South Africa has proposed major changes to its automotive incentive scheme to provide greater support for electric vehicle (EV) battery production and critical minerals processing.
Trade, Industry and Competition Minister Parks Tau published draft amendments to the Automotive Production and Development Programme for public comment on Friday, Moneyweb reports.
The proposed changes would introduce higher production credits and customs rebates for battery manufacturers, while expanding the list of qualifying materials to include critical minerals processed in South Africa and neighbouring countries.
Under the amendments, the proportion of eligible materials qualifying for support would increase from 25% to 50%, potentially unlocking significantly higher incentive credits for manufacturers.
The draft changes would also broaden the programme to include battery-electric, hybrid and fuel-cell vehicles as government seeks to reposition the local automotive sector for new-energy vehicle production.
This comes as the domestic automotive manufacturing sector faces mounting pressure from rising production costs, weakening exports and growing competition from cheaper vehicle imports originating in India and China.
Manufacturers, including Toyota Motor Corporation and Volkswagen AG, have called for urgent policy interventions to improve competitiveness.
The proposed reforms also seek to leverage South Africa’s mineral reserves, as it holds about 70% of the world’s identified manganese resources, a key input material used to manufacture EV batteries.
Source: Bloomberg, via Moneyweb
