South Africa is poised to start producing electric vehicles (EVs) as early as 2026, Trade, Industry, and Competition Minister Ebrahim Patel announced on December 4. This significant development follows the Cabinet’s approval and adoption of the Electric Vehicles White Paper last month.
The White Paper, developed through extensive international and domestic research and consultations since 2019, charts the transition of South Africa’s automotive industry. It aims to integrate EVs into the production and consumption mix by 2035, alongside internal combustion engine vehicles.
Patel highlighted that the White Paper’s development took into account the country’s energy crisis, emphasizing the need to add more renewable energy sources to the grid. The policy document sets the framework for supporting this transition towards broader new energy vehicle production, with a current focus on EVs.
The policy approach is underpinned by six core principles. These include the urgency of transitioning to EVs, adopting a technology-agnostic approach to attract investment, and providing investment support to boost production capacity. Moreover, the policy actions will reflect cost-effective, fiscally sustainable solutions, aim to deepen localization of the automotive supply chain, and ensure a just transition in the industry.
The focus is on domestic EV production, encompassing various technologies from battery electric vehicles to fuel-cell technologies and sustainable fuels. Public measures, including fiscal support, will complement these efforts. The Just Energy Transition Investment Plan funding and upcoming National Budget announcements will play key roles in supporting these initiatives.
The White Paper presents a two-pronged strategy. The first area focuses on investments in EV component production and vehicle assembly, especially for markets moving towards net-zero emission vehicles. It also involves investment in local production and standardization of charging infrastructure.
The second area balances market development, including increasing grid capacity for domestic EV uptake, public procurement of locally produced EVs, exploring consumer incentives, and leveraging the African Continental Free Trade Area to boost demand.
The policy framework outlines ten goals and 16 distinct actions, spanning from now until 2035. These include increasing investment and funding levels, developing an electric battery regional value chain, and introducing a temporary reduction in import duties for batteries in domestically produced vehicles.
Other actions involve leveraging research and development incentives, commercializing green hydrogen production, implementing energy reforms, and developing an EV certification program for skills development.
Post-publication of the White Paper, the Department of Trade, Industry, and Competition (dtic) will finalize the incentive package architecture by January 2024. Amendments to the Automotive Production and Development Programme Regulations and Guidelines will follow, with stakeholder engagements beginning in the same month.
The National Treasury is expected to detail the OEM incentives by February 2024, and amendments to the Automotive Investment Scheme guidelines will be published concurrently.
Meanwhile, the Green Hydrogen Commercialisation Strategy report outlines growth opportunities for South Africa in green hydrogen. This includes domestic production and use of green hydrogen to decarbonize the economy, with a focus on hard-to-decarbonize value chains. The strategy also emphasizes the development of industrial capabilities in the green hydrogen value chain.
These policy developments mark a significant step for South Africa in establishing itself as a key player in the global shift towards sustainable transportation.
