South Africa will implement an investment allowance to encourage the production of electric vehicles (EVs) in the country from the first of March.

Finance Minister Enoch Godongwana announced the new investment incentive during his budget speech on Wednesday.

“This will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles in the first year.”

The incentive will be implemented in addition to the existing support under the Automotive Production Development Programme, Godongwana said.

He added the government has also reprioritised R964 million over the medium term to support the transition to Evs.

This complements funding that is being secured for the Just Energy Transition Investment Plan and the implementation plan for electric vehicles.

“The Electric Vehicles White Paper outlines our strategy to transition towards a broader new energy vehicle production and consumption in South Africa, starting with electric vehicles,” Godongwana said.

“It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles by 2035.”