South Africa proposes extending auto incentives to battery materials

South Africa plans to add to its automotive incentive program minerals used in the manufacturing of electric vehicle batteries to boost local EV production and support related supply chains.

The government is reviewing its automotive policy to address the global shift toward electric and hybrid vehicles, tightening emissions rules and rising competition from low-cost imports, particularly from China and India.

The current list of “standard materials” covered by the incentives includes inputs such as aluminum, steel and platinum group metals but not minerals critical in EV battery production.

The International Trade Administration Commission (ITAC) said in a government notice released late on Monday it planned to expand the list by adding materials such as rare earths, iron, lithium, graphite, copper and cobalt.

To be included in the program, the materials will need to be sourced from the Southern African Customs Union and countries of the Southern African Development Community. Half of their value would be counted as locally value added, allowing producers to qualify for production incentives on that basis.

The revisions are intended to align the program with the South African Automotive Master Plan 2035, which aims to raise output to about 1.4 million vehicles a year, deepen localization and support the transition to electric mobility.

South Africa’s automotive program supports the industry through customs duty rebates and refunds, production-linked incentives, investment support, and a volume-based allowance that rewards carmakers for producing vehicles at scale in South Africa.

The public has four weeks to comment on the proposed amendments.

(By Nqobile Dludla; Editing by Tomasz Janowski)