South Africa’s 150% EV Tax Incentive: A Bold Move, But Is It Enough?

South Africa is making strides toward electric vehicle (EV) adoption with President Cyril Ramaphosa signing into law a new 150% tax incentive for EV and hydrogen-powered vehicle manufacturers. This measure, set to take effect in 2026, aims to enhance the local EV market, attract foreign investment, and solidify the country’s position in the global green economy.

The incentive allows manufacturers to deduct 150% of the cost of buildings and equipment used primarily for producing electric and hydrogen-powered vehicles, significantly lowering production costs. According to Mikel Mabasa, CEO of the Automotive Business Council, the policy is already attracting attention from Chinese automakers, with three manufacturers signing NDAs to explore South African opportunities.

A Promising Move, But Challenges Persist

While the incentive is expected to boost local EV manufacturing, industry players argue it’s not a standalone solution. South Africa faces numerous barriers to EV adoption, including:

• High Import Duties: Current import duties on EVs are at 25%, compared to 18% for traditional combustion vehicles, making EVs less affordable for consumers.
• Inadequate Charging Infrastructure: South Africa lacks a robust network of EV charging stations, critical for supporting the expected rise in EV usage.

Zero Carbon Charge (CHARGE), a local company developing off-grid EV charging networks, highlighted these concerns, stating:
“While the tax incentive is a positive step, addressing barriers like high import duties and inadequate infrastructure is essential to the success of EV adoption.”

Industry Perspective: More Action Needed

Mabasa echoed similar concerns, emphasizing that government support must extend beyond the tax amendment to ensure long-term success.
“If government is not supportive, the industry will die,” Mabasa warned.

For a thriving EV industry, South Africa needs:

1. Reduction in Import Duties: Lowering EV import tariffs would make electric vehicles more accessible to South Africans.
2. Investment in Charging Infrastructure: Expanding a stable and widespread network of charging stations is critical to support the anticipated influx of EVs.
3. Clear Policy Frameworks: Simplifying regulations and incentivizing private sector participation can accelerate growth.

What’s Next for South Africa’s EV Market?

The 150% tax incentive is a bold initiative that underscores South Africa’s commitment to transitioning toward green technology. However, experts agree that the government must adopt a holistic approach to ensure the industry’s survival and growth.

By addressing regulatory barriers, reducing import duties, and investing in infrastructure, South Africa has the potential to position itself as a leader in EV manufacturing and adoption in Africa.

As the world shifts toward sustainable transportation, South Africa’s actions today will determine its role in the global EV revolution tomorrow.

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com