Demand-side reform, rather than manufacturing incentives, will be critical to accelerating electric vehicle (EV) adoption in South Africa, says electric mobility company Everlectric chief commercial officer Paul Plummer.

As South Africa moves towards implementing new manufacturing tax incentives for electric and hydrogen-powered vehicles in 2026, Plummer says the focus has largely been on industrial policy. The incentives include a 150% investment allowance for producers under the country’s New Energy Vehicle framework.

But Plummer notes that there are currently no large-scale EV manufacturers operating locally.

“Even with incentives, vehicle production facilities take years to plan, finance and build. In the meantime, businesses make decisions based on vehicles they can procure now,” he says.

Plummer adds that, if the objective is to stimulate demand, reduce fleet operating costs and accelerate transport decarbonisation, policy focus should shift towards demand-side reform.

He highlights that EVs in South Africa face structural cost challenges compared with internal combustion engine (ICE) vehicles. Import duties of 25% apply to EVs sourced from outside the EU, compared with 18% for ICE vehicles, while ad valorem duties further increase retail prices, he says.

“For fleet operators, acquisition cost remains the primary challenge. Even where total cost of ownership modelling shows lower cost per kilometre on suitable routes, import duties and taxes distort the economics,” he explains.

Plummer points to international examples where demand-side policy interventions supported adoption.

“In Norway, value added tax exemptions and reduced purchase taxes enabled EVs to become mainstream, with more than 80% of new passenger vehicle sales now electric. In the UK, a combination of mandates, grants and tax incentives supported commercial EV uptake,” he says.

He notes that South Africa’s automotive sector contributes about 5% of GDP and nearly 15% of total exports, but emphasises that industrial policy and market adoption are not the same.

Fiscal Implications

Plummer acknowledges that National Treasury would need to consider fiscal implications but suggests that time-bound or volume-capped adjustments could support early adoption while maintaining fiscal discipline.

He adds that transport has broader economic implications, with South Africa increasingly reliant on imported liquid fuels. In 2024, the country imported $12.3-billion of refined petroleum.

“Even modest EV penetration in high-mileage fleets can replace a portion of imported fuel spend with locally produced electricity, improving energy security and reducing exposure to oil price and currency volatility,” he says.

Plummer adds that demand-side reform could also support trade competitiveness, particularly as carbon-related trade measures evolve. He notes that the EU’s Carbon Border Adjustment Mechanism will enter its definitive phase in 2026 and already covers major industrial exports.

“Decarbonising domestic logistics helps exporters demonstrate supply-chain emissions reductions and strengthens resilience as carbon-linked trade measures expand,” he says.

On environmental considerations, Plummer cites estimates that transport accounts for about 23% of global energy-related CO2 emissions. He says South Africa’s reliance on road freight makes fleet electrification a practical intervention.

“Even with a carbon-intensive grid, EVs deliver net emissions reductions owing to drivetrain efficiency, and these benefits increase as renewable energy is added. EVs are also futureproof assets, as emissions decline with grid decarbonisation, without requiring vehicle replacement,” he says.

Plummer notes that manufacturing incentives may attract future assembly capacity, but warns that without sufficient domestic demand, such facilities may struggle to achieve scale.

“If 2026 is to mark a turning point for electric mobility, policy must address current constraints. Fleet operators are ready to adopt where the economics make sense, but structural pricing barriers remain,” he concludes.