South Africa is setting up a major electric vehicle (EV) manufacturing subsidy beginning March 2026. This is part of the government’s wider strategy to promote the transformation of the automotive industry to cleaner, greener technologies. The subsidy looks to draw investment, create jobs, and prepare for the transition at the global level of the car manufacturing sector away from petrol and diesel cars.
Who Is Eligible for the Subsidy
This subsidy is meant for selling manufacturers of electric and hydrogen-powered vehicles. Eligible manufacturers are those that have made investments in buildings, plants, machinery, and equipment for the purpose of producing EVs or hydrogen vehicles. To qualify, the assets must be new, not previously used, and used predominantly for the production of EVs for at least five years. Manufacturers should also ensure that their projects meet local content and employment specifications set forth by the Department of Trade, Industry and Competition.
Subsidy Amount and Benefits
From March 2026, the eligible manufacturers will be able to claim 150 percent of the tax deductions in respect of qualifying capital expenditure. This means that for every rand invested in EV-related infrastructure approved by the government, companies may deduct an amount equivalent to one and a half times the actual investment from taxable income in the first year of such investment. This should help reduce initial investment costs and hence make South Africa a more viable site for the expansion of EV production by global car brands.
Final Decision on Dates and Duration
As at March 1, 2026, such a claim for subsidy shall commence and continue in force for a period not less than 10 years to March 2036. This long timeframe allows manufacturers an opportunity to plan and work on their projects in harmony with the global transition of vehicle production for export markets.
Conclusion
The new EV incentive really stands as a testimony to South Africa’s quest to modernize its automotive industry and reduce carbon emission. With well-defined eligibility criteria, attractive incentives, and ample period of 10 years for abirth are induced into investment, the scheme is poised to attract huge domestic and international investments putting South Africa as a major player in the future of electric mobility.