Putting EV production in motion
Finance Minister Enoch Godongwana has prepared the launch pad for an electric vehicle (EV) manufacturing sector in South Africa, with significant tax breaks for investments in the sector.
In his budget speech this week, Godongwana said that, from March 2026, businesses and investors involved in EV production would be able to claim 150% of qualifying investment spending in the first year against their overall tax bill.
The Automotive Business Council (Naamsa) welcomed the announcement, which was characterised by Naamsa CEO Mikel Mabasa as a “forward-looking strategy.”
Mabasa said the tax break was “a crucial step in attracting investments, fostering innovation, and driving the growth of EV sector”.
However, Mabasa inserted a note of realism by pointing out that the current automotive production development programme would need to be tweaked to accommodate EV production.
He said that batteries – a major component of EVs – were currently produced in China, South Korea and Japan, meaning that local content requirements in place would not be likely to be met.
This, suggested Mabasa, “necessitates government’s consideration to support other key technologies such as traditional hybrids and plug-in hybrids”.
Critics of the low adoption of EVs in South Africa say that, while the lack of charging infrastructure is a major discouraging factor, so too is price, because the government has not put in place any financial incentives for motorists to move towards new energy vehicles.
When these subsidies were put in place in the United Kingdom and Europe, the EV car park grew by leaps and bounds.