Mercedes' East London production pause highlights urgent need to transform automotive industry

Daily Maverick

2 days ago

Mercedes-Benz has the red light on at its East London plant for July. If we don't start making electric cars soon, temporary closures could become permanent along with thousands of jobs lost.
Last month, Mercedes-Benz South Africa halted operations at its East London manufacturing plant for the entire month of July. While the company insists this is 'standard procedure' and typical maintenance scheduling, the timing reveals a more troubling narrative.
The East London factory has been assembling cars since 1958. Now, this important outpost has gone silent.
The perfect storm
The shutdown may well be connected to escalating trade tensions initiated by US President Donald Trump's April announcement of 25% tariffs on automotive imports, tariffs that have since intensified to 30% last week. These protectionist measures significantly undermine the economic viability of exporting locally manufactured vehicles, such as the Mercedes-Benz C-Class sedans produced in East London, to the United States, one of South Africa's five largest automotive export markets.
However, the challenges extend beyond tariff barriers. South Africa's automotive sector faces diminishing global appetite for traditional internal combustion engine vehicles, as international markets increasingly transition toward electrification. This structural shift threatens similar production curtailments, regardless of trade policy considerations.
The global shift is unstoppabl e
The future is unequivocal: the global automotive industry is transitioning toward zero-emission mobility in response to tightening worldwide vehicle emission regulations. South Africa's automotive sector remains locked in first gear during this global transformation, with predominantly petrol and diesel-based production and limited hybrid manufacturing.
Despite sustained engagement from local manufacturers and industry bodies stretching back years, South Africa's automotive policy is lacking alignment with progressive global markets. Only in 2026 will car manufacturers establishing new investments qualify for tax incentives for producing 'new-energy vehicles'. Here lies the fundamental problem: it takes approximately seven years for automotive manufacturing cycles for new models. What will the global market look like by then?
This production pause isn't merely a difficult month for East London's economy — it's a warning signal for the entire South African automotive industry. Consider this: in January 2024, Ethiopia announced an immediate ban on petrol and diesel car imports, a global first signalling regulatory change across developing markets.
South Africa's primary car export markets in Europe and the UK have firmed 2035 and 2030 as their respective bans on petrol and diesel car imports.
The revolution was televised
Globally, electric cars aren't some distant trend but today's reality. The past seven years have witnessed nearly 800% growth in passenger electric car sales. From Norway to China, car buyers increasingly choose electric over internal combustion engines — driven not necessarily by sustainability ambitions, but by direct financial benefits.
Automakers like Volkswagen, Ford, and BMW are investing tens of billions into electric car production lines worldwide. Mercedes-Benz, the very company halting production in East London, has declared its intention to go all-electric by decade's end in markets where conditions permit.
Carbon taxes will devastate our exports
The European Union (EU) has introduced the Carbon Border Adjustment Mechanism, a carbon tariff that imposes levies on goods exported to the EU based on production emissions. South Africa's carbon-intensive industrial sector will pay dearly.
The automotive industry represents our largest manufacturing sector, with Europe as its primary customer. Approximately 75% of locally manufactured cars are shipped abroad, with the EU consuming 60% of this output. Under the Carbon Border Adjustment Mechanism, internal combustion engine models and associated components will face additional costs that make them less competitive compared with electric alternatives manufactured elsewhere.
It's a lose-lose situation: either already financially strained car makers absorb the cost, or they lose customers.
We have the raw materials
The transition to electric cars isn't a threat but an opportunity. Southern Africa possesses abundant raw materials such as manganese and nickel, essential for lithium batteries. What we lack is political action and market supply side policies mandating manufacturers to locally produce affordable electric cars for local, regional, and international markets.
Mercedes-Benz South Africa's July shutdown should serve as the warning light demanding political action to accelerate progressive policies such as fuel efficiency standards and vehicle emission standards to shape domestic markets, while critically providing manufacturing incentives across the value chain towards localisation.
No time to coast
Thankfully, the Mercedes-Benz plant isn't closing permanently, and hopefully this costly downtime will be used to realign toward zero-emission vehicle technologies under incoming CEO Abey Kgotle. If the East London plant doesn't start moving toward that future, it risks being excluded from the group's long-term plans entirely.
The same applies to Volkswagen in Uitenhage, Toyota in Durban, and all other manufacturers. These companies participate in global supply chains now oriented around decarbonisation. If they don't meet new global standards, South Africa won't make the cut.
South Africa boasts a strong automotive legacy, celebrating 100 years of the industry in 2024. But legacy isn't a business model, and nostalgia doesn't pay salaries. We stand at a crossroads, and the road forward is toward zero-emission cars.
If we fail to act, July's pause may become August's retrenchments and next year's closures. If we seize this moment, however, we can ensure South Africa becomes not merely a producer of cars, but a global hub for the sustainable mobility revolution.
The Mercedes plant's pause should be a wake-up call to policymakers for critical action. The question isn't whether the transition will happen, but whether South Africa will be part of it. DM