South Africa Courts Chinese EV Investment in $27B Automotive industry
TLDR
- South Africa’s $27 billion automotive industry is poised to attract Chinese investment
- President Cyril Ramaphosa has enacted a tax break for new-energy vehicle production
- Three Chinese automakers have signed non-disclosure agreements with the Automotive Business Council
South Africa’s $27 billion automotive industry is poised to attract Chinese investment following President Cyril Ramaphosa’s enactment of a tax break for new-energy vehicle production. The amendment, allowing a 150% tax deduction for investments in electric and hydrogen-powered vehicle manufacturing, aims to secure the future of the country’s car-making sector.
Three Chinese automakers have signed non-disclosure agreements with the Automotive Business Council, CEO Mikel Mabasa revealed. Chinese brands like Chery and Great Wall Motor are already gaining ground in South Africa, challenging established manufacturers such as Toyota and Volkswagen.
The step comes as the EU’s phased ban on internal-combustion engines threatens South Africa’s exports. While Ford and BMW are producing or planning hybrids locally, no manufacturers have committed to battery-electric vehicle (BEV) production yet.
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Key Takeaways
While the tax amendment is a positive step, industry leaders caution that it alone won’t attract the investments needed to transition to new-energy vehicle production. Investments in charging networks, leveraging South Africa’s mineral wealth for battery production, and reducing high import levies and ad-valorem taxes are critical to maintaining competitiveness. South Africa’s status as a leading manganese and platinum producer, essential for EV batteries and hydrogen fuel cells, positions it as a strategic location for EV manufacturing. However, automakers stress that additional policy support is vital to ensure the country remains a key player in the global automotive industry.
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