Latest news with #AutomotiveProductionDevelopmentProgramme
IOL News
2 days ago
- Automotive
- IOL News
Precious minerals shipped away: Why SA wants to incentivise local production of EV batteries
Government wants to see EV batteries produced in South Africa. Image: Newspress South Africa is considering expanding its vehicle production incentive programme to encourage the production of electric vehicle (EV) batteries in the country. This would see the ITAC trade commission adding certain locally mined minerals to the list of items that qualify as local content under the Automotive Production Development Programme (APDP), reported. This list could be expanded to include materials such as lithium, copper, graphite, cobalt sulfate, manganese sulfate and other rare earth minerals. South Africa is a significant producer of minerals such as manganese, nickel, cobalt, lithium and platinum. Building batteries in the country would help to maximise the value extracted from these precious minerals. The government is also said to be considering increasing the customs duties on EV batteries, in order to further encourage local production, Xagta added. However, this move could backfire if a manufacturer is interested in producing EVs in South Africa, but does not wish to use locally produced batteries. It could mean losing the entire vehicle production contract rather than just foregoing production of the battery components. The APDP operates through a system of rebates and refunds on specific customs duties, and is aimed at incentivising local production of vehicles. Following the publication of the Electric Vehicle White Paper in late 2023, South Africa has already taken concrete steps to incentivise the local production of electric vehicles. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ From March 2026, car companies will be able to claim a 150% tax deduction on investments related to EV production in South Africa. This includes new production equipment and factory upgrades made with the intention of producing EVs. The new incentive programme will run until March 2036. The South African automotive sector produces over 500,000 vehicles per year. While plug-in hybrid vehicles are produced for export by both BMW and Ford, no fully electric vehicles are currently produced locally. A move to full EV production could be critical to the survival of the local industry, given that the European Union, which is South Africa's main export destination, plans to ban the sale of new internal combustion engined vehicles from 2025. Some manufacturers, such as Volkswagen, are reluctant to invest in the local production of EVs unless there is a significant local demand for such vehicles. Although President Cyril Ramaphosa announced in late 2024 that EV purchase incentives will be introduced, no timelines or details have been released as yet. Currently, EVs attract a higher import duty than internal combustion vehicles, with rates of 25% compared to 18%. IOL
Zawya
04-04-2025
- Business
- Zawya
South Africa not planning to retaliate over Trump's tariffs
South Africa has no immediate plans to retaliate against the United States over tariffs announced by President Donald Trump this week and will instead seek to negotiate exemptions and quota agreements, senior government officials said on Friday. Trump imposed a 31% tariff on U.S. imports from South Africa on Wednesday, when he announced a 10% baseline tariff on all imports and higher targeted duties on dozens of countries. The United States is South Africa's second-largest bilateral trading partner after China. Africa's most industrialised nation has said previously that it wants to agree a bilateral trade deal with Trump's team. That looks to be a tall order, however, after the U.S. president's repeated attacks on South Africa since his return to the White House in January. "To say we will impose reciprocal tariffs without first understanding how the U.S. arrived at 31% ... would be counterproductive," trade minister Parks Tau told a press conference, saying South Africa's average tariff on imports was 7.6%. Foreign affairs minister Ronald Lamola, meanwhile, said Trump's tariffs effectively nullified the benefits African countries had enjoyed under the African Growth and Opportunity Act. The AGOA initiative, which grants qualifying African nations duty-free access to the U.S. market, is due to expire in September. And Trump's far-reaching tariffs suggest that a renewal of the trade accord enacted in 2000 is now unlikely. The actions by the United States underscored the need for South Africa to accelerate efforts to diversify its export markets, the ministers said, mentioning markets in Asia and the Middle East as potential opportunities. In the meantime, they said the government would seek to support industries most affected by the tariffs, including car manufacturing, agriculture, processed foods and metals. The government will not remove benefits U.S. carmakers enjoy under its Automotive Production Development Programme, a production incentive scheme, Tau said. South Africa's National Treasury estimates that losing its AGOA status could reduce economic growth by less than 0.1 percentage points. The central bank has modelled several scenarios related to South Africa's access to U.S. markets, with the impacts ranging from under 0.1 percentage points to 0.7 percentage points depending on the severity of the trade barriers and how badly financial market sentiment is affected. Trump's latest tariffs are in addition to the 25% imposed on all vehicles and car parts imported into the U.S. That is a particular threat to South Africa, which exports over $2 billion a year in vehicles and auto parts to the U.S. (Reporting by Nqobile Dludla and Bhargav Acharya; Additional reporting by Sfundo Parakozov and Olivia Kumwenda-Mtambo; Writing by Alexander Winning Editing by Joe Bavier)
Yahoo
01-04-2025
- Automotive
- Yahoo
South Africa seeks meeting with US on auto tariffs
JOHANNESBURG (Reuters) - South Africa will seek a meeting with U.S. authorities on auto tariffs, Trade Minister Parks Tau said on Tuesday, noting the levies are a concern as the country has preferential trade status with the United States. South Africa, whose exports of vehicles and parts into the United States is estimated at over $2 billion, could take a severe hit from a planned tariff of 25% on automobile imports unveiled last week by U.S. President Donald Trump. Tau said in a statement that the U.S. Section 232 tariffs are expected to apply to imports of cars and car parts from countries, including South Africa, that benefit from the U.S. African Growth and Opportunity Act (AGOA). AGOA provides duty-free access to the U.S. market for most agricultural and manufactured products, such as cars and parts exported by eligible African countries. "Automobile exports from South Africa accounted for 64% of South Africa's exports under AGOA in 2024, and are therefore a significant component of products currently benefiting under the preferential programme," Tau said. While South Africa's car exports to the United States go duty-free under AGOA, U.S. imports into South Africa also enjoy rebates under the country's Automotive Production Development Programme. South Africa's exports of automobiles accounts for only 0.99% of U.S. total vehicle imports and 0.27% of auto parts "and thus do not constitute a threat to U.S. industry", Tau added. "South Africa will seek a meeting with the United States authorities to discuss these developments, given the potential negative effect on the South African economy," Tau said. The representative body of South Africa's automotive industry, NAAMSA has said that it was actively assessing the potential impact of these tariffs and that it was engaging with its members and other key stakeholders. Among the car brands that South Africa exports to the U.S. are Mercedes-Benz and BMW.
Yahoo
01-04-2025
- Automotive
- Yahoo
South Africa seeks meeting with US on auto tariffs
JOHANNESBURG (Reuters) - South Africa will seek a meeting with U.S. authorities on auto tariffs, Trade Minister Parks Tau said on Tuesday, noting the levies are a concern as the country has preferential trade status with the United States. South Africa, whose exports of vehicles and parts into the United States is estimated at over $2 billion, could take a severe hit from a planned tariff of 25% on automobile imports unveiled last week by U.S. President Donald Trump. Tau said in a statement that the U.S. Section 232 tariffs are expected to apply to imports of cars and car parts from countries, including South Africa, that benefit from the U.S. African Growth and Opportunity Act (AGOA). AGOA provides duty-free access to the U.S. market for most agricultural and manufactured products, such as cars and parts exported by eligible African countries. "Automobile exports from South Africa accounted for 64% of South Africa's exports under AGOA in 2024, and are therefore a significant component of products currently benefiting under the preferential programme," Tau said. While South Africa's car exports to the United States go duty-free under AGOA, U.S. imports into South Africa also enjoy rebates under the country's Automotive Production Development Programme. South Africa's exports of automobiles accounts for only 0.99% of U.S. total vehicle imports and 0.27% of auto parts "and thus do not constitute a threat to U.S. industry", Tau added. "South Africa will seek a meeting with the United States authorities to discuss these developments, given the potential negative effect on the South African economy," Tau said. The representative body of South Africa's automotive industry, NAAMSA has said that it was actively assessing the potential impact of these tariffs and that it was engaging with its members and other key stakeholders. Among the car brands that South Africa exports to the U.S. are Mercedes-Benz and BMW. Sign in to access your portfolio
Zawya
28-02-2025
- Automotive
- Zawya
South Africa's electric dream from loadshedding to leading the EV revolution
Just a year ago, South Africa was battling persistent loadshedding. The idea of electric vehicles (EVs) seemed a distant dream, a luxury for a country struggling to keep the lights on. But today, the narrative has dramatically shifted. Stabilised power supply and bold government initiatives have positioned South Africa to, as is increasingly being said in key policy and business circles, "be a primary player in the EV manufacturing space." This isn't just about cars; it's about seizing a transformative industrialization opportunity, boosting exports, and driving economic growth. South Africa's automotive sector is a cornerstone of its industrial landscape. It's mature, especially compared to other African nations, and boasts a strong presence of global Original Equipment Manufacturers (OEMs) like BMW, Toyota, and Nissan. The Automotive Production Development Programme (APDP), with its focus on "boosting production levels and job opportunities in the automotive sectors" (APDP 1) and aiming "to build a globally competitive automotive industry that drives South Africa's economic growth" (APDP 2), has fostered a robust ecosystem. Chinese manufacturers are also eyeing South Africa as a gateway to the African market, further enhancing the country's potential. A roadmap to an electric future The Department of Trade, Industry, and Competition's (DTIC) November 2023 Electric Vehicles White Paper recognised that the global automotive industry is 'undergoing one of the most seismic shifts in its nearly 150-year history' and provides South Africa with a 'major industrialisation opportunity'. It laid out a vision for South Africa to capitalise on this opportunity, leveraging its existing manufacturing prowess, logistical infrastructure, and strategic trade agreements. South Africa benefits from a complex web of trade agreements, opening doors to key markets: - Southern African Development Community (SADC) - SADC-EU Economic Partnership Agreement - African Growth and Opportunity Act (AGOA) with the United States - African Continental Free Trade Area (AfCFTA) Automotive is a priority sector for AfCFTA, fueling efforts to map value chains across the continent and create opportunities for collaboration. Incentivising the EV shift The paper outlined 10 crucial actions to boost EV production, and the government is making good on its promises. Specifically, there are efforts in: - Increasing investment and funding levels, including developing cost-effective incentive support, with higher levels of investment funding 'intended to catalyse EV investment in assembly and component manufacturing'. - Facilitating and developing an electric battery regional value chain - Introducing a temporary reduction of import duties for batteries in vehicles produced and sold in the domestic market. - Securing or maintaining duty-free export market access for vehicles and components produced in South Africa. The recent Taxation Laws Amendment Bill, signed into law in December 2024, is a game-changer. Section 12V offers a 150% tax deduction for qualifying assets used in EV production, effective from March 2026 to March 2036. This powerful incentive is designed to attract significant investment. Further proposed amendments to the APDP 2 Regulations, published in June 2024, aim to support the transition from internal combustion engines to EVs. The introduction of the Production Rebate Certificate (PRC) offers a duty credit certificate, incentivising local manufacturers and reducing customs duties based on local value added. Hub-and-spoke collaboration The concept of "rules of origin" is critical within trade agreements like AfCFTA. These rules determine whether a product qualifies for duty-free trade based on its manufacturing location. While the AfCFTA rules for automotive are still being finalised (expected by October 2025), a 40% threshold is common in other regions. South Africa's existing Special Economic Zones (SEZs), like Coega and Tshwane Automotive SEZ, are already well-positioned to attract investment. However, competition is heating up across the continent, with organizations like ARISE Integrated Industrial Platforms (ARISE IIP), that: A continent-wide vision AfCFTA and the African Automotive Manufacturers Association advocate for a "hub-and-spoke" model. This approach recognises that no single African country can do it all. Instead, regional hubs (like South Africa) will assemble vehicles, sourcing components from various "spoke" countries across the continent. Other African nations are already making strides in e-mobility. Kenya, Ghana, Nigeria, Togo, and Ivory Coast are incentivising EV development, with a focus on electric buses, two- and three-wheelers, and public transport. According to the United Nations Environment Program (UNEP): This specialisation creates complementary roles within a broader African EV value chain. Challenges and opportunities For this vision to succeed, seamless infrastructure, efficient logistics, and a reduction in non-tariff barriers are essential. If goods can't move efficiently, the industry will stall. If South Africa, in collaboration with other African nations, navigates these challenges successfully, its EV manufacturers will not only export to traditional markets like the US and Europe but also tap into the burgeoning demand within Africa. This will unlock the immense potential of new industries and drive economic growth across the continent. South Africa's journey from loadshedding to EV leadership is a testament to its resilience and a beacon of hope for a sustainable, industrialised African future. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
