In the National Budget in February, an investment allowance for new EV investments was announced. Set to commence in March 2026, the allowance will see businesses and investors involved in EV production claim 150% of their qualifying investment spending in the first year. File: Photo
In a good first step the government, through an accelerated depreciation allowance, would promote the production of electric vehicle (EV) in South Africa, Automotive Business Council (Naamsa) CEO Mikel Mabasa said yesterday.
He said in an interview with “Business Report” that the investment allowance was particularly generous considering the state of the fiscus and local economy and that there were a great deal of competing needs for government support.
In the National Budget in February, an investment allowance for new EV investments was announced. Set to commence in March 2026, the allowance will see businesses and investors involved in EV production claim 150% of their qualifying investment spending in the first year.
He said although the number of EVs was growing fast, they amounted to about less than 1 000 vehicles a month, and it was still “a long way to go” before local manufacturers would begin making fully electric vehicles.
As a first step, local manufacturers were producing hybrid EVs, including from Toyota SA, BMW SA, Mercedes-Benz SA and Ford.
Naamsa’s data showed 3 042 new EVs, which includes fully electric and hybrid, were sold in South Africa in the year to March 31, 2024, compared with 1 665 sold in the same period a year before. Only 330 of those were fully electric, compared with 232 in the preceding year to March 2023.
The investment allowance will be a complementary initiative to the existing Automotive Production Development Programme (APDP).
“The composition of the APDP post the investment phase remains a critical lever in ensuring the transitioning from traditional internal combustion engines to a dual platform that includes electric vehicles by 2035,” Mabasa said in an earlier statement.
The APDP is a production incentive scheme for the motor industry that seeks to promote production volumes, and also promote added value in the local automotive component sector.
He said the industry would continue to engage with the government to carefully manage some of the challenges associated with the implementation of the APDP, especially concerning vehicles with limited local content due to the predominant location of battery production in Japan, South Korea, and China.
“In the short term, the existence of low local content necessitates the government’s consideration to support other key technologies such as traditional hybrids and plug-in hybrids.
“We hope to compare notes around the adoption of an APDP rate specifically designed to cover instances of low local content and the exploration of effective strategies to address the adoption of locally produced EVs. The aim is to ensure that the advantages of the programme keep the local industry globally competitive,” he said.
BUSINESS REPORT