South Africa launches tax break, helping to lure China EV makers

South Africa is positioning itself for significant Chinese investment in its $27 billion automotive industry following the enactment of a tax break encouraging new-energy vehicle production.

The amendment, signed into law by President Cyril Ramaphosa on December 24, allows a 150% tax deduction on investments in electric and hydrogen-powered vehicles.

Chinese automakers like Chery Automobile Co. and Great Wall Motor Co. are already gaining traction in South Africa, competing with established brands like Toyota and Volkswagen. While the industry welcomes this policy, challenges remain.

Local automakers like Volkswagen and Isuzu are hesitant to commit to electric vehicle (EV) production, citing a need for supportive measures like tax reductions on sales, infrastructure development, and leveraging South Africa's mineral resources.

Industry leaders warn that without stronger government backing, South Africa risks losing its status as a global automotive hub.