President Cyril Ramaphosa used the SA Auto Week in Cape Town to announce that the country was close to finalising a New Energy Vehicle (NEV) policy that would incentivise the manufacture and sale of electric vehicles.
This news was widely welcomed by the industry, as many stakeholders fear that South Africa’s automotive manufacturing industry - which currently exports around two thirds of its vehicle output - would get left behind as the world transitions to electrified vehicles.
South Africa’s automotive industry accounts for about 15% of the country’s total exports and makes a significant contribution of about 6% towards the country’s GDP.
A key concern is that the European Union, which is the country's largest export destination, plans to ban the sale of petrol and diesel powered cars from 2035 onwards.
“As many of our major trading partners rapidly shift towards EVs, it is imperative that we remain part of this global supply chain. This is a major industrialisation opportunity for South Africa and the region, particularly within the context of the African Continental Free Trade Area,” Ramaphosa said during his EV policy announcement on Thursday.
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The President also acknowledged that the global decarbonisation shift presented a significant challenge to the local automotive industry, but said his government was committed to working closely with the sector.
“The transition towards cleaner and more sustainable fuels – together with stringent regulations in key markets – puts a number of automotive firms and sub-industries in a vulnerable position. Even as the journey to net zero poses a challenge for the auto industry, there is at the same time immense opportunity.
“The local automotive sector needs to position itself to take advantage of the demand for electric vehicles, new energy vehicles and sustainable fuels. The transition to cleaner, more sustainable practices in the automotive industry is a priority for our government. The automotive industry has a critical role to play in achieving South Africa’s climate targets.
“We are committed to working hand-in-hand with the private sector to promote the production of New Energy Vehicles and the development of the necessary infrastructure to support them,” Ramaphosa added.
The government has yet to divulge specific details on the incentives being offered to manufacturers.
In his 2024 Budget Speech in February, Finance Minister Enoch Godongwana said companies that built electric or hydrogen vehicles in South Africa would be able to claim 150% of qualifying investment spending as an incentive to aid the transition to NEVs.
South Africa does not currently produce any electric vehicles. The country currently has five high-volume export products, namely the Volkswagen Polo, Mercedes C-Class, BMW X3, Ford Ranger and Toyota Hilux.
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