South Africa’s automotive industry is racing against a deadline it can’t control: the point at which global carmakers lock in where their next generation of electric vehicles will be built. A new 150% tax deduction for EV and hydrogen vehicle manufacturing, signed into law by President Cyril Ramaphosa and effective from March 2026, is meant to keep the country in that race. Industry executives say it’s a welcome start, but not close to enough on its own.
The stakes are hard to overstate for an industry that made up 23.8% of South Africa’s manufacturing output in 2025 and supports roughly 611,000 jobs directly and indirectly. About 67% of locally built vehicles are exported, and 63% of those exports go to the EU and UK — both markets tightening emissions rules and shifting rapidly toward lower-emission vehicles, which means South Africa’s traditional export base is shrinking just as the incentive is meant to help it grow a new one.
“What we’ve got to be very careful of is that South Africa doesn’t get left behind because the global framework is moving so quickly,” Ford Motor Company Africa president Neale Hill said. Toyota South Africa CEO Andrew Kirby was blunter about what’s actually driving investment decisions: “We used to rely on low energy costs, affordable labour, taxes and logistics. All of these have risen significantly over the last decade.” Toyota chose Thailand, not South Africa, to build the electric version of its Hilux pickup. Nissan exited local manufacturing entirely this year after its plant ran below capacity.
South Africa has been here before, and lost. Until 2024, it had held the title of Africa’s largest vehicle producer for decades. Morocco took it away that year, and has widened the gap since — Morocco crossed a million vehicles produced in 2025 against South Africa’s roughly 555,000 over the same period, with Morocco’s vehicle exports now worth around $14bn annually. The shift wasn’t really about South Africa building fewer cars; it was Morocco building a supply chain aimed squarely at the EV transition years in advance, backed by Renault-Dacia and Stellantis plants and closer proximity to European buyers.
The industry’s current warning is essentially that the same dynamic — early, sustained investment in EV supply chains beating incremental incentives — could now cost South Africa ground in the EV era the way it already cost the country its manufacturing crown.
Government support for EVs has existed since 2024, when Finance Minister Enoch Godongwana first earmarked R964 million for the transition alongside the existing Automotive Production Development Programme (APDP2). Industry body Naamsa noted at the time that figure amounted to a fraction of what South Africa’s OEMs invest annually on their own — around R5 billion collectively — and pushed for the APDP2 review to be brought forward rather than wait for its scheduled 2026 date. That review is still not finalised. Ramaphosa said in August the government was treating it “as a priority,” pointing to improved electricity supply and reforms at freight and ports operator Transnet as parallel efforts.
None of that changes the arithmetic facing OEMs weighing where to build next. As Investec’s De Wet Taljaard put it, the risk isn’t that South Africa’s existing car plants shut down overnight — it’s that “the next generation of vehicle platforms, technologies and manufacturing investments goes elsewhere,” the way it already has once this decade.
