South Africa will spend R1-billion to support the local production of new energy vehicles and batteries, as well as related manufacturing projects, national treasury said on Wednesday.

The country is the largest automotive manufacturing hub in sub-Saharan Africa, hosting brands such as Toyota, Ford, Isuzu, Volkswagen and Mercedes, among others.

The industry has said that government incentives and policy interventions will encourage original equipment manufacturers to invest more in the production of electric vehicles in the country.

South Africa released its Electric Vehicles White Paper in 2023, outlining the country’s strategy to transition the automotive industry from primarily producing internal combustion engine vehicles to a mix that includes electric vehicles by 2035.

In its annual budget review, the treasury said the department of trade & industry in partnership with the department of mineral resources, planned to approve and implement a regional critical minerals strategy, without giving a timeline.

Critical minerals such as copper, cobalt and lithium are needed for the production of products like electric vehicle batteries and solar panels, and are key to the world’s energy transition.

Industrial development

National treasury said R1-billion was being set aside over the medium term for the industrial development support programme, an incentive scheme that aims to increase participation and investment in infrastructure by firms in selected manufacturing sectors such as automotive.

“The purpose of the incentive is to enhance the local production and assembly of new-energy vehicles, batteries and projects focused on operational efficiency and competitiveness in new manufacturing projects,” treasury added.