Lerato Mbhiza
Trade, Industry and Competition Minister Ebrahim Patel has announced the introduction of a temporary reduction on import duties for batteries in electric vehicles (EVs) produced and sold in the domestic market.
Speaking at a media briefing on the release of the documents, Patel said the EV White Paper was the final iteration, following its approval and adoption by Cabinet last month. This move is aimed at improving the cost competitiveness of EVs in South Africa.
“We are looking at reducing the current petrol-driven incentives to electrical vehicles and provide additional support in the form of tax or fiscal measures as well as the use of what is called the JEIP funding – these are the resources with partners as part of South Africa’s transition,” Patel said.
He added that the reduction in import duties for batteries will be subject to careful consultation to ensure that local producers are not undermined.
The announcement comes as South Africa seeks to accelerate its transition to a low-carbon economy.
The Department of Trade, Industry and Competition (dtic) on December 4 released the Electric Vehicles (EV) White Paper, as well as the Green Hydrogen Commercialisation Strategy final report.
The White Paper outlines a course to transition the country’s automotive industry from primarily producing internal combustion engine (ICE) vehicles to a dual platform that includes EVs in the production and consumption mix, alongside ICE vehicles in South Africa by 2035.
The White Paper was drawn up following considerable international and domestic research and consultations, spanning from 2019 to this year.
Patel averred that, following the release of the paper, South Africa’s production of EVs could begin as early as 2026, as indicated by the dtic’s engagements with various original-equipment manufacturers (OEMs) in finalising the paper.
There is, however, one outlying OEM, which would begin production at a later stage, he said.
Patel pointed out that the White Paper was developed with the country’s energy crisis in mind and was aimed at facilitating the addition of more renewable energy sources to the energy grid.
The paper sets out the policy goals and actions that will be taken to support the transition towards broader new energy vehicle (NEV) production and consumption in South Africa, with an immediate focus on EVs.
A set of core principles underpin the policy goals and actions to be taken:
The transition to EVs and NEVs is necessary, and the pace at which key decisions are required is urgent given the speed at which markets are developing, and the long lead times for investment decisions.
Attracting investment requires a technology-agnostic approach, including embracing a range of clean energy sources to ensure an appropriate transition.
Investment support is required to boost productive capacity, while fourth, policy actions have to reflect cost-effective and fiscally sustainable solutions.
Deepening localisation of the automotive supply chain, including through beneficiation of critical minerals through the development of regional value chains is essential and, lastly, policy actions must reflect the need for a just transition in the automotive industry.
Patel emphasised that key to the approach was the importance of domestic production of EVs and highlighted a technology-agnostic stance, with the paper encompassing a variety of different technologies, ranging from battery electric vehicle (BEV) to fuel-cell technologies and sustainable fuels (also called synthetic fuels), and aiming to position the country as a production destination for vehicles and components in emerging technologies.
He also emphasised the commitment to public measures including fiscal support.
The use of Just Energy Transition Investment Plan (JET-IP) funding will complement yearly budget appropriations and announcements in the National Budget next year.
Following publication of the White Paper, the government will make the first announcements of resource allocations in the February 2024 Budget.
The White Paper highlights the considerable industrialisation opportunity for South Africa and the region to develop regional ‘critical minerals to batteries’ value chains.
It outlines that capitalising on this would require a regional approach to critical mineral beneficiation.
It therefore aims to establish a framework under which African countries can work with partner countries to develop the industrial capacity necessary to make the continent a key industrial player, rather than just a source of critical minerals, in the transition to EVs.
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