South Africa is poised to become a significant player in the electric vehicle (EV) industry, with plans to commence local EV production by 2026. This initiative is supported by substantial government incentives, strategic investments from global automakers, and a commitment to developing the necessary infrastructure.
Government Incentives and Policy Framework
The South African government has introduced a comprehensive policy framework to encourage local EV production. Key measures include:
- Tax Incentives: From March 2026, manufacturers can claim a 150% tax deduction on investments related to EV production, encompassing new equipment and factory upgrades.
- Investment in Production: A R1 billion ($54.27 million) investment has been allocated to support local EV and battery manufacturing projects, aiming to attract R30 billion in private sector investment.
- Policy Development: The Electric Vehicle White Paper outlines the country’s strategy to transition from internal combustion engine vehicles to EVs by 2035, with a focus on local production and export.
Automaker Investments and Local Production Plans
Several global automakers have announced plans to invest in South Africa’s EV industry:
- BMW: Commenced production of the plug-in hybrid X3 xDrive30e at its Rosslyn plant in October 2024, marking a significant step towards local EV manufacturing.
- Volkswagen: Investing R4 billion ($210 million) to upgrade its Eastern Cape plant for the production of a new SUV model from 2027, with considerations for future EV production.
- BYD: Plans to expand its dealership network from 13 to 30-35 by next year, following the launch of new hybrid and electric models in April 2025.
- Chery: Introduced hybrid versions of its Omoda C9 and Jaecoo J7 SUVs in June 2025, with plans to launch the Jaecoo J5 and Omoda C7 in the near future.
Infrastructure Development and Challenges
To support the growing EV industry, South Africa is focusing on infrastructure development:
- Charging Stations: As of 2023, there were approximately 300 public charging stations, with plans for expansion to accommodate increased EV usage.
- Electricity Supply: Efforts are underway to improve the reliability of the electricity grid, which is currently heavily reliant on coal, to support EV charging needs.
- Battery Production: The government aims to incentivize local production of EV batteries, leveraging the country’s mineral resources to establish a sustainable supply chain.
Market Outlook and Future Prospects
Analysts predict that electric and plug-in hybrid vehicles could account for up to 20% of new car sales in South Africa by 2030. The combination of government support, automaker investments, and infrastructure development positions South Africa to become a hub for EV production and innovation on the continent.
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