Bad news for Toyota, BMW, and Ford in South Africa

The International Trade Administration Commission (ITAC) has proposed a 15% import tariff on new energy vehicle (NEV) batteries to build on local manufacturing capabilities.

This could be problematic for carmakers like Toyota, BMW, and Mercedes, who produce NEVs locally but import the batteries they use.

In a Government Gazette notice on 29 May 2025, the ITAC committed to reviewing the list of materials qualifying as standard materials under the Automotive Protection and Development Programme.

It said the review will include measures to support battery manufacturing in South Africa.

“These materials and minerals, to the extent that they can be found in viable deposits and reserves in South and Southern Africa, present an opportunity to increase manufacturing capabilities,” it said.

“Several minerals associated with battery electric vehicle production, including all hybrid derivatives, are not currently contained in the list of standard materials.”

The ITAC invited interested parties to submit comments on its proposals. The first of which is expanding the list of standard materials to include the following, when sourced from the SADC region:

• Rare earth minerals
• Iron
• Lithium
• Graphite
• Copper
• Cobalt Sulfate
• Manganese Sulfate
• Nickel Sulfate
• Polymers
• Sodium Carbonate

It is also considering increasing the customs duty applicable to NEV batteries to the World Trade Organisation-bound rate of 15% ad valorem.

The ITAC says increasing the duty will “provide tariff support for all future manufacturers of batteries, which can be accomplished by creating an eight-digit tariff subheading that will separate the batteries from cells.”

Speaking to 702, ITAC chief commissioner Ayabonga Cawe, explained that the move would provide local manufacturers importing battery components and assembling them in South Africa with some protection.

“As we shift towards battery electric vehicles, many of those batteries are made from a combination of minerals and materials that are found in some relative abundance in the SACU and SADC,” said Cawe.

“So this is in keeping with some of those developments and propulsion technologies. We are trying, by this effort, to harmonise and align our auto-industrial package to move in concert with that.”

Threat to locally assembled hybrids and EVs

Some of the world’s largest vehicle manufacturers, including Toyota, Ford, BMW, and Mercedes, assemble electrified vehicles in South Africa.

However, they source their batteries from elsewhere. For example, the batteries used in Toyota’s hybrid vehicles are manufactured in either the US or Japan.

At the same time, BMW sources the batteries used in its X3 30e xDrive model from manufacturers in Hungary, the US, Mexico, and China.

The 15% import duty on batteries assembled outside of South Africa could significantly impact these carmakers’ operations and prices.

Several types of hybrid-electric vehicles are produced in South Africa.

Traditional hybrids, like the Toyota Corolla Cross Hybrid, combine an internal combustion engine with an electric motor and a small battery during acceleration, resulting in lower fuel consumption.

The engine can charge the battery when it runs low, and the battery also charges through regenerative braking. It never has to be plugged into external power to charge.

PHEVs, such as the locally produced Ford Ranger PHEV and BMW X3 30e xDrive, also combine batteries, electric motors, and internal combustion engines.

Their batteries are generally quite large compared to traditional hybrids.

This enables them to run on minimal fuel when the battery is charged. It also enables electric-only driving in many models, meaning drivers don’t have to consume fuel over shorter-distance trips.

PHEVs can be charged by plugging into an external power source, as well as through the internal combustion engine and regenerative braking.

Mild Hybrids, such as Toyota’s 48V Hilux and Fortuner models, use a small electric generator to replace the traditional starter motor and alternator.

The generator provides some power assistance during fuel-intensive activities like rapid acceleration or restarting after stopping, resulting in lower fuel consumption.

Like traditional hybrids, mild hybrids can harvest energy during braking, charging the battery to provide further electric assistance.