South Africa’s R964-million plan to boost electric-car production revealed

To encourage the production of new-energy vehicles (NEV) in South Africa, the national government will introduce an allowance for new investment into these technologies beginning on 1 March 2026.

“This will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles within the first year,” said finance minister Enoch Godongwana in his annual budget statement today, 21 February.

“The incentive will be implemented in addition to the existing support under the Automotive Production Development Programme (APDP).”

Additionally, the Godongwana said that government has reprioritised R964 million over the medium term to support the automotive manufacturing industry’s transition to NEVs.

Unfortunately, however, no consumer-focused incentives for the purchasing of NEVs were announced, meaning that the high barrier to entry for these vehicles is unlikely to come down any time soon.

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

South African-made electric cars a reality by 2026

At the release of the country’s NEV White Paper in December last year, Patel foreshadowed Godongwana’s announcement by stating that South African-made electric vehicles will become a reality by as early as 2026.

According to the minister, the main goals of the White Paper include:

• Implementing reforms to freight rails and ports
• Leveraging research and development on tax incentives to deepen domestic value addition
• Commercialising green hydrogen production in South Africa as a source of sustainable fuels
• Refurbishing the rail line between Gauteng and Ngqura to improve overall cost competitiveness
• Developing an EV certification programme in collaboration with industry for skills development
• Implementing energy reforms, including executing interim solutions for energy in partnership with industry
• An increase in levels of investment and funding, including the development of improved cost-effective incentive support
• Securing or maintaining duty-free export market access for vehicles and components produced in South Africa to support the resilience of the industry
• The introduction of a temporary reduction on import duties for batteries in vehicles produced and sold in the domestic market, to improve cost competitiveness
• The facilitation and development of an electric battery regional value chain, including raw material refining, battery active materials and component production, and cell manufacturing

“The primary goal of the White Paper is to set a course to transition the auto industry from primarily producing internal-combustion-engine (ICE) vehicles, to a dual platform that includes EVs in the production and consumption mix alongside ICE vehicles in South Africa by 2035,” said Patel.

“The compelling reasons behind this transition are numerous. Foremost is the urgent need to reduce greenhouse gas emissions and combat climate change. Additionally, we recognise the pivotal role the automotive industry plays in South Africa’s economy, as a major employer and a driver of economic growth.”