Chasing the Future: South Africa's Race to Electrify the Automotive Industry

Hlela, Ntuthuko

Chasing the Future: South Africa's Race to Electrify the Automotive Industry

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

The automotive industry, one of the biggest contributors to climate change, has been tasked to transition from producing ICEVs to producing Electric Vehicles (EVs) as the latter is relatively more environmentally friendly. Given the technical distinctions between ICEVs and EVs, this transition bears significant implications for the automotive industry GVC. The fundamental purpose of this paper is to understand, using the GVC methodology, how South Africa can accelerate the production and consumption of EVs. The paper found that to navigate the EV transition successfully, the South African government needs to make legally binding commitments to the transition. More specifically, on the supply side, the government needs to offer significant tax breaks and subsidies that will make establishing businesses in South Africa attractive for investors, especially Original Equipment Manufacturers (OEMs). South Africa already has a geographical disadvantage coupled with a relatively small domestic and regional market; therefore, it is paramount for the government to use all available tools in its arsenal to make the country a viable option for investors. On the demand side, the government should provide financial incentives to prospective EV buyers. The price differential between ICEVs and EVs is the main hurdle to a mass adoption of the latter, hence tax incentives and subsidies will play an important role in accelerating the adoption of EVs in the country.

Keywords

electric vehicles

climate change

Reference:

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