Electrical Power & Protection


South Africa can become an important EV manufacturer

April 2025 Electrical Power & Protection

A year ago, South Africa was mired in loadshedding, with the importance and relevance of electric vehicles (EVs) far from the public imagination. How can a country that struggles to keep the lights on dedicate time and resources to building out an EV future?

Fast forward a year and much has changed. The power supply has stabilised and a statement increasingly doing the rounds in key policy and business circles is, “South Africa should be a primary player in the EV manufacturing space.” The reasons why are myriad, with recent moves by the government accelerating a true export industrialisation opportunity that can have real implications for South Africa’s trade and economic growth. South Africa has what it takes to become a global EV manufacturer; but first it’s important to take a step back.

The automotive sector is crucial to the posture of South Africa’s industry and its automotive manufacturing is mature, especially relative to other African markets. A number of the world’s largest auto original equipment manufacturers (OEMs) manufacture in South Africa, including BMW, Toyota and Nissan. Chinese auto manufacturers are increasingly considering South Africa as a manufacturing hub to access the rest of the African market. The work undertaken as part of the Automotive Production Development Programme (APDP), a customs duty-based programme comprising rebates and refunds of the relevant customs duties, has underpinned the government’s policy approach to the sector. The APDP 1, focuses on “boosting production levels and job opportunities in the automotive sectors”, whereas the APDP 2 aims “to build a globally competitive automotive industry that drives South Africa’s economic growth”. The ecosystem to support these manufacturers has evolved substantially over time.In November 2023, the Department of Trade, Industry and Competition published the ‘Electric Vehicles White Paper.’ This paper acknowledges that the global automotive industry is “undergoing one of the most seismic shifts in its nearly 150-year history” and provides South Africa with a major industrialisation opportunity to develop regional ‘critical minerals to batteries’ value chains. The maturity of the country’s auto manufacturing sector, its developed logistics infrastructure, and a complex mix of existing trade agreements with key economic centres and regions, all position South Africa favourably as a potential EV manufacturer.

Currently the mix of trade agreements includes the Southern African Development Community (SADC); the SADC-European Union’s Economic Partnerships Agreement; the African Growth and Opportunity Act with the United States; and the African Continental Free Trade Area (AfCFTA). Automotive is among the sectors prioritised by AfCFTA, which has led to advanced work taking place by various stakeholders to map value chains across the continent.


Yael Shafrir, associate director.

Among the 10 actions named in the white paper to support the development of the Southern African EV productive capacity are:

• Increasing investment and funding levels, including developing cost-effective incentive support with higher levels of investment funding “intended to catalyse EV investment in assembly and component manufacturing”.

• Facilitating and developing an electric battery regional value chain, including raw material refining, battery active materials, component production and cell manufacturing.

• Introducing a temporary reduction of import duties for batteries in vehicles produced and sold in the domestic market to improve cost competitiveness.

• Securing or maintaining duty-free export market access for vehicles and components produced in South Africa to support the resilience of the industry.

The government has been under significant pressure to take action as highlighted in the white paper to stimulate investment. It is pleasing to see that progress is being made to attract foreign investment in EV manufacturing.


Raeesah Shaik, associate.

On 24 December 2024, President Cyril Ramaphosa signed the Taxation Laws Amendment Bill into law. Of particular interest to the EV industry is the amendment of section 12 of the Income Tax Act, with Section 12V inserted and set to take effect on 1 March 2026.Section 12V provides a 150% tax deduction on the cost of certain parts and assets used by automotive manufacturers in the production of electric battery powered or hydrogen-powered vehicles in South Africa. These assets include buildings, new and unused machinery, plants, implements and articles. They should be used to produce vehicles and have foundations or supporting structures if integrated with machinery. To qualify for the tax deduction, the assets must be used between 1 March 2026 and 1 March 2036.

This amendment aligns with point 1 of the 10 action steps outlined in the white paper, and represents a significant step towards encouraging EV manufacturing in South Africa by incentivising auto companies to set up operations in South Africa.

The government also published proposed amendments to the APDP 2 Regulations on 19 June 2024. Some of the key proposed amendments include supporting the transition of production from internal combustion engines to EVs. The proposed amendments introduce the Production Rebate Certificate, (PRC) which is a duty credit certificate that rebates customs duties, an incentive that will become available for final manufacturers in South Africa on certain qualifying products. Under the first phase of the APDP, the government issued the Production Rebate Credit Certificate (PRCC), which only rebated the customs value. Those qualifying for PRCs under the proposed amendments will enjoy production incentives and a reduction of customs duties, depending on the local value added. The value of the production incentive will be adjusted downward by a 20% customs duty rate for components and tooling, and 25% customs duty rate for specified motor vehicles.

What the government is seeking to do is stimulate EV manufacturing and encourage OEMs to continue manufacturing vehicles in South Africa.


Nasmé Puley, associate.

An Africa-wide EV manufacturing industry

An important part of global trade agreements, including AfCFTA, is the concept of rules of origin. Rules of origin are the criteria used to assess whether a product is eligible for duty-free trade on the basis that it is manufactured or a minimum percentage of it is manufactured in a region, continent or country as agreed upon in a trade agreement. The agreed rules of origin for automotive under AfCFTA are yet to be finalised. The finalisation is anticipated to take place by the end of October 2025. In other regions, 40% is the broadly accepted threshold in this sector.

With the established special economic zones (SEZ) in South Africa already hosting many OEMs, e.g., the Coega SEZ and the Tshwane Automotive SEZ, South Africa is already in a strong position to attract foreign and domestic direct investment in the automotive manufacturing sector with an export orientation. However, it is competing with the proliferation of SEZs and Industrial Zones across the continent, including Pan African players such as ARISE Integrated Industrial Platforms (ARISE IIP). ARISE IPP is dedicated to creating, funding, conceptualising, and managing industrial ecosystems across Africa. The organisation identifies gaps in various African markets and develops tailored solutions aimed at promoting the sustainable transformation of raw materials.


Shirleen Ritchie, partner.

This approach not only boosts exports but also fosters trade. Special Economic Zones (SEZs) and industrial parks are increasingly positioning themselves as competitive players by providing incentives, access to essential infrastructure, deep-sea ports, and comprehensive industrial ecosystems designed to support manufacturing and enhance export capabilities.

Furthermore, outside of South Africa’s own ambitions, AfCFTA and the African Automotive Manufacturers Association support the concept of a hub-and-spoke model for African automotive manufacturing. For African automotive manufacturing to be competitive, one country cannot do it all. A regional hub-and-spoke model is essential to establish a value chain and facilitate the utilisation of local components and material in the production process across different African countries. A hub-and-spoke model has been put forward to enable multiple countries in one region to share the benefits of having an automotive industry. Each African region should embed a hub-and-spoke production model whereby vehicle components may be manufactured in different countries across that particular region (spokes), which are shipped into the assembling country of that region (hub).

For example, countries such as Kenya, Ghana, Nigeria, Togo and Ivory Coast are increasingly incentivising EV and e-mobility development, with Ivory Coast focusing on electric buses, while Kenya has established an E-mobility Taskforce to develop a National Electric Mobility Policy covering all forms of transport. Much of Africa, particularly East and West Africa, is focusing on two and three wheelers (both e-hailing and personal mobility) and public transport (like e-buses), whereas countries such as South Africa will more likely focus on ‘green taxis’, micromobility, last mile delivery and fleets. According to the United Nations Environment Program (UNEP), “two and three-wheelers are the priority in transitioning to e-mobility because they are the fastest-growing mode of transportation in many low and middle-income countries”.

There is an opportunity for certain African countries to play a key role as a regional complementary hub and partners in the mobility/EV value chain throughout the continent. It is important to create regional ecosystems and supply chains through private sector collaboration in key focus industries. For this model to work, there must be infrastructure, logistics and a reduction in non-tariff barriers. If manufactured goods cannot be moved from A to B efficiently, an industry will become moored at the start line.

If done correctly, South African auto EV manufacturers will not just export to the USA and Europe, but also to other African countries, thereby enjoying all the possibilities that new industries would create on the continent.

For more information contact Webber Wentzel, +27 11 530 5000, [email protected], www.webberwentzel.com




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