Local car manufacturers are likely to be negatively impacted by the government’s proposal to add a new tariff on vehicle batteries.
Earlier this year, the International Trade Administration Commission (ITAC) proposed that the government should implement a 15% import tariff on new-energy vehicle batteries.
The proposal, outlined in the Government Gazette issued on 29 May 2025, would impose a new cost on the batteries found in hybrid and electric models.
The stated intention behind the move is to encourage South Africa’s original equipment manufacturers (OEMs) to fabricate their own batteries, rather than importing them.
However, South Africa currently lacks the means to produce its own NEV batteries, meaning that the tariff will likely raise the price of an already-expensive component even further.
The tariff may be problematic for Toyota, Ford, and BMW – three OEMs that currently produce a hybrid car within our borders.
MyBroadband recently contacted all three carmakers to find out how the proposed tariff would affect their pricing and operations, and whether the added cost would ultimately necessitate the creation of a local assembly plant for NEV batteries.
Unfortunately, the three OEMs were unable to provide definitive statements on how the tariff would impact their business.
Toyota, which produces the Corolla Cross HEV (hybrid electric vehicle) stated that it is aware of the proposal.
“Toyota South Africa Motors (TSAM) has shared its inputs and remains in consultation with the government on this matter,” it said.
“As the policy formulation process is still ongoing, TSAM is not in a position to comment further on specific questions at this stage.”
Ford, which currently manufactures a plug-in hybrid (PHEV) of the Ranger bakkie for export markets, gave a similar response.
The Blue Oval explained that, while the Ranger’s battery is assembled at its Silverton factory in Pretoria, the battery arrays are imported into the country.
“We remain open to engaging with government stakeholders and will carefully assess any proposed amendments that may impact this process,” it said.
Last up is BMW, which recently upgraded its Rosslyn plant to produce a PHEV version of the next-gen X3 SUV.
The batteries for the hybrid X3 30e xDrive models are imported from Hungary, the US, Mexico, and China, meaning they would be subject to the new tariffs.
BMW has not officially responded to the matter as of the time of writing.
Impact on the local car industry
The ITAC stated that it is committed to reviewing the list of items qualifying as standard materials under the Automotive Protection and Development Programme.
The review will include measures to support battery manufacturing in South Africa, which has been identified as a key goal to support the local car industry.
All of the materials required to make NEV batteries can be found in the Southern African region, which means Mzansi is in a good position to become a global manufacturer of a valuable and highly-demanded resource.
“Several minerals associated with battery electric vehicle production, including all hybrid derivatives, are not currently contained in the list of standard materials,” it said.
The ITAC invited interested parties to submit comments on its proposals.
This includes the suggestion to expand the list of standard materials sourced from the Southern African Development Community (SADC) region, to include the following:
- Iron
- Lithium
- Copper
- Polymers
- Graphite
- Cobalt Sulfate
- Nickel Sulfate
- Manganese Sulfate
- Sodium Carbonate
- Rare earth minerals
It also proposed increasing the customs duty applicable to NEV batteries to the World Trade Organisation-bound rate of 15% ad valorem.
While the idea of turning South Africa into a global NEV battery manufacturing hub is certainly ambitious, the decision to introduce tariffs on imported components is likely to raise prices for consumers over the short to medium term.
It is estimated that constructing such a facility would take years and billions of rands of investment, and so the 15% import tariff will raise costs for OEMs that do not currently have an alternative source for their batteries.
This, in turn, will raise prices for consumers until South Africa can produce its own power cells to supply carmakers.
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