South Africa’s Ministry of Finance said on March 12 it would invest 1 billion rand (54.27 million U.S. dollars) in special funds to support local new energy vehicle and battery production projects, while promoting the development of related manufacturing projects, Reuters reported.
As the largest automobile manufacturing center in sub-Saharan Africa, South Africa is home to many well-known automobile brands such as Toyota, Ford, Isuzu, Volkswagen and Mercedes-Benz.
Auto industry insiders said that the incentives and policy support introduced by the South African government will effectively encourage OEMs to increase their investment in local electric vehicle production in South Africa. The "Electric Vehicle White Paper" released by the South African government in 2023 clearly stated that it plans to achieve the strategic goal of transforming the South African automotive industry from single internal combustion engine vehicle production to a "internal combustion engine vehicle + electric vehicle" dual-track model by 2035.
The South African Treasury said in its 2024 budget review that the Department of Trade and Industry will work with the Department of Mineral Resources to develop and implement a regional critical mineral strategy, but the specific timetable has not yet been announced. Critical minerals such as copper, cobalt and lithium are important raw materials for the production of products such as electric vehicle batteries and solar panels, and play an important role in the global energy transformation process.
The South African Treasury said it would set aside R1 billion in the medium-term budget to support the transformation of South Africa's automotive industry. The plan aims to encourage companies in specific manufacturing sectors such as automobiles to increase their participation and investment in infrastructure construction. The South African Treasury added: "The main purpose of this incentive is to enhance South Africa's local production and assembly capabilities for new energy vehicles and batteries, while focusing on operational efficiency and competitiveness in new manufacturing projects." It is reported that this incentive plan is expected to attract R30 billion in investment from the South African private sector.
It is worth noting that in January this year, it was reported that South African President Cyril Ramaphosa had signed a law to reduce taxes for the production of new energy vehicles, planning to implement a 150% tax reduction policy for companies that invest in the production of electric vehicles and hydrogen-powered vehicles in South Africa. Therefore, Chinese automakers are planning to invest in the South African automotive industry.
