South Africa’s introduction of a tax incentive aimed at attracting electric vehicle (EV) and hydrogen-powered vehicle production has positioned the country as a potential hub for Chinese automakers.
The legislation is seen as a response to ongoing shifts in global automotive markets, particularly the European Union’s drive to phase out internal combustion engines.
Mikel Mabasa, CEO of the Automotive Business Council, confirmed in an interview with Bloomberg that three Chinese automakers have signed non-disclosure agreements related to potential investments.
While the tax break has been welcomed by the industry, Mabasa highlighted that it comes amid mounting pressure on South Africa’s automotive sector. Export-focused manufacturers face challenges adapting to the EU’s timeline for phasing out petrol and diesel vehicles.
The announcement of South Africa’s tax incentive came just over a week before China’s proposal to impose new export restrictions on EV-related technology.
China’s proposal forms part of broader and escalating trade tensions with the United States.
The latest proposed measures could further impact global supply chains, reinforcing China’s dominance in lithium processing and EV battery production.
Industry analysts suggest that the proposed curbs may serve as leverage in trade negotiations, with potential implications for Western automakers reliant on Chinese technology.
South Africa’s position as a producer of key minerals places it at the center of this evolving landscape.
Currently, China controls around 70 percent of global lithium processing. Industry analysts believe that further export restrictions would reinforce this position.
The South African government is expected to consult with industry stakeholders on additional measures to support the automotive transition.
Meanwhile, automakers will closely monitor developments in China’s export policy, recognizing the potential impact on global supply chains and future investments.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
Leave a Reply