(Ecofin Agency) – Leading vehicle producer in Africa, South Africa now wants to stimulate the production of electric vehicles. To do this, it wishes to rely on the local processing of critical minerals as well as the adoption of tax incentives.
South Africa plans to introduce tax incentives to support its electric vehicle industry, according to an announcement made on Thursday, October 17, 2024, by President Cyril Ramaphosa (pictured).
« We are working to finalize comprehensive policy guidance on electric vehicles, which does not exclude alternative technologies such as hybrids and plug-in hybrids. It is essential to consider incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the adoption of electric vehicles “, he declared, during the South African Auto Week 2024. These incentives will be supported by a “valuation » increased local critical minerals, notably through the production of electric batteries and the development of value chains in the green hydrogen fuel cell sector, he added.
Considered the most industrialized nation on the continent, South Africa has an automobile industry that has long dominated the sector. Thanks to partnerships with international brands, this industry represents more than 5% of the country’s gross domestic product (GDP) and employs more than 116,000 people. However, the country still lags behind in electric vehicle production, despite the abundance of raw materials. The authorities hope to reverse this trend.
This announcement comes as Africa, considered the cornerstone of the electric vehicle industry thanks to its abundant resources, seeks to exploit its strengths to better benefit from the sector. In the DRC, Zimbabwe and South Africa, discussions are underway to locally process critical minerals such as cobalt, to maximize value addition and strengthen the continent’s position in global value chains.
To boost the production of electric vehicles, the South African government will introduce, from 1is March 2026, an allocation for new investments, as revealed by Finance Minister Enoch Godongwana in February. Producers will be able to deduct 150% of eligible investment expenses for electric and hydrogen vehicles from the first year.
« It’s not just about creating a greener future, but also ensuring that South Africa remains competitive in the global market “, underlined Mr. Ramaphosa, adding: “ As many of our major trading partners rapidly shift to electric vehicles, it is imperative that we remain an integral part of this global supply chain. »
Moutiou Adjibi Nourou
