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Friday / 24 May 2024
HomeFeaturesBig push to bring sub-R500,000 electric cars to South Africa

Big push to bring sub-R500,000 electric cars to South Africa

The National Association of Automobile Manufacturers of South Africa (Naamsa) is actively lobbying local automakers to import more affordable electric vehicles (EVs) to the country, preferably ones that cost under R500,000.

At present, the lowest-priced EV in the local market is the new GWM Ora 03 which launched at the tail end of 2023 for R686,950, though the average price of EVs is much higher than this.

According to Naamsa CEO Mikel Mabasa, the introduction of cheaper electrics will greatly encourage the use of new-energy vehicles (NEVs) in the domestic market; “NEVs” being a blanket term that refers to battery-electric, hybrid, and hydrogen-powered cars.

NEVs currently only account for around 1% of South Africa’s total car parc, and while this share is growing every year, the rate at which it is doing so is starting to slow down.

A vital industry

Not only will sub-R500,000 EVs enable more consumers to own one, but increased mass adoption will also assist in channeling investment into the manufacturing of NEVs and their related components in South Africa.

Multinational automakers have started negotiating with their respective international headquarters regarding the local production of EVs following the government’s recent announcement of tax incentives for investors willing to build these vehicles in South Africa, Mabasa told Rapport.

In February, finance minister Enoch Godongwana announced that the first phase of government’s NEV White Paper will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles beginning 1 March 2026, and that treasury will reprioritise R964 million over the medium term to support the automotive manufacturing industry‚Äôs transition to NEVs.

Mabasa additionally said that although the investment incentive only refers to battery-electric cars, Naamsa will talk to the minister to also include the manufacturing of hybrid vehicles which are currently covered under the existing Automotive Production Development Programme.

2025 Ford Ranger plug-in hybrid

While the result of the new EV-friendly policy may not be immediately visible as it will take at least a year or two for factories to be sufficiently upgraded and employees to be upskilled, it has wide-reaching consequences for the industry at large.

Up to the minister’s announcement, several automotive conglomerates including Ford and VW warned the powers that be that the future of their South African operations may be in jeopardy due to a lack of legislation that incentivises NEV production.

Now, however, the new policy has given these brands a leg to stand on when they attempt to convince their parent companies to establish NEV factories on local soil, in the process future-proofing one of the domestic economy’s most important industries.

The automotive sector in South Africa contributed 4.9% of the country’s total Gross Domestic Product in 2023, with more than half of this being attributed to the manufacturing industry.

Phase two of the NEV White Paper will place priority on motivating private buyers to purchase NEVs, potentially through tax breaks, but this is only expected to take place in approximately seven years, according to Ebrahim Patel, Minister of Trade, Industry, and Competition.

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