2024 BUDGET ALLOCATES CLOSE TO A BILLION RAND TO EV TRANSITION
In a landmark move aimed at encouraging sustainable development and embracing the global shift towards greener mobility, this year’s National Budget sees a substantial investment of R946 million dedicated to the transition to electric vehicles.
Facilitated in collaboration with South Africa’s Department of Trade, Industry and Competition, this allocation sits in line with the New Energy Vehicles White Paper approved by the Cabinet in 2023. The investment adopts a multi-faceted approach to accelerating the adoption of EVS locally in a bid to revitalise the automotive sector.
According to Finance Minister Enoch Godongwana, “It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles, by 2035. To encourage the production of EVS in South Africa, government will introduce an investment allowance for new investments, beginning 1 March 2026. This will allow producers to claim 150% of qualifying investment spending on electricand hydrogen-powered vehicles in the first year and will be implemented in addition to the existing support under the Automotive Production Development Programme.”
The primary focus will be on establishing Ev-charging infrastructure networks that span urban centres, motorways and rural areas, which were previously deemed peripheral to such developments. A substantial portion of the investment will be channelled towards research-and-development initiatives that encourage technological innovation at a local-manufacturer level. This will give South Africa the means to position itself as a global player in the EV market while creating highskilled jobs and training opportunities in the automotive sector.
“The transition to electric vehicles is not merely an environmental imperative but a strategic economic opportunity for South Africa. By embracing cleaner transportation solutions, we can stimulate economic growth, mitigate climate change and enhance energy security,” said Godongwana of the latest round of investment in local EV development.
National Treasury’s deputy director general for tax and financial sector policy, Christopher Axelson, claims there will be large investments as a result of the incentive. “We’ve pencilled in that it will lead to revenue forgone of R500 million in 2026–2027, which is a few years from now, as those investments start to take place. That revenue forgone will kick up and increase in the outer years. We think this will be one of the factors that will sway the decision-makers of the OEMS to investment more for EVS in South Africa.”
National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mike Mabasa stated that the investment is a pivotal step towards modernising the automotive industry and promoting sustainable mobility solutions. “South Africa has the potential to become a hub for electric-vehicle production and innovation. The allocation of R946 million signifies a decisive move towards realising this vision,” remarked Mabasa.
However, Mabasa also highlighted the importance of a coordinated approach involving government, industry stakeholders, and the broader community to ensure the successful implementation of the electric-vehicle-transition strategy. “Effective collaboration and targeted policies are essential to overcome regulatory barriers, incentivise investment, and promote consumer acceptance of electric vehicles,” he emphasised.
The automotive industry stands to reap substantial benefits from a more proactive stance on electrification from the government. The hope is that EV manufacturers and component suppliers are poised to experience increased demand, spurring investment and job creation within the sector while affording them the opportunity to diversify their product offerings and capitalise on consumer trends that are leaning towards more eco-friendly powertrain options.