Mercedes-Benz South Africa (Mercedes) is investing ZAR100M (US$5.35M) to expand solar PV installations at its East London manufacturing plant in South Africa​​.

The solar power project will kick off in 2024 and is part of the company’s second phase expansion, with the total generation estimated to account for 20% of the East London plant’s annual energy consumption. While the move to fast-track solar power in its supply chain is part of Net-Zero ambitions, South African operations are finding themselves at the front of the queue not only because of a well-established export automotive industry but also thanks to failing grid energy system of rolling blackouts (load-shedding) as a major challenge for most industries in the country.

From the South African perspective, automotive OEMs are a key contributor to the local economy and the industry has been able to leverage access to platinum group metal (PGM) resources used in catalytic converters. OEMs, like Mercedes, export a significant portion of local production (both cars and catalysts), with Europe being one of the major markets. While South Africa is not seeing a rapid EV penetration, the shift to electric vehicles in Europe is forcing OEMs in South Africa to review what car models will be built at its plants in future. Volkswagen (VW), as an example from a report a year ago, said it was confident that it will produce EVs in South Africa by 2035 – although recent news has surfaced about a consideration to leave South Africa… VW refuted this in a follow-up note.

To support maintaining automotive plants in South Africa, OEMs will be looking at battery supply chains and weighing up the domestic market potential. Mercedes said in its recent announcement, that it is also investing ZAR40M (US$2.14M) into a local EV charging grid, rolling out 120 charging stations across the country to open up longer distance routes. Nevertheless, key challenges still lay ahead for EV penetration in South Africa, with the grid still largely unstable and underpinned by coal energy. However, South Africa may not have a choice in adopting more EVs on its roads if it hopes to secure ongoing relations with OEMs within its borders.