Abstract
The European Union’s (EU) ban on carbon-emitting vehicles and the Carbon Border
Adjustment Mechanism (CBAM) included in the Fit for 55 regulations have significant
implications for the automotive global value chain. This paper sought to understand the likely
cross-border impact of the regulations on the metal subsector in the South African automotive
component manufacturing industry. The paper adopted a mixed-methods approach, utilising
trade data and primary interview inputs. The findings show that the South African sector is
particularly exposed to the ban on carbon-emitting vehicles, given that the EU is the largest
export market for the industry and a large share of exports to the region are legacy
components and internal combustion engine vehicles. CBAM currently has a smaller impact
on the sector. The findings also indicate that given component suppliers are unlikely to redirect
their supply from the EU, a local transition toward new energy vehicles (NEV) is fundamental.
Despite the lack of R&D capability domestically, the large cohort of multinational subsidiaries
provides access to crucial NEV technologies to support this transition. The proliferation of
private regulations have also led component manufacturers to seek means to lower their
carbon emissions, driving cost savings. The likely low volumes in the initial stages of the
transition, however, threaten the competitiveness of domestic component supply.
Key words: regulation, global value chain, South African automotive industry, automotive
component industry, competitiveness