South Africa is considering introducing incentives to encourage local manufacturing of electric and hybrid vehicles and offering tax rebates or subsidies to promote their usage, President Cyril Ramaphosa said.
“This is not just about creating a greener future, but also about ensuring South Africa remains competitive in the global markets as many of our major trading partners rapidly shift toward EVs,” he said in a speech at an automotive conference in Cape Town on Thursday.
“It is also imperative that we remain part of this global supply chain. If we don’t we will be left behind.”
South Africa’s automotive industry, which accounted for more than 271 billion rand ($15.3 billion) in exports last year, is currently dependent on shipments to the European Union, where legislation is expected to gradually reduce demand for vehicles that run on diesel and gasoline.
While the government announced in February that automakers will be allowed to claim a 150% tax deduction on investment in facilities to manufacture EVs, details of the plan have yet to be released.
Industry executives have complained that the government has also done little to grow a domestic market for the vehicles.
South Africa imposes a 25% tax on electric-vehicle imports, while some traditional cars don’t attract any levy.
“The formula for the incentives is currently being worked out,” Vincent Magwenya, Ramaphosa’s spokesman, said in an interview.
“We know they have to be completed soon. One big issue is the rollout of recharging infrastructure and that is where the private sector can play a big part.”
South Africa needs to take smaller steps toward a full electric-vehicle future with a much broader new energy vehicle policy that includes policies for hybrid cars, Business Day reported Thursday, citing Peter van Binsbergen, the chief executive officer of BMW South Africa.
The newspaper said van Binsbergen and others industry executives want the government to add hybrid-electric vehicles to the policy mix following softened demand for electric vehicles in Europe this year.
