Finance Minister Enoch Godongwana confirmed on Wednesday that government intended implementing tax and expenditure measures to support the domestic automotive sector’s transition to new energy vehicles (NEVs) and that details will be provided in the 2024 Budget Review in February.

In addressing lawmakers, Godongwana acknowledged that South African vehicle producers, along with the associated exports and jobs in the sector, faced an “existential threat” as the world transitioned to NEVs from internal combustion engines.

“This transition will require balancing domestic market demand, establishing renewable-energy-based charging infrastructure, and supporting production.

“The goal is to make sure the sector remains a major contributor to the industrial development of the domestic economy,” the Minister said.

He added that the broader NEV strategy included a plan to collaborate with other African countries to develop battery production capacity, by “pooling the critical-mineral resource base that Africa is endowed with”.

In a media briefing, Godongwana said the details of the incentives were still being finalised, but he indicated that there was unlikely to be any support for consumers to buy NEVs, as such a move would stimulate exports and “we can kiss production goodbye”.

Meetings had been held with all seven domestic manufacturers on ways to stimulate production and exports and the Minister indicated that he did not anticipate any tax incentives flowing before the third year, or 2025/26, of the medium-term expenditure framework.

The Automotive Business Council | naamsa described policy certainty as a critical step for securing the future of the automotive industry in South Africa.

"The lack of the NEV regulatory framework could result in the South African automobile makers facing the threat of losing significant investment for local production," the council said.