South Africa’s electric vehicle (EV) market could soon face a major price hike, following a proposal by the International Trade Administration Commission (ITAC) to implement a 15% import tariff on batteries used in new energy vehicles (NEVs). The move is intended to stimulate local manufacturing of EV battery technology but is expected to push up vehicle prices in the near term.
Localisation Push Could Cost Consumers More
According to a Government Gazette notice published on 29 May 2025, ITAC is reviewing the Automotive Production and Development Programme (APDP) with the aim of strengthening South Africa’s EV value chain. A key proposal involves imposing a 15% ad valorem customs duty on imported NEV batteries. The commission believes this tariff will incentivize original equipment manufacturers (OEMs) to develop battery manufacturing capacity within the country.
Currently, global automakers like Toyota, BMW, Ford, and Mercedes-Benz manufacture hybrid and electric vehicles in South Africa but rely heavily on imported batteries. For instance, Toyota’s Corolla Cross Hybrid receives its battery packs from the U.S. and Japan, while BMW’s plug-in hybrid X3 sources batteries from countries including Hungary, Mexico, China, and the United States.
By levying the proposed tariff, ITAC aims to level the playing field for local producers, arguing that it would provide long-term tariff protection for battery manufacturing investments. The commission is also exploring the creation of a dedicated eight-digit tariff code to distinguish batteries from their components, ensuring clear categorization and targeted support.
Mineral Resources and Regional Sourcing
In line with the localisation strategy, ITAC also suggested broadening the list of standard materials that qualify under the APDP. These materials, many of which are crucial for battery production, would ideally be sourced from the Southern African Development Community (SADC) region. Among them are:
- Lithium
- Cobalt sulfate
- Nickel sulfate
- Manganese sulfate
- Graphite
- Copper
- Polymers
- Iron
- Rare earth minerals
- Sodium carbonate
These resources, if found in commercially viable deposits in Southern Africa, could be used to bolster local battery production. ITAC has invited industry stakeholders to comment on the proposals, signaling that the process remains open for public and private sector input.
The Trade-Off: Development vs Affordability
While the commission’s strategy is aimed at strengthening South Africa’s industrial base and reducing reliance on foreign imports, the short-term consequence could be painful for consumers. The higher cost of importing NEV batteries is likely to increase production costs for local assembly plants, with those added expenses passed on to consumers in the form of higher EV prices.
Experts note that it could take several years before South Africa develops the capacity to manufacture lithium-ion batteries domestically. Until then, buyers of hybrid and electric vehicles may face steeper costs, potentially slowing the adoption of greener mobility in the country.
Looking Ahead
As South Africa positions itself for the global shift toward electric mobility, balancing industrial policy with affordability will be key. The proposed tariff is a bold step toward fostering a local battery supply chain—but whether that comes at the cost of consumer accessibility remains a pressing concern. Stakeholders now have a window to voice their perspectives before the tariff decision is finalized.
Related article: Electric Vehicles: One Segment Where Chinese Cars Don’t Outsell European Rivals in SA
