Motor industry gets its plan on EV manufacturing
Finance minister Enoch Gondongwana this week made good on a long-delayed promise to Sa-based motor manufacturers that the government would back its transition to electric vehicle (EV) manufacturing, but hiked the vehicle emissions tax, taking aim specifically at double-cab bakkies.
The motor industry has been warning the government for years that rapid regulatory change in its key European and North American markets makes its business model unsustainable, and that the industry’s long planning horizon’s required urgent change.
The National Treasury has allocated R500m “to encourage the production of electric vehicles in SA”.
The allocation will be available “for new investments from March 2026”, according to the National Treasury’s Budget Review.
“Producers will be able to claim 150% of qualifying investment spending on production capacity for electric and hydrogen-powered vehicles in the first year of investment.”
Most vehicles built in SA for export are destined for markets that plan to phase out internal combustion engines (ICE), meaning local manufacturers either need to find new markets, or to begin building EVS. The EU, the largest automotive export market, will phase out ICE sales in 2030 and hybrid-electric vehicles (HEVS) by 2035.
Toyota and Mercedes-benz now manufacture HEVS, and BMW has announced that it will begin building an HEV model at its Rosslyn plant, but there are now no plans for EV manufacturing in SA.
According to the Budget Review, the production incentive allocation supplements R964m “reprioritised” by the department of trade, industry & competition “for transition to EVS, in line with the New Energy Vehicles white paper approved by cabinet in 2023”.
Retailers will rue a hike in the motor vehicles emissions tax from R132 to R146 per gram of CO2 for passenger cars, and from R176 to R195 per gram for double-cab bakkies, which represents a hike of more than 10%, which will either need to be absorbed by the retailers or new-vehicle buyers.