastics.

He noted that these are areas where African suppliers can be integrated into original equipment manufacturer (OEM) procurement systems.

“SACU, SADC (the Southern African Development Community) and the broader continent are endowed with critical minerals such as platinum group metals, manganese, nickel, cobalt, copper, lithium, graphite, iron and rare earth elements,” said Tau.

“The strategic imperative is clear: Africa must beneficiate these endowments on the continent and convert mineral wealth into manufactured products, skilled jobs and export earnings.”