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Wednesday / 17 April 2024
HomeNewsWhy Tesla is avoiding South Africa

Why Tesla is avoiding South Africa

Tesla hasn’t attempted to introduce its electric vehicles (EVs) to South Africa due to the country’s “super high” import duties, CEO Elon Musk confirmed on X (previously Twitter).

“Import duties are super high in South Africa to protect the domestic industry,” said Musk in response to a query from one of his local followers.

“Doesn’t make sense for Tesla, given that electric cars are not locally made.”

At present, EVs imported into South Africa are taxed up to 7% higher than petrol and diesel cars depending on their country of origin, with an additional 17% “luxury tax” being placed upon them due to their batteries, and 15% VAT also thrown into the equation.

If these levies are applied to the recently-launched Cybertruck, it would cost in the region of R1.96 million to bring the electric bakkie into the country, compared to its selling price of R1.16 million ($60,990) in the US, found an analysis by MyBroadband.

A dealer will also add their own markup on top of this if they were to try and make a business out of importing Teslas, which could easily result in the Cybertruck being nearly twice the price in South Africa in contrast to its home country.

Light at the end of the tunnel

Many large automakers have sounded the alarm on South Africa’s restrictive new-energy vehicle (NEV) policies in recent years, forcing government back to the drawing board in an attempt to secure the future of the country’s valuable car and component-manufacturing industries.

Subsequently, in late 2023, minister of trade, industry, and competition, Ebrahim Patel, released the country’s White Paper on EVs that outlines a comprehensive roadmap and numerous policy interventions aimed at supporting the domestic auto manufacturing industry in the shift to a greener future.

While the specifics of the document will only be released in the February 2024 Budget Review, the minister said it will support investments in the development and expansion of new and existing manufacturing plants to incentivise the domestic production of battery-electric vehicles, hydrogen fuel-cell vehicles, and internal-combustion vehicles running on synthetic fuels.

Hybrids will not be part of this new framework as these are covered under the existing Amended Automotive Production & Development Program (ADPDP2), said the minister.

Through successful implementation of the legislation, South Africa will be able to produce its first locally-made EV “as early as by 2026,” said Patel, and it’s expected that the price tags of imported EVs will also be positively impacted.

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