Trade, Industry and Competition Minister Parks Tau says South Africa’s future competitiveness in the automotive sector hinges on rapidly embracing new energy vehicles (NEVs), as the global auto industry undergoes its most significant transformation in a century.

Global markets are accelerating the shift away from internal combustion engines. The UK and the EU, which together account for almost half of South Africa’s vehicle exports, will ban sales of new fossil-fuel vehicles by 2035.

“If we do not adapt, we risk losing these key export markets,” he said this week in his keynote address at the 2025 South African Auto Week hosted by industry organisation naamsa | The Automotive Business Council.

The automotive industry contributed 5.2% to South Africa’s GDP in 2024, accounted for 22.6% of total manufacturing output, and exported vehicles and components worth R268.8-billion to 155 markets.

The sector sustains nearly 500 000 direct jobs, more than the mining industry,  and supports around one-million across the value chain, he highlighted.

“This sector also anchors our manufacturing capacity, attracts consistent investment, and integrates South Africa into global supply chains. It is one of our most competitive industries and gives us a unique advantage in Africa,” Tau said.

Further, in 2024, 15 611 NEVs were sold in South Africa, representing 3% of the market, and sales of hybrids and electric vehicles (EVs) are growing steadily.

“Importantly, our domestic industry has already attracted more than R12-billion in new investment into NEV models,” said Tau.

Government has amended the Automotive Production and Development Programme to include EVs and their components, while a 150% tax deduction for qualifying EV and hydrogen vehicle production investments will take effect from 2026.

There were also ongoing partnerships with universities and research institutions to develop the next generation of automotive engineers and technicians, he added.

At the same time, government has finalised South Africa's National Critical Minerals Strategy, aimed at securing supply chains for the domestic NEV industry, attracting investment into gigafactories, and supporting the development of hubs for battery assembly, recycling, and research.

“This is not just an industrial project. It is about positioning South Africa as a maker of value, not a taker, creating skilled jobs, spurring innovation, and deepening Africa’s role in the global clean energy transition,” he added.

Tau stressed that Africa’s platinum, manganese, nickel, cobalt, and rare earth mineral deposits gave the continent a once-in-a-generation opportunity to build a competitive battery manufacturing value chain.

Africa was growing in importance as an export destination and, in 2024, South Africa’s vehicle exports to the continent were worth R48.1-billion, which was an increase of 12.4% year-on-year.

“The African Continental Free Trade Area (AfCFTA) presents significant opportunities by enabling duty-free access beyond the Southern African Development Community, supporting regional value chains, and encouraging infrastructure investment.

“[AfCFTA] also opens doors for collaboration in battery manufacturing and mineral beneficiation across Africa,” he said.

To this end, South Africa was advancing the creation of an African Auto Pact, which would harmonises policies and rules of origin to attract investment and build regional industrial capacity.

“Through AfCFTA, we can build a continental battery industry that leverages resources from across Africa, and South Africa’s manufacturing and research strengths, to create value chains,” said Tau.