Despite continued efforts from the South African government to entice BYD to establish a manufacturing facility on local soil, things have yet to take off.
Hailing from China, BYD is the world’s biggest producer of new-energy vehicles (NEV), celebrating the assembly of its 10-millionth NEV in November 2024.
The company has held a small presence on local soil since June 2023 with battery-electric models such as the Atto 3, Dolphin, and Seal. It plans to further expand its offerings with the hybrid Shark bakkie and Sealion SUV in the near future.
It has also penned a deal with Cape Town-based Golden Arrow, one of South Africa’s largest bus operators, for the supply of 120 electric buses over the coming years.
While sales of BYD’s passenger cars may not have taken off as quickly in South Africa as it might have hoped, the brand has achieved great successes in markets outside its home nation such as Australia, Isreal, and Thailand.
Owing to BYD’s rapid rise to stardom and the close ties between the Chinese and South African governments, combined with new tax incentives meant to stimulate NEV production on domestic soil, local authorities have been in discussion with the automaker since late 2023 for the potential establishment of a manufacturing plant within our borders.
A Cabinet statement released at the end of August 2023 read: “South Africa is negotiating with BYD, the Chinese automaker and the world’s largest electric-vehicle manufacturer, for possible opening of a manufacturing plant in South Africa.”
A year later, in September 2024, it was revealed that the talks were still ongoing and that BYD had expressed interest in working and investing in South Africa.
“It’s now about taking it to the next level,” said Minister of Trade, Industry, and Competition, Parks Tau, at the time.
Tau himself, accompanied by President Cyril Ramaphosa, has even visited BYD’s Shenzhen headquarters where they were personally greeted by founder and chairman Wang Chuanfu who gave them a tour of the company’s advanced NEV technologies.
Despite the apparent interest from both parties to get the ball rolling on a BYD factory in South Africa, plans have yet to be put in motion.
In a response to queries sent by TopAuto surrounding the potential new facility, a spokesperson for BYD’s local subsidiary said that they “do not have much information” on the questions raised.
The spokesperson noted that, as soon as something becomes available, the public will be notified.
This suggests that discussions have yet to progress to any meaningful point a year and a half after they were initiated.
A big investment
Establishing an NEV production facility in South Africa could be a wonderful initiative with many upsides, but may prove to be too risky even for an organization with the capital and resources of BYD.
A recent report from Bloomberg suggested that Elon Musk’s Tesla was mulling over the same idea, however, industry experts quickly labeled this as a long shot.
South Africa’s new-vehicle market is a very small fish in a gigantic pond, which combined with its indifference to NEVs, would make it difficult to justify spending billions of rands on setting up a new factory as it is likely to take ages before a company starts seeing a return on its investment.
Automakers prefer to sell cars where they build them to reduce costs and with only a couple thousand battery-incentivised autos being registered in South Africa a year, and even fewer on the rest of the continent, it’s going to be a tough sell to BYD’s accountants.
Perhaps more feasible would be a battery assembly facility.
South Africa possesses all the important minerals needed for battery manufacturing such as lithium, manganese, and nickel.
It also has the necessary mineral processing facilities, line builders, and manufacturing capabilities that would simplify such a daring endeavour.
However, according to Rubicon sustainability and e-mobility head Greg Blandford, the new facility would need to produce at least 20 gigawatt-hours (GWh) of battery capacity per year to be viable.
South Africa only recently opened its first gigawatt factory near Cape Town which produces roughly 1GWh per annum; a 20GWh factory would therefore be a significant step up in this regard.
Blandford said whoever builds such a battery plant in South Africa should consider starting small and expanding its capacity over time, given that demand for NEVs is still relatively low in the domestic market.
It could also supplement sales with alternate products like stationary backup storage – a valuable commodity in South Africa.
An existing battery plant will also strengthen the business case for a future vehicle factory should NEV adoption rates start rising.
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