By Enyichukwu Enemanna
South Africa will commit the sum of 1 billion rand ($54.27 million) to support the local production of new electric vehicles (EVs) and batteries, as well as other related manufacturing projects, the country’s National Treasury announced on Wednesday.
“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,” the treasury added.
It noted that the incentive is expected to attract investment worth 30 billion rand from the private sector.
South Africa is the largest automotive manufacturing hub in sub-Saharan Africa, hosting brands such as Toyota, Ford, Isuzu, Volkswagen, Mercedes among others.
The National Treasury says the move has become necessary as a result of nearly $873 million spending on new internal combustion engine and hybrid models.
The industry has said that government incentives and policy interventions was necessary to encourage original equipment manufacturers to invest more in the production of electric vehicles in the country.
In 2023, South Africa unveiled Electric Vehicles White Paper outlining the country’s strategy to transition the automotive industry from primarily producing internal combustion engine vehicles to a mix that includes electric vehicles by 2035.
In its annual budget review, the treasury said the department of trade and industry in partnership with the department of mineral resources, planned to approve and implement a regional critical minerals strategy, but did not give a timeline to achieve this.
Some of the key mineral resources including copper, cobalt and lithium vital for the production of electric vehicle batteries and solar panels are found in South Africa. They play crucial role to the world’s energy transition.
The treasury said 1 billion rand was being set aside over the medium term for the industrial development support programme, an incentive scheme that aims to increase participation and investment in infrastructure by firms in selected manufacturing sectors such as automotive.
