South Africa paves way for NEV investment boom

Published in Brainstorm Magazine, March 2025.

South Africa hopes to attract new investment in the automotive industry after signing legislation in January that introduces a 150% tax incentive for electric and hydrogen vehicles, or new energy vehicles (NEVs), produced locally.

Effective from March 2026, all qualifying investments up to R500 million can claim a 150% tax deduction for the 2026/27 tax year.

Three Chinese automakers have signed NDAs with Naamsa, the Automotive Business Council. That’s according to CEO Mikel Mabasa, who said in an interview: “With good government policies, we will attract new investment and increase and retain investment.”

While Chery, BYD, and GWM did not respond to queries, deputy director Ben Fouche from BAIC says it has plans to start producing and selling NEVs, especially battery electric vehicles (BEVs), in South Africa. Timelines will depend on market conditions.

BAIC has already invested in a plant in the Coega Special Economic Zone in the Eastern Cape, as part of a joint venture with South Africa’s Industrial Development Corporation.

The new tax incentive excludes hybrid vehicles, but the Department of Trade, Industry and Competition says hybrid vehicles and their components are already supported by the Automotive Production and Development Programme (APDP) master plan.

“At present, there are four original equipment manufacturers (OEMs) producing hybrid vehicles in South Africa that are being supported by the APDP, including the Automotive Investment Scheme,” says the DTIC, referring to BMW, Ford, Mercedes-Benz and Toyota. According to Naamsa, the automotive sector contributes 5.3% to South Africa’s GDP, with 3.2% for manufacturing and 2.1% in retail. Meanwhile, vehicle exports declined 22.8% in 2024, the first time since Covid-affected 2020.

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