It is a positive signal. But it is not the lever that will meaningfully accelerate electric vehicle adoption in the country in the near term.

There are currently no large-scale EV manufacturers operating locally. Even with the incentive in place, vehicle production facilities take years to plan, finance, and build. In the meantime, fleets and businesses make decisions based on vehicles they can procure today, not those that may be assembled locally at some point in the future.

If the objective is to stimulate demand, lower fleet operating costs, and accelerate decarbonisation in transport, the focus must shift from supply-side incentives to demand-side reform.

Navigating the obstacles

At present, electric vehicles in South Africa face structural cost headwinds that internal combustion vehicles do not. Import duties of 25% apply to EVs sourced from outside the European Union, compared to 18% for combustion vehicles. On top of that, ad valorem duties increase the final retail price further.

For fleet operators, acquisition cost is the first challenge. Even when the total cost of ownership modelling shows that EVs can deliver lower cost per kilometre on the right routes, elevated import duties and ad valorem taxes distort the economics.

International experience shows what happens when those distortions are addressed directly. This experience indicates that demand-side policy consistently precedes mass adoption, regardless of geography or grid mix.

In Norway, VAT exemptions and reduced purchase taxes transformed EVs from niche products into mainstream fleet and consumer choices. Today, more than 80% of new passenger vehicle sales in Norway are electric, supported by sustained demand-side policy intervention. In the United Kingdom, the Zero Emission Vehicle mandate, combined with targeted grants and tax incentives, has accelerated commercial EV uptake while providing clear regulatory signals to industry.

Closer to home, South Africa’s automotive sector remains a critical contributor to GDP and exports. The industry accounts for approximately 5% of GDP and nearly 15% of total exports.

But industrial policy and market adoption are not the same thing.

Doing the job

From an operator’s perspective, the question is whether the vehicle can do the work at a lower cost per kilometre without compromising payload, uptime, or service levels. On many urban and last-mile routes, the answer is increasingly yes. In our experience, commercial EVs deployed on the right routes already deliver 10 to 15% lower total cost of ownership than their internal combustion equivalents, even without incentives. However, elevated import duties delay that crossover point. What holds back faster adoption is not technological readiness. It is the pricing structure at the point of import.

Concurrently reducing import duties on EVs to align with those for internal combustion vehicles would send a clearer signal to the market than manufacturing incentives alone. Revisiting ad valorem duties for electric vehicles would further correct a pricing distortion that currently penalises lower-emission technologies.

For Treasury, the concern is understandably fiscal. Any reduction in duties must be weighed against revenue considerations. Time-bound or volume-capped adjustments could stimulate early adoption while preserving long-term fiscal discipline.

Yet transport carries economic costs of its own. South Africa increasingly relies on imported liquid fuels due to declining local refining capacity, which directly puts pressure on the current account and foreign-currency demand. In 2024, South Africa imported $12.3bn of refined petroleum. Even modest EV penetration, particularly in high-mileage fleets, substitutes a portion of imported fuel spend with locally produced electricity, strengthening energy security and reducing exposure to oil price and currency volatility.

Finally, demand-side EV reform supports trade competitiveness. The EU’s Carbon Border Adjustment Mechanism enters its definitive phase in 2026 and already covers major industrial exports; South Africa had R43.4 billion in exports to the EU within CBAM scope in 2023. While CBAM does not currently cover agricultural exports such as fresh fruit, the direction of travel is clear: embedded emissions are becoming a trade variable, and the EU is already considering expanding coverage to additional product categories over time. Decarbonising domestic logistics, particularly high-mileage fleet transport, helps South African exporters demonstrate credible supply-chain emissions reduction and improve resilience as carbon-linked trade measures evolve.

Environmental matters

The International Energy Agency estimates that transport accounts for roughly 23% of global energy-related CO₂ emissions. South Africa’s heavy reliance on road freight means that fleet electrification represents one of the most practical levers available. While the country’s grid remains carbon-intensive, electric vehicles still deliver net emissions reductions due to drivetrain efficiency, and the benefit increases as renewable generation is added. Critically, EVs are future-proofed assets: as the grid decarbonises, fleet emissions decline without requiring vehicle replacements. Currently, with on-site renewable energy generation, wheeling and other offset programs, these emissions can be virtually mitigated.

Manufacturing incentives may eventually attract assembly capacity. But without a growing domestic market, those facilities will struggle to achieve scale. Demand precedes supply.

If 2026 is to mark a meaningful turning point for electric mobility in South Africa, policy must recognise the immediate constraint. Fleet operators are ready to move where the economics make sense. Vehicle options are expanding. Charging infrastructure models are stabilising. What remains is to remove structural pricing barriers that slow adoption at the first decision point.

The opportunity is not theoretical. It is operational. With calibrated demand-side reform, South Africa can accelerate EV uptake while supporting industry, protecting fiscal stability, and strengthening the competitiveness of its transport economy.

By Paul Plummer, Chief Commercial Officer, Everlectric