Thabo Nkosi 
South Africa is committing R1 billion ($54.27 million) to boost its electric vehicle (EV) production by 2035. This investment, announced in March 2025, aims to transform the country’s automotive industry by focusing on EVs, batteries, and supporting infrastructure. The plan aligns with global sustainability goals and aims to reduce greenhouse gas emissions while maintaining South Africa’s position as a leading automotive hub in sub-Saharan Africa.
Key details:
- Public-Private Investment: The R1 billion is expected to attract an additional R30 billion in private funding.
- EV Market Growth: EV sales in South Africa rose by over 80% between 2023 and 2025 but still account for only 1.2% of new car sales.
- Government Support: A 150% tax deduction for EV production investments will launch in March 2026.
- Mineral Resources: South Africa’s reserves of manganese, nickel, and other critical minerals will support local battery production.
This initiative also focuses on creating jobs, building EV infrastructure, and positioning South Africa as a key player in the global EV market.
Minister: South Africa likely to produce first EV in 2026
Government Policies and Support for EV Development
South Africa is making a bold move toward electric vehicle (EV) production, driven by a detailed policy framework aimed at reshaping its automotive sector. From manufacturing incentives to securing essential materials for batteries, the government is laying the groundwork for a thriving EV industry.
The Electric Vehicles White Paper (2023)
On December 5, 2023, South Africa introduced its first official policy on EV manufacturing, sales, and usage: the Electric Vehicles White Paper. This document acknowledges a critical challenge – the global shift to EVs could impact the automotive sector, which currently contributes 2.9% to the country’s GDP. To address this, the White Paper outlines 10 key actions to boost EV production, including:
- Increased investment in EV assembly plants.
- Developing a regional supply chain for electric batteries.
- Lowering import duties on batteries.
- Securing duty-free exports for EVs and related components.
"The White Paper is a decisive step in the transformation of the South African automotive industry, and it is intended to lay the foundation for the development and implementation of a South African EV market." – Global Compliance News
The automotive sector’s importance to the economy is hard to overstate. It employs 0.8% of the workforce, pays over $1.63 billion (R30 billion) annually in formal wages, and contributed $10.86 billion (R200 billion) in vehicle and component exports in 2022, making up 12.4% of total exports. However, the sector also faces environmental scrutiny, as transportation is the third-largest source of greenhouse gas emissions in the country, responsible for 11% of total emissions.
To accelerate the transition, the government is offering strong incentives to attract private sector investment in EV production.
Private Sector Investment Incentives
To encourage private investment, South Africa offers a 150% tax deduction on EV production investments, capped at $26.9 million for the 2026/27 tax year. Other incentives include:
- Tax breaks for research and development.
- A procurement policy favoring EV manufacturers for state contracts.
- Increased funding for EV infrastructure.
- Consumer incentives to promote EV adoption.
These efforts are already yielding results. In February 2025, BMW chose South Africa as the exclusive production hub for its hybrid X3 model. Meanwhile, Stellantis and other manufacturers are exploring opportunities in new-energy vehicle production. According to the Trade Minister, the first domestically produced EV could hit the market as soon as 2026. This shift is timely, as fossil fuel vehicle exports dropped by 23% in 2024, even as the export value of vehicles and automotive components reached a record $14.7 billion (R270.8 billion) in 2023, accounting for 14.7% of total exports.
In addition to financial incentives, the government is focusing on securing the raw materials needed for battery production through its Critical Minerals Strategy.
Critical Minerals Strategy for Battery Production
The Critical Minerals Strategy aims to ensure a stable supply of essential materials for EV batteries while transforming South Africa from a raw material exporter to a leader in mineral processing and technology. With ore reserves valued at over $2.5 trillion, the country is well-positioned to achieve this goal.
| Classification | Key Minerals for EV Production |
|---|---|
| High-Criticality | Platinum, Manganese, Iron Ore, Coal, Chrome |
| Moderate to High Criticality | Palladium, Rhodium, Rare Earth Elements |
| Moderate Criticality | Copper, Cobalt, Lithium, Graphite, Nickel |
Minister of Mineral and Petroleum Resources Gwede Mantashe described the strategy as "a call to action for public–private collaboration, inviting investors, communities, and development partners to unlock the full potential of South Africa’s mineral wealth". The plan emphasizes local beneficiation – processing raw materials domestically – which could create 2.3 million jobs and add 12% to Africa’s GDP. Globally, the battery market is expected to reach $250 billion by 2030.
"By implementing this strategy, South Africa can create a self-sustaining industrial base that generates high-value products, supports downstream industries, and fosters higher rates of job creation."
To close production gaps and strengthen global partnerships, the strategy calls for targeted investments in exploration, research, local processing facilities, and collaborative ventures. These steps aim to position South Africa as a critical player in building durable supply chains for emerging technologies.
Economic, Environmental, and Technology Impacts
South Africa’s R1 billion (about $54 million) investment in electric vehicle (EV) production is poised to influence the economy, environment, and technology sectors. This initiative goes beyond simply manufacturing vehicles – it aims to reshape the country’s automotive industry, promote environmental responsibility, and drive technological progress.
Job Creation and Economic Growth
The automotive industry is a cornerstone of South Africa’s economy, employing around 457,000 people in the formal sector and contributing 6.4% to the nation’s GDP in 2019. Within this, the component manufacturing sector employed 64,791 individuals in 2022. With the shift to electric mobility, small and medium enterprises across the supply chain stand to gain significantly. The government has set an ambitious goal to double employment in the automotive value chain by 2035.
The rise of green jobs across Africa is another promising development. EV manufacturing initiatives are opening up opportunities in areas like battery maintenance, fleet servicing, and vehicle design, all while enhancing the continent’s expertise in e-mobility.
Makena Ireri and Naomi Wagura from the Global Energy Alliance for People and Planet highlight the broader potential:
"A surge in investment has the potential to create millions of green jobs across the continent. Globally, green jobs have been growing at an impressive rate of 8% annually over the past five years, with projections of 112 million new jobs in selected green sectors by 2030. Africa, with its youthful population, could generate an estimated 75 million green jobs by 2050."
Environmental Benefits of EV Production
South Africa’s transportation sector has long been a significant contributor to environmental challenges. In 2019 alone, road transport was responsible for 59.49 million tons of CO₂ equivalent emissions, with motorcars accounting for 45.74% of that total. Transitioning to electric vehicles could make a substantial difference – projections indicate that EV adoption could slash emissions by 19% and reduce annual liquid fuel demand by 40% by 2050.
The momentum for EV adoption is already evident. In 2020, EV sales in South Africa surged by 431.7% year-over-year. Globally, The Climate Group reported a 93% increase in EV adoption last year, with EV100 businesses now operating over 400,000 EVs worldwide.
Sandra Roling, Director of Transport at The Climate Group, underscores the importance of targeting high-emission vehicles:
"While only accounting for 4% of vehicles on the road globally, they are responsible for 40% of all road transport emissions and a third of total transport fuel use. Including these most polluting vehicles in the shift to zero-emission solutions will be crucial if we are to achieve the Paris climate goals."
These environmental gains also lay the groundwork for further advancements in technology.
Technology Advancement and Innovation
This investment is not just about producing vehicles – it’s about driving technological progress. By focusing on the local production and assembly of new-energy vehicles and batteries, South Africa is positioning itself as a hub for innovation. Government incentives are pushing original equipment manufacturers to ramp up their EV production efforts. Currently, EVs make up about 1.2% of new vehicle sales in South Africa, supported by over 500 public charging stations.
In a significant policy move, President Cyril Ramaphosa signed the Taxation Laws Amendment Bill into law on December 24, 2024. This introduced Section 12V of the Income Tax Act, which provides a 150% tax deduction for assets used in producing electric or hydrogen-powered vehicles. This incentive will be in effect from March 1, 2026, through March 1, 2036. The National Treasury explained:
"The purpose of the incentive is to enhance the local production and assembly of new-energy vehicles, batteries and projects focused on operational efficiency and competitiveness in new manufacturing projects."
These technological advancements, backed by strong government support and private investment, are helping South Africa carve out a prominent role in the global EV supply chain. With these efforts, the nation is well on its way to achieving its 2035 EV production goals.
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Industry Partnerships and Local Manufacturing Growth
With strong policy incentives in place, industry players are ramping up efforts to shift manufacturing locally and seize opportunities in the electric vehicle (EV) market. South Africa, as the largest automotive manufacturing hub in sub-Saharan Africa, has become an appealing destination for global automakers aiming to expand their EV production. The country is already home to major brands like Toyota, Ford, Isuzu, Volkswagen, and Mercedes.
South Africa’s automotive legacy is impressive, with exports accounting for over 60% of its total vehicle production in recent years. This export-driven model gives the nation a solid foundation to cater to both domestic and international EV markets. The alignment between government policies and manufacturing shifts is creating a dynamic industrial environment.
Converting Manufacturing Lines for EV Production
Automakers are reconfiguring their existing facilities to accommodate EV production. Companies like BMW, Ford, Toyota, and Volkswagen already operate manufacturing plants in South Africa that export vehicles and components to more than 150 countries. Now, these companies are exploring how to adapt their infrastructure and expertise to assemble EVs. This shift requires operational redesigns due to the fundamental differences between internal combustion engine (ICE) vehicles and EVs.
As Stanley Engineered Fastening highlights:
"EV motors have very few moving parts; they do not require engine oil or transmission fluid. EVs need no exhaust systems, alternators, fuel injectors, or starters. All of these familiar ICE vehicle components will be entirely absent from EV production lines. Because there will be so many fewer parts in an EV, compared to its ICE counterpart, the assembly process will be simplified."
Chinese automakers are also eyeing South Africa as a strategic manufacturing base. Tony Liu, CEO of Chery South Africa, underscores the country’s importance:
"We treat South Africa as a very important market for our global expansion,"
referring to it as a "gateway to the African continent."
Similarly, Conrad Groenewald, GWM‘s chief operating officer, shares plans to revisit local production:
"I think now that we’ve got economies of scale … We need to revisit those feasibility studies in the next 12 months."
Increasing Local EV Component Production
The government has set a goal to increase the local content of EV parts from 40% to 60% by 2035. Achieving this ambitious target will require substantial investment in local component manufacturing.
Africa’s rich mineral resources offer a strategic edge for battery production. The continent holds over half of the world’s reserves of key EV battery materials like copper, cobalt, and lithium. A regional strategy for critical minerals is being developed to support local battery production, reducing reliance on imports.
The National Automotive Manufacturers Association of South Africa (Naamsa) is actively working to enhance local capacity. Shivani Singh, Naamsa’s chief projects officer, explains:
"Our EV market is in extremely early stages. We’re starting to see the use of electric two-wheelers and three-wheelers for delivery purposes in the rest of Africa, but there’s no EV passenger car assembly happening."
Naamsa is collaborating with charging service providers and local businesses to establish the infrastructure needed for EVs while boosting local component production. This cooperative approach is helping to create the ecosystem necessary for scaling up EV manufacturing.
EV Production vs Traditional Car Manufacturing Comparison
The differences between traditional ICE vehicle production and EV manufacturing are significant, as shown in the table below:
| Aspect | Traditional ICE Manufacturing | EV Manufacturing |
|---|---|---|
| Component Complexity | Requires engine oil, transmission fluid, exhaust systems, alternators, fuel injectors, starters | Simplified assembly with fewer moving parts, no traditional engine components |
| Assembly Process | Complex multi-stage assembly with numerous mechanical systems | Streamlined process focused on battery integration and electric motor installation |
| Workforce Skills | Traditional mechanical and automotive engineering expertise | Expertise in battery production, management, and electric systems |
| Quality Control | Engine performance, emissions testing, mechanical systems validation | Battery safety testing, electric motor inspection, charging system verification |
This shift brings both opportunities and challenges. Steve Chang, general manager of BYD Auto South Africa, sees massive potential in the African market:
"I think South Africa and the rest of Africa have a very big opportunity to what I call leapfrog from ICE into renewable energy (cars)."
However, the market remains nuanced. Hans Greyling, general manager of Chery’s Omoda & Jaecoo brand, notes:
"Battery electric vehicles have not really taken off in South Africa,"
highlighting a stronger focus on hybrids.
Despite these hurdles, the EV market is gaining traction. Sales of new energy vehicles (hybrids and EVs) in South Africa doubled between 2023 and 2024, reaching 15,611 units and accounting for 3% of total vehicle sales. With government-backed policies, vehicle production in the country could grow from around 600,000 units in 2024 to as many as 1.5 million by 2035.
This upward trend, combined with strategic collaborations and supportive policies, positions South Africa as a rising force in the global EV manufacturing arena.
How EV24.africa Supports the African EV Market
South Africa has set an ambitious goal: a US $54 million investment to scale up local EV production by 2035. But achieving this vision requires more than just building factories – it hinges on connecting manufacturers with consumers across Africa. That’s where EV24.africa steps in, acting as a crucial link in the electric vehicle (EV) ecosystem. By offering a comprehensive marketplace, EV24.africa is helping to drive EV adoption and support local manufacturing, paving the way for a broader transformation in the continent’s EV landscape.
One of the biggest hurdles South Africa faces in its EV production plans is creating enough demand to justify large-scale manufacturing investments. Without easy-to-access purchasing channels and transparent pricing, even the most advanced production facilities would struggle to find a foothold in Africa’s diverse markets.
Electric Vehicle Marketplace Across 54 African Countries
EV24.africa operates as a one-stop marketplace, delivering electric vehicles to all 54 African countries, including South Africa, with tailored logistics for cross-border delivery. The platform boasts an impressive lineup of over 200 EV models from more than 25 global brands, including Tesla, BYD, and Toyota.
This extensive reach directly supports South Africa’s manufacturing ambitions. Already a major exporter, the country benefits from EV24.africa’s delivery network, which connects local manufacturers with markets across the continent. The platform also simplifies the often-complicated import process by handling international commercial terms (Incoterms), customs clearance, registration, and import taxes. For South African buyers, this means access to EV suppliers from regions like Europe, Asia, North America, and Japan, while local manufacturers can use the platform to tap into international markets.
Alignment with South Africa’s EV Production Goals
EV24.africa works in tandem with government initiatives to create demand for EVs. The platform offers valuable local expertise, guiding buyers with clear details on customs duties, tax exemptions, and incentives. This support is particularly timely as South Africa has exempted 100% electric vehicles from VAT and customs duties.
Axel Peyriere, Co-Founder and CEO of AUTO24.africa, highlights the platform’s mission:
"Africa is ready for electric vehicles, and EV24.africa is committed to making this transition smooth and accessible. Our goal is to provide a reliable, transparent, and competitive marketplace for EV buyers across the continent."
EV24.africa’s approach aligns closely with government strategies to foster a supportive environment for EV adoption. The platform has already facilitated EV sales in over 15 African countries, showcasing a growing demand that local manufacturers can address. This kind of market visibility is essential for South Africa to meet its 2035 production targets. By helping to create a clear demand pipeline, EV24.africa enables manufacturers to confidently shift traditional production lines toward EVs.
Clear Pricing and Customer Support Services
One of the biggest barriers to EV adoption in Africa is the lack of transparency around pricing and financing. EV24.africa tackles this head-on by offering clear pricing, detailed vehicle specifications, and accessible financing options.
The platform is designed to make the entire process of importing and purchasing EVs as straightforward as possible. With a user-friendly interface, customers can explore a wide range of EVs, request quotes, and let EV24.africa handle the rest – from shipping and customs to delivery and compliance assistance. Buyers also benefit from favorable tax incentives, making EV ownership more attainable.
Conclusion: South Africa’s Path to EV Manufacturing Leadership
South Africa’s $54.27 million investment lays the groundwork for becoming a leader in electric vehicle (EV) manufacturing, setting the stage for global competitiveness while driving Africa’s shift toward clean mobility by 2035.
This funding is expected to bring more than just industry advancements – it promises to deliver considerable economic gains. The government’s introduction of a 150% tax deduction for EV manufacturers, effective from March 1, 2026, through March 1, 2036, underscores a strong commitment to attracting investments and strengthening the automotive sector’s contribution to the economy.
EV production also aligns with international clean energy goals, promoting environmental responsibility and positioning South Africa as a key player in the global clean energy landscape. This dual focus on economic growth and sustainability highlights the broader impact of the initiative.
However, success hinges on creating strong demand channels to support local production. Platforms like EV24.africa are essential in bridging the gap between manufacturers and buyers across all 54 African nations, ensuring the visibility and market access necessary for sustained growth. By tapping into this demand, South Africa can secure its role in the continent’s clean energy future.
To reach the 2035 goal, collaboration across government policies, private investments, and market infrastructure is crucial. With these elements working in unison, South Africa is well-positioned to become Africa’s gateway to the global clean energy economy.
FAQs
What incentives is the South African government providing to encourage private investment in electric vehicle production?
The South African government is introducing a 150% tax deduction for investments in electric and hydrogen vehicle production. This move is designed to draw private investors into the growing sector. On top of that, about $54.3 million (1 billion rand) has been set aside over the medium term to support local EV manufacturing. This funding will also cover infrastructure upgrades and battery production.
These efforts are part of a broader plan to bolster South Africa’s automotive industry, cater to the increasing global demand for EVs, and establish the nation as a key player in sustainable transportation.
How is South Africa supporting the production of EV batteries through its Critical Minerals Strategy?
South Africa’s strategy for critical minerals zeroes in on resources like lithium, manganese, and platinum group metals (PGMs) – key ingredients for producing EV batteries. By focusing on these materials, the country seeks to carve out a stronger role in the electric vehicle supply chain while cutting down on its dependence on imports.
In addition, the plan promotes local battery assembly and offers incentives for domestic manufacturing. This dual effort not only builds a more independent EV sector but also drives economic development and advances technology, aligning with global efforts toward sustainability.
How will South Africa’s $53 million investment in electric vehicle production impact jobs and the economy?
South Africa is channeling $53 million into electric vehicle (EV) production, a move that promises to create thousands of jobs while giving the economy a much-needed boost. By building a local EV manufacturing industry, this initiative opens doors to employment opportunities in areas like automotive production, tech development, and supply chain operations.
On top of that, government-backed incentives – like tax breaks and efforts to bring in foreign investment – are set to accelerate industrial growth. This positions South Africa as a rising contender in the global EV market, paving the way for technological advancements and a stronger economic future.
