By Lehlohonolo Lehana.
President Cyril Ramaphosa says South Africa is considering introducing incentives to encourage local manufacturing of electric and hybrid vehicles and offering tax rebates or subsidies to promote their usage.
Ramaphosa was speaking at the South African Automotive Week 2024, held in Cape Town hosted by Naamsa.
South Africa’s automotive industry, which accounted for more than 271 billion rand ($15.3 billion) in exports last year, is currently dependent on shipments to the European Union, where legislation is expected to gradually reduce demand for vehicles that run on diesel and gasoline. While the government announced in February that automakers will be allowed to claim a 150% tax deduction on investment in facilities to manufacture EVs, details of the plan have yet to be released.
The president also fulfilled two of the domestic automotive industry’s long-standing wishes.
“The Department of Trade, Industry and Competition, National Treasury and the Department of Mineral and Petroleum Resources are in conversation about implementing the EV White Paper [released last year].”
“This work includes the beneficiation of critical minerals, the production of new-energy vehicles (NEVs) and their associated value chains,” noted Ramaphosa.
“It also includes the production of batteries for battery-electric vehicles (BEVs) and the development of value-chains in the green-hydrogen fuel-cell market.”
NEVs refer to hybrids (less green at the tailpipe), plug-in-hybrids (PHEVs – more green) and zero-emission BEVs (most green). The goal of the White Paper is to help South Africa’s automotive industry transition to include NEV production of all types.
“We are working to finalise comprehensive NEV policy guidelines that do not exclude technologies such as hybrids and PHEVs, “noted Ramaphosa.
“So, consideration must be given to incentives for manufacturers – as well as tax rebates or subsidies for consumers to accelerate the uptake of EVs.”
Ramaphosa did not provide a timeline for the finalisation of these guidelines.
This is not just about a greener future, but also about ensuring that South Africa remains competitive in the global market,” he emphasised.
“As many of our major trading partners rapidly shift to EVs, there is an imperative that we remain part of this global supply chain. If we don’t, we’ll be left behind.”
The president’s announcement, which was met with enthusiastic applause, comes as some vehicle manufacturers have expressed concern that hybrids and PHEVs have been excluded from the EV White Paper, with companies such as Toyota, Mercedes-Benz and BMW already producing PHEVs and hybrids at their local plants.
No BEVs are currently produced in South Africa.
South Africa’s vehicle makers have also been advocating for NEV sales incentives for quite some time.
Domestic sales of NEVs – especially the more expensive PHEVs and BEVs – have been slow in South Africa, frustrating efforts by manufacturers to produce these vehicles for the local and export markets.