South Africa Bets Big On Evs

This incentive reflects the South African government's commitment to transform the automotive manufacturing industry from the production of primarily internal combustion engine vehicles to include the production of battery-electric and hydrogen-powered vehicles as envisaged in the Electric Vehicles White Paper published in November 2023.

Various African countries, including Togo, Ghana, Benin, Uganda, Tanzania and Zambia, have introduced tax incentives for battery-electric vehicles, not only to lower to cost of such vehicles to the consumer but to boost investments in the local manufacture of electric vehicles.

South Africa joins a laundry list of African countries that have adopted tax incentives. However, battery-electric and hydrogen-powered vehicle manufacturers need to be aware of the manner in which the South African Revenue Service will apply this tax incentive.

The incentive allows taxpayers to claim income tax allowances of 150 of the cost of any buildings and improvements new and unused plant and machinery including the cost of installation of any foundations or supporting structures designed for the plant and equipment and any improvements to plant and machinery acquired by the taxpayer that are used mainly in the production of battery-electric or hydrogen-powered vehicles in South Africa.

The incentive will apply for 10 years, to assets brought into use from 1 March 2026 and before 1 March 2036.