South Africa has taken another step towards positioning itself in the global electric vehicle (EV) value chain, proposing amendments to its automotive incentive programme that would extend benefits to minerals used in EV battery production.
The proposal, published by the Department of Trade, Industry, and Competition (DTIC), seeks to include key battery minerals such as lithium, cobalt, graphite, copper, iron, and rare earth elements under the country’s existing automotive incentive framework. The move is aimed at strengthening local EV manufacturing, supporting mineral beneficiation, and helping the country remain competitive as the global automotive industry shifts towards cleaner mobility.
South Africa’s automotive sector is one of the country’s most important manufacturing industries, contributing significantly to exports, employment, and industrial output.
The proposed changes form part of the broader South African Automotive Master Plan (SAAM) 2035, which aims to:
- Increase South Africa’s vehicle production levels.
- Boost local content and component manufacturing.
- Expand participation in global automotive supply chains.
- Support the transition towards electric and hybrid vehicle production.
Currently, the automotive incentive programme covers materials such as aluminium, steel, and platinum group metals. However, minerals essential to EV battery manufacturing have been excluded despite growing global demand for battery-powered vehicles.
Under the proposed amendments, qualifying battery minerals sourced from countries within the Southern African Customs Union (SACU) or the Southern African Development Community (SADC) would be eligible for incentives. Additionally, 50% of the value of these materials would be recognised as locally added value when calculating production incentives.
The proposal comes as governments and manufacturers worldwide race to secure supplies of critical battery materials amid growing EV adoption.
South Africa possesses significant reserves of several minerals used in battery production and already plays a major role in the global mining sector. By expanding incentives beyond vehicle assembly and traditional automotive materials, policymakers hope to encourage greater beneficiation and local processing of strategic minerals rather than exporting raw resources.
Industry stakeholders have long argued that South Africa needs to capture more value from its mineral wealth as global demand for battery materials accelerates.
The DTIC’s proposal also aligns with recent government efforts to support new-energy vehicle production. Earlier this year, South Africa introduced a tax incentive allowing vehicle manufacturers to claim up to 150% of qualifying investments in electric and new-energy vehicle production facilities.
The proposed amendments arrive as the automotive industry faces major structural changes driven by:
- Rapid growth in electric vehicle production.
- Stricter emissions regulations in key export markets.
- Increasing competition from lower-cost vehicle imports, particularly from China and India.
- Growing demand for secure battery material supply chains.
South Africa’s automotive manufacturers remain heavily reliant on export markets, especially Europe, where emissions regulations are becoming increasingly stringent. Failure to adapt production capabilities could place future export competitiveness at risk.
The country’s automotive industry currently employs approximately 115,000 people, including around 80,000 in component manufacturing. The sector contributes roughly 22.6% of South Africa’s manufacturing output and around 5.2% of GDP, highlighting its importance to the broader economy.
The government has opened a four-week public consultation period on the proposed amendments, allowing industry participants and stakeholders to submit comments before the changes are finalised.
If implemented, the revisions could help deepen regional supply chains, encourage investment in battery material processing, and position South Africa as a more important player in the rapidly growing global electric vehicle industry.
As automakers worldwide accelerate their transition towards electrification, the inclusion of battery minerals in South Africa’s automotive incentive programme could become a key pillar of the country’s long-term industrial strategy and its ambitions under the Automotive Master Plan 2035.
