South Africa at a crossroads – minerals and mobility
Can South Africa leverage its mineral wealth and manufacturing expertise to secure a meaningful position in Africa’s mobility revolution? The answer requires an honest assessment of our strengths, our limitations and the strategic role the country can realistically play.
South Africa’s manufacturing strengths: A world-class foundation
South Africa boasts the most advanced automotive industry in Africa alongside Morocco, with sophisticated road infrastructure, strong technical capabilities and supply chain depth, and an established manufacturing base.
South Africa has a very mature and evolved automotive ecosystem, including special economic zones (SEZs) designed to boost automotive manufacturing and export capabilities, Tier 1 and Tier 2 manufacturers, training facilities and the Automotive Production and Development Programme (APDP). The country has the most mature original equipment manufacturer (OEM) presence in Africa, supported by deep Tier 1 and 2 supplier networks.
The infrastructure supporting this ecosystem is impressive. Available SEZs include Coega in the Eastern Cape, Dube TradePort in KwaZulu-Natal, Atlantis as an emerging player in the Western Cape, and Tshwane in Gauteng, all with a strong automotive focus and existing OEM presence.
The workforce is highly skilled, supported by excellent training infrastructure, including automotive Sector Education and Training Authorities (SETAs) and technical colleges. South Africa is world-class in terms of manufacturing capability, engineering and access to components for motor vehicle manufacturing.
Four-wheelers: South Africa’s traditional strength and export markets
What sets South Africa apart is that a large part of the population drives four-wheelers rather than two-wheelers, which supports greater economies of scale. This is where South Africa’s manufacturing excellence has historically thrived.
South Africa has a mature automotive sector, including OEMs that export globally, supported by trade agreements such as the SADC European Partnership Agreement (EPA), the Southern African Customs Union and Mozambique–United Kingdom Economic Partnership Agreement (SACUM–UK EPA) and traditionally the African Growth and Opportunity Act (Agoa).
However, the continental picture is changing, especially with Morocco’s increasing competitive advantage in automotive manufacturing. Morocco also benefits from both proximity and a free trade agreement with the European Union.
The rise of two and three-wheelers: A different opportunity
The rise of two and three-wheelers across the continent has been significant, with West Africa arguably the biggest consumer of these vehicles, which are better able to navigate inadequate road infrastructure in the region. Recognising this demand, players from India and China are increasingly moving into this market.
There are many startups, mostly in East Africa, creating electric two and three-wheelers to offset the environmental impact of motorcycles and reduce costs, with increased innovation from fintech startups offering financing and insurance for taxi drivers, spurring local job creation.
The market data reveals South Africa’s position as a relatively small player in the continental two and three-wheeler market, with West and East Africa representing most of the demand. South Africa has a limited motorcycle culture and a small domestic market relative to East and West Africa. However, mobility is changing with delivery bikes for last-mile delivery, though not at the scale seen in West Africa. Furthermore, South Africa is also a high-risk country for motorcycles.
Yet opportunities exist in specific niches. South Africa has a role to play in the last-mile delivery space using motorcycles, and we should start seeing more assembly of two and three-wheelers locally. However, economies of scale continue to favour four-wheelers.
The EV transition: playing catch-up
South Africa has lagged in the electric vehicle (EV) transition, creating both challenges and strategic opportunities.
While South Africa had the white paper on EV, which mandates a strategic shift towards domestic production of EVs by 2035, the country has not had EV-dedicated regulations beyond some tax amendments and a review of import tariffs, and the history of load-shedding and lack of large-scale charging infrastructure has been a detractor for EV companies.
However, policy is beginning to shift. South Africa’s Section 12V tax incentive, signed into law in December 2024, offers a 150% deduction for local manufacturers of EV parts, effective 1 March 2026, signalling that industrial policy and trade are finally aligning.
While South Africa is a large economy that uses four-wheelers, the evolution to EVs is not internationally aligned, posing questions around economies of scale, with OEMs increasingly grappling with how to balance internal combustion engine production with EVs and hybrids. Across the continent, governments are increasingly advancing e-mobility policies. Additionally, the Carbon Border Adjustment Mechanism (CBAM), and the planned phase-out of internal combustion engine (ICE) vehicle sales in the European Union and the United Kingdom, will pose further challenges for the sector.
The beneficiation challenge
Africa holds more than half the world’s reserves of cobalt and manganese and a significant share of lithium, all essential for EV batteries. The vision is an African hub-and-spoke model, where different countries specialise in different parts of the EV value chain—for instance, Ghana or Ivory Coast assembling, South Africa supplying lithium-ion batteries, and East Africa focusing on two-wheelers.
Yet the reality is more complex. South Africa’s massive energy demands have limited the country’s capacity to use critical minerals to manufacture batteries locally, and even in other areas of the continent where critical minerals will be processed locally, they are commonly exported. Furthermore, battery production remains limited, although notable progress is being made in countries like Morocco.
More generally, the key challenge is not imports themselves. Trade and investment are vital for industrial development, but the focus must be on beneficiation and progressive localisation, not merely semi-knocked-down (SKD) assembly operations that add limited value to the economy. Rather than viewing basic assembly as a problem, it should be seen as the starting point, with a strategy to transition to full CKD production with progressive localisation, an approach successfully adopted by several emerging markets.
Bringing it all together: South Africa’s strategic path
The evidence points to a strategic role for South Africa in the mobility value chain:
• Focus on four-wheelers for regional markets: South Africa’s established automotive ecosystem, deep supplier base and four-wheeler culture provide genuine competitive advantage;
• Targeted two and three-wheeler assembly: Domestic opportunities exist in last-mile delivery and certain niches;
• Critical minerals beneficiation: The shift must be towards real value addition through battery manufacturing and component production, supported by addressing energy constraints and implementing supportive industrial policy;
• Progressive localisation, not just assembly: The mining sector understands beneficiation. The same principle applies to mobility manufacturing. Investment should be structured to progressively increase local content, develop supplier capabilities and transfer technology, not simply bolt together imported components, particularly in the emerging EV space; and
• The AfCFTA value chain opportunity: The AfCFTA has prioritised the automotive sector and transport and logistics value chains, and South Africa can leverage preferential tariffs subject to meeting the rules of origin. From electric vehicles to lithium batteries, realising this opportunity will depend on how effectively South Africa, and the continent, co-ordinates industrial policy, unlocks supply chains, reduces logistics costs and promotes meaningful investment across borders.
Conclusion
The message is clear: minerals alone do not guarantee manufacturing success. South Africa has world-class automotive expertise and significant mineral resources, but must overcome energy constraints, implement progressive localisation requirements that go beyond basic SKD assembly, and focus strategically on sectors where genuine competitive advantage exists. Reducing non-tariff barriers, especially logistics costs and streamlining cross-border trade processes, must also be a priority for the continent.
One of the continent’s big ambitions is to address the challenge of access to affordable, safe mobility. South Africa remains well-positioned to play a key role as a regional and continental mobility hub, but to lead, the country will need greater urgency, coherence and ambition in its mobility goals.