South Africa Considers Tax on EV Batteries to Boost Local Industry

New Tariff Could Impact Automakers Assembling Cars Locally

South Africa’s International Trade Administration Commission (ITAC) is proposing a 15% import tariff on new energy vehicle (NEV) batteries, a move designed to stimulate domestic battery manufacturing and strengthen the country’s automotive supply chain. The potential levy raises concerns for automakers who currently import batteries for vehicles assembled within South Africa.

Expanding Local Manufacturing Capabilities

The proposal, detailed in a Government Gazette notice released on May 29, 2025, stems from a review of materials qualifying for benefits under the Automotive Protection and Development Programme. ITAC believes expanding local production of battery components is crucial for long-term industry growth.

According to the notice, the review aims to identify opportunities to increase manufacturing within South Africa and the broader Southern African Development Community (SADC) region. ITAC highlighted the abundance of minerals essential for battery production, such as rare earth minerals, lithium, and graphite, found within the region.

ITAC is also considering broadening the definition of “standard materials” to include these minerals when sourced from the SADC, potentially offering incentives for their use in local production. The commission is seeking feedback from stakeholders on these proposals.

Impact on Major Automakers

Several global vehicle manufacturers, including **Toyota**, **Ford**, **BMW**, and **Mercedes**, currently assemble hybrid and electric vehicles in South Africa, but rely on imported batteries. For instance, **Toyota**’s hybrid vehicle batteries are sourced from the United States and Japan. **BMW** imports batteries for its X3 30e xDrive model from facilities in Hungary, the US, Mexico, and China.

The proposed 15% duty could significantly increase production costs for these companies and potentially impact vehicle pricing. The tariff would apply to batteries imported fully assembled, while components imported for local assembly would receive some protection.

Different Hybrid Technologies Affected

The tariff would impact various types of hybrid vehicles produced in South Africa. Traditional hybrids, like the **Toyota** Corolla Cross Hybrid, use a small battery charged through regenerative braking and the internal combustion engine. Plug-in hybrid electric vehicles (PHEVs), such as the **Ford** Ranger PHEV and **BMW** X3 30e xDrive, have larger batteries and can be charged from external power sources.

Mild hybrids, like **Toyota**’s 48V Hilux and Fortuner models, utilize a small electric generator to assist the engine, improving fuel efficiency. According to the International Energy Agency, global sales of electric vehicles (including hybrids) reached 14 million in 2023, representing 18% of all car sales (IEA Global EV Outlook 2024).

“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.”

—Ayabonga Cawe, ITAC chief commissioner

**Cawe** explained to 702 that the move aims to align South Africa’s automotive industrial policy with the growing demand for battery-powered vehicles and the availability of key minerals within the region.

ITAC believes the tariff will encourage investment in local battery manufacturing, creating jobs and boosting the South African economy. The commission is accepting comments on the proposal from interested parties before making a final decision.