To encourage local electric vehicle production, the government has proposed a tax incentive that will allow manufacturers to claim 150% of qualifying investment spending.
According to the budget, tabled by Finance Minister Enoch Godongwana on Wednesday, the proposed incentive will be made available for new investments from 1 March 2026.
Producers will be able to claim 150% of qualifying investment spending on production capacity for electric and hydrogen-powered vehicles in the first year of investment. The tax expenditure is estimated to amount to R500 million for 2026/27.
The electric vehicle tax incentive follows similar moves by the government to encourage investments in green technologies.
The 2023 budget proposed an incentive for individuals investing in rooftop solar, allowing them to receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels. According to the budget document tabled this week, the incentive supported the installation of solar panels that are now generating 5 200 megawatts of electricity for households and businesses.
In his speech on Wednesday, Godongwana noted that the government has also reprioritised R964 million over the medium term to support the transition to electric vehicles.
Meanwhile, the government has proposed to increase the motor vehicle emissions tax rate for passenger vehicles from R132 to R146 per gram of CO2 emissions per kilometre. The tax rate for double cabs will increase from R176 to R195 per gram of CO2 emissions per kilometre from 1 April 2024.
