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Minister’s EV transition instruments welcomed

Home Manufacturing & Processing Automotive Minister’s EV transition instruments welcomed

FINANCE Minister Enoch Godongwana’s 2024 Budget Speech made ground-breaking announcements for South Africa’s plan to transition towards manufacturing electric vehicles (EVs). The transition follows the official publication of the White Paper on EVs in December 2023.

The following is a relevant extract from the Budget Speech:

“Supporting the Production of New Energy Vehicles: The Electric Vehicles White Paper outlines our strategy to transition towards a broader new energy vehicle production and consumption in South Africa, starting with electric vehicles. It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles, by 2035.

“To encourage the production of EVs in South Africa, government will introduce an investment allowance for new investments, beginning 1 March 2026. This will allow producers to claim 150 percent of qualifying investment spending on electric and hydrogen-powered vehicles in the first year. The incentive will be implemented in addition to the existing support under the Automotive Production Development Programme.

“Government has also reprioritised R964 million over the medium term to support the transition to electric vehicles,” the minister said.

The AIDC-EC welcomes these ground-breaking announcements that have been in the works for the past 2 years and is encouraged that the country has finally put its front foot forward in terms of transitioning with the rest of the world. The above instruments are important not only for the country, but specifically for the Eastern Cape province.

The automotive industry in the Eastern Cape is estimated to account for about 65,000 jobs, it produces 46% of vehicles produced in the country and exports 54% of South Africa’s export vehicles. It hosts both MBSA, VW Africa Group, Isuzu and now Stellantis, some of which are most likely to be the first OEMs to produce NEVs in the country and our province. MBSA already produces hybrid vehicles for the export market.

According to Thabo Shenxane, AIDC-EC CEO, these announced instruments further propel several discussions that the AIDC-EC has been leading in the past two years with potential key investors in NEVs. Most of these discussions were held up because there was no policy clarity concerning NEV production in South Africa.

“We are now going to further pursue these potential investors and assist current investors to access and use these instruments to benefit their businesses and also address our country and province’s socioeconomic challenges”, says Shenxane.

We look forward to engaging further with national government to practicalise this support in the province, the AIDC-EC said.

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