Volkswagen and Isuzu Chill South Africa’s EV Ambitions

Major car manufacturers Volkswagen and Isuzu Motors do not have immediate plans to make electric or hybrid vehicles in South Africa despite generous tax breaks the country introduced earlier this year.

South Africa said in February that companies that invest in the production of electric vehicles (EVs) in the country would be able to claim a 150% tax deduction on these investments, beginning in 2026. The country aims to attract EV manufacturing and incentivize its EV and hydrogen industries, which are relatively small and underdeveloped.   

However, Volkswagen and Isuzu plan to remain focused on vehicles with internal combustion engines in South Africa, the respective regional heads of the two auto manufacturers told Bloomberg.

While Volkswagen and Isuzu don't have plans for EV or hybrid vehicle manufacturing in South Africa, another major carmaker, Stellantis, is weighing the possibility of expanding its South African production into the new-energy vehicles (NEVs), as EVs, plug-in hybrids, and traditional hybrids are known.

Stellantis's decision would depend on whether a market for these vehicles emerges in South Africa, the managing director of the company's South African unit, Mike Whitfield, told Bloomberg in an interview last week.

In five years "it's a high probability but there's no final decision," said Whitfield of Stellantis, the manufacturer of Jeep.

South Africa's NEV market is rising, but from a very small base, and sales are not in numbers that would currently warrant mass EV manufacturing in the country.

Sales of NEVs in South Africa jumped by 65% last year, but the overall number was just 7,693 units of hybrids and EVs sold. NEVs accounted for only 1.45% of all new cars sold in the country in 2023. 

NEV sales in the first quarter of 2024 jumped by nearly 83%, to 3,042 NEVs, compared to 1,665 vehicles sold during the same period in 2023, according to the Q1 2024 quarterly review of the National Association of Automobile Manufacturers of South Africa (NAAMSA).  

By Charles Kennedy for Oilprice.com

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