The world is shifting fast to electric vehicles (EVs), and South Africa wants to join the trend. To support this, the government is offering a 150% tax deduction for investments in EV and hydrogen vehicle production starting in March 2026. It has also partnered with Chinese automakers to explore building EVs locally. As the automotive industry moves toward a greener future, South Africa has a great opportunity to lead Africa in making and innovating EVs.
South Africa’s $27 billion car industry is at a decisive point. To stay competitive, it needs smart tax rules that help businesses grow, attract investment, and create a sustainable future. While the new tax break for EV production is a good start, more strategies are needed to stay ahead.
One idea is to lower or remove taxes on parts like batteries and motors. This would make it cheaper to build EVs locally and encourage car companies to set up factories in South Africa. More factories would mean more jobs and a stronger economy. The more affordable it is to make EVs, the more likely companies will invest in South Africa.
Another idea is offering tax credits to businesses that invest in making EVs, researching new tech, and building charging stations. These credits would help local companies grow, and attract global automakers looking to enter the green car market. This could boost South Africa’s position as a leader in EV production and innovation.
At the same time, the current tax on luxury cars should be updated. The ad-valorem tax was meant for luxury vehicles but now affects electric cars, making them more expensive. Lowering this tax and cutting VAT on EVs would make them more affordable and encourage South Africans to switch to greener transportation.
South Africa also has a wealth of critical minerals like manganese, platinum, and nickel, which are essential for making EV batteries. By offering export incentives, South Africa could become a key supplier in the global EV supply chain, benefiting from both local production and worldwide demand.
Finally, giving tax breaks to new investors entering the EV market could make South Africa an even more attractive destination for automakers. This would help create jobs, grow the industry, and lower risks for companies.
With the right tax policies, South Africa has the chance to lead the global electric vehicle revolution. By investing in the future now, the country can build a cleaner, greener tomorrow and a thriving car industry for everyone.
