South Africa’s tax break plan may direct China to produce electric vehicles in Africa. This comes after the president signed a law providing tax breaks for the production of new energy vehicles.
Three Chinese automakers have signed non-disclosure agreements with the Automotive Business Council. CEO Mikel Mabasa, who gave an interview on Friday, did not reveal the names of these companies and commented on the situation as follows:
“With good government policies, we will attract new investment, we will increase and retain investment.”
The country will offer a 150% tax deduction on investments in the production of electric and hydrogen-powered vehicles.
Chinese brands like Chery Automobile and Great Wall Motor have become strong enough to compete internationally in the industry. In December, the Chinese ambassador to South Africa, Wu Peng, described the South African government’s move as a significant step. According to him, the government is encouraging automakers to invest in South Africa.
However, there have been years of warnings that the automotive industry, a key sector in South Africa’s manufacturing, is at risk due to European Union laws aimed at phasing out the use of internal combustion engines.
While companies like Ford and BMW plan to produce hybrid vehicles in the country, none has announced plans to invest in battery electric vehicles. On the other hand, companies like Isuzu Motors and Volkswagen have stated that they do not see the possibility of producing electric vehicles in South Africa.
CEO Mikel Mabasa noted that while electric vehicles have been adopted slowly in European and U.S. markets, South Africa must begin production and attract investment to maintain its position in the global industry.
Mabasa also pointed out that South Africa’s infrastructure and relatively affluent consumer base make it an attractive hub for automakers, but the sector needs more support.