SADC battery incentives – FINALLY
The Department of Trade and Industry has proposed sweeping changes to local content calculations for the automotive industry.
Chinese imports are eroding demand for South African-built vehicles and becoming a real balance-of-payments issue for Treasury. With each new Chinese vehicle purchase, instead of a locally built unit, South Africa ' s Automotive Production and Development Programme( APDP) takes a loss, while the country ' s current account weakens.
Since its inception, the APDP has dispersed significant local production incentives. The goal has been to create employment, develop the downstream technical supply chain, and earn foreign currency for the fiscus.
Most of the APDP ' s ambitious targets for total local production were never for local demand, but for export, to earn valuable foreign currency. But there has always been a local demand component to the APDP strategic policy. Alarmingly, over the last decade, South African buyers have shifted from buying 56 % locally made models to only 33 %, contributing to the overall underachievement of the APDP production targets.
BRIDGING THE BATTERY GAP
Leaders in the South African automotive industry have been warning that, without a clear and coherent policy to establish automotive-grade powertrain battery-pack production, the industry will suffer a technical shortfall that it could never recover from in the future.
The logical conclusion is that the 430 % year-on-year increase in PHEV demand South Africa ' s experienced over the last year, proves the case for vehicles with some form of battery powertrain integration.
Without local battery production, there ' s a capability gap in what OEMs can build locally, in terms of powertrain diversity for popular models. Most OEMs are developing towards some form of electrification, with PHEVs the most likely configuration. To address the locally built PHEV issue, there are interesting details in the latest policy documents regarding South Africa ' s industrial strategy.
WORDS IN ACTION 40 JUNE 2026