South Africa weighs subsidies and rebates to boost electric car sales

South Africa is considering introducing incentives to encourage local manufacturing of electric vehicles and offering tax rebates or subsidies to promote their usage, President Cyril Ramaphosa said.

“This is not just about creating a greener future, but also about ensuring South Africa remains competitive in the global markets as many of our major trading partners rapidly shift toward EVs,” he said in a speech at Naamsa | The Automotive Business Council’s South African Auto Week conference in Cape Town on Thursday.

“It is also imperative that we remain part of this global supply chain. If we don’t, we will be left behind,” he said.

In February, finance minister Enoch Godongwana introduced long-awaited incentives to aid in attracting investment for the local production of EVs. The scheme will allow producers of electric and hydrogen vehicles to claim up to 150% of “qualifying investment spending” in the first year.

The announcement, which was eagerly anticipated by the motoring industry, has one big catch: it will only come into effect in 2026.

“The electric vehicles white paper outlines our strategy to transition towards broader new-energy vehicle production and consumption in South Africa, starting with electric vehicles. It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles by 2035,” said Godongwana in his budget speech in parliament.

Frustration

Delays in the finalisation of the national EV policy had long frustrated industry players, which could not make long-term investment decisions without any certainty about government’s policy direction.

Read: South Africa to get its first fleet of electric buses

The delays had a knock-on effect on the economy. Some 110 000 South Africans are employed directly by car manufacturers, which must pivot their production towards new-energy vehicles to keep pace with shifts in global demand. The lag has allowed other African countries, including Egypt and Ethiopia, to overtake South Africa in electric vehicle production.  — (c) 2024 Bloomberg LP, with additional reporting (c) 2024 NewsCentral Media

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