South Africa’s plan to cut electric car prices — with R80,000 discounts on the cards

President Cyril Ramaphosa’s recent announcement that consumer and manufacturer incentives were on the cards for new energy vehicles (NEVs) could provide a big boost to electric vehicle sales in the coming years.

Speaking at the SA Auto Week 2024 in Cape Town in mid-October 2024, Ramaphosa said the government was considering introducing incentives to encourage local NEV manufacturing.

He also said that the government was weighing tax rebates or subsidies to promote consumer uptake of NEVs.

“This is not just about creating a greener future, but also about ensuring South Africa remains competitive in the global markets as many of our major trading partners rapidly shift toward EVs,” he said.

“It is also imperative that we remain part of this global supply chain. If we don’t, we will be left behind.”

The announcement was welcomed by the National Association of Automobile Manufacturers in South Africa (Naamsa), which represents all prominent vehicle makers in South Africa.

For years, the association complained that the government’s failure to embrace the transition to NEVs could make one of South Africa’s biggest industries and job creators irrelevant.

Naamsa said the incentives for manufacturers and subsidies for consumers were a “crucial step towards the widespread adoption of cleaner, more sustainable vehicles.”

The organisation previously published its new energy vehicle roadmap discussion document in early 2023, detailing its recommendations on consumer and manufacturer incentives to promote local NEV growth.

To advance local sales, it believes the government should provide the following subsidies for different types of NEVs:

• R20,000 for traditional hybrid electric vehicles (HEVs) up to 31 December 2030
• R40,000 for plug-in hybrid electric vehicles (PHEVs) up to 31 December 2030
• R80,000 for fully-electric vehicles (BEVs) up to 31 December 2035

One key condition for these subsidies is that they must only be available to NEVs which have been deemed road-legal in the EMA region, which encompasses Europe and the United Kingdom (UK).

Naamsa has estimated that these subsidies would cost the government about R94.5 billion by 2035, but it argues that it would close the price gap between NEVs and ICE models in South Africa and increase NEV sales significantly.

With the subsidies in place, Naamsa reckons that NEVs will make up 20% of all car sales in South Africa in 2025, a drastic increase over the 1.45% recorded in 2023.

It is also estimated that the NEV share will increase to 40% by 2030 and 60% by 2035.

Import duty tax reduction

Naamsa also wants original equipment manufacturers to get long-term duty-free access to the EMA region — which includes Europe and the United Kingdom — South Africa’s biggest vehicle export market.

That would be aimed at securing production demand for existing South African-made models.

It also recommended the current 25% import duty on EVs from the EMA region to be reduced to the same 18% charged for ICE vehicle imports.

This should be on the condition that the tariff reduction is reciprocal, which will also make it more affordable for the EMA countries to import NEVs made in South Africa.

Naamsa said these tax adjustments would have no fiscal impact as they would maintain the industry’s status quo regarding two-way trade flow between South Africa and the EMA.

As it stands, all of the sub-R1 million fully-electric cars sold in South Africa come from China, which means that they won’t benefit from the import duty reduction.

However, by reducing the import duty for vehicles produced in the EMA, it may may convince OEMs making EVs in those countries to bring more of their models to South Africa.

Some companies — like Volvo and Volkswagen — also manufacture certain electric models in both China and the EMA.

If an import duty reduction would make the total landing cost of the vehicle cheaper when imported from its EMA plants, the manufacturer could switch to that source to offer the best prices and boost sales prospects in South Africa.

Impact on prices of current models

As it stands, the most affordable proper EV in South Africa is the BYD Dolphin, which starts at R539,900 new for the standard range model.

This model is made in China, so it won’t benefit from the proposed reduced import duty percentage of 18%.

However, as it has been homologated and sold in the EMA, it should qualify for Naamsa’s proposed subsidy.

If Naamsa’s recommended subsidies were implemented, the price of the Dolphin would drop to R459,900.

The impact of the reduction would also be significant for those who buy the Dolphin with a vehicle loan.

Financing the car over a 72-month period at a 13% interest rate with no balloon or deposit would currently cost R10,931 per month.

With the subsided price tag, the monthly repayment would drop to R9,325.

Below, we have summarised how much South Africans could pay for the six most affordable EVs in the country if the government adopted Naamsa’s proposed subsidies.

Bear in mind that none of these cars would qualify for the import duty reduction, which would only apply to models built in the EMA region.

However, since all have been homologated in the EMA, they should qualify for the R80,000 subsidy.

BYD Dolphin Standard — R459,900 (normally R539,900)

• Power/torque: 70kW/180Nm
• 0—100km/h acceleration: 12.3 seconds
• WLTP range: Up to 340km
• Charging speeds: 7.4kW AC, 60kW DC
• Vehicle-to-load support: Yes, up to 3.3kW

GWM Ora 03 300 Super Luxury — R606,950 (normally R686,950)

• Power/torque: 126kW/250nm
• 0—100km/h acceleration: 8.2 seconds
• WLTP range: 310km
• Charging speeds: 11kW AC, 67kW DC
• Vehicle-to-load support: No

BYD Atto 3— R688,000 (normally R768,000)

• Power/torque: 150kW/310Nm
• 0—100km/h acceleration: 7.3 seconds
• WLTP range: Up to 345km
• Charging speeds: 11kW AC, 70kW DC
• Vehicle-to-load support: Yes, up to 3.3kW

Volvo EX30 Core Single Motor — R711,900 (normally R791,900)

• Power/torque: 200kW/343Nm
• 0—100km/h acceleration: 5.7 seconds
• WLTP range: Up to 344km
• Charging speeds: 11kW AC, 134kW DC
• Vehicle-to-load support: No

BYD Seal Extended Range RWD — R919,900 (normally R999,900)

• Power/torque: 230kW/360Nm
• 0—100km/h acceleration: 5.9 seconds
• WLTP range: Up to 480km
• Charging speeds: 11kW AC, 150kW DC
• Vehicle-to-load support: Yes, up to 3.3kW

Mini Countryman SE ALL4 — R1,006,000 (normally R1,086,000)

• Power/torque: 230kW/494Nm
• 0—100km/h acceleration: 5.6 seconds
• WLTP range: Up to 365km
• Charging speeds: 11kW AC, 128kW DC
• Vehicle-to-load support: No