Rise of plug-in car spurs Sasol rethink

WITH rapid advances in battery technology and increasing pressure to phase out the internal combustion engine, the future of energy companies such as Sasol has become nearly impossible to predict.

Established in 1950 and credited as the first oil-from-coal company in the world, one of the JSE’s biggest players may be facing an existential crisis.

Over the past 67 years it has diversified away from its energy focus and broadened its chemical interests, but with the future of transport likely to be dominated by electric power, Sasol’s business model is set for a fundamental shift.

Professor Anton Vosloo of the faculty of engineering at Stellenbosch University, who spent most of his career at Sasol, sees developments in battery technology as perhaps one of the biggest risks to his former employer.

But he said the company had time to make the necessary changes to position itself for a future where it would be less reliant on coal and oil.

Elon Musk’s Tesla is due to complete its Gigafactory in Nevada next year, which will be the world’s biggest plant yet.

Even more ambitious plans are under way in China, which will by 2021 have the capacity to produce enough battery cells for about 1.5 million Tesla Model S vehicles or 13.7 million Toyota Prius plug-in hybrids a year, according to Bloomberg New Energy Finance.

China, France and the UK are among nations that have mooted bans on the internal combustion engine in the foreseeable future.

In light of developments around energy, Vosloo sees Sasol focusing more on its chemicals batterymaking division and electricity production in coming years.

Casparus Treurnicht, an analyst at Gryphon Asset Management, said the gas- and coal-to-liquids side of Sasol had a question mark hanging over it. He also noted that the trend towards electric vehicles had implications for South Africa’s platinum producers. One of its major uses is in catalytic converters for the internal combustion engine.

In response to questions, Sasol said it was fine-tuning its longer-term strategy. It would provide further details towards the end of this year. — DDC