South Africa vs Morocco: Can the 2026 NEV tax incentive reclaim Africa’s top auto producer spot?
As the clock struck 09:30 AM this morning, January 27, 2026, the Portfolio Committee on Trade, Industry and Competition convened in Parliament for a session that could determine the trajectory of South Africa’s industrial heartbeat for the next decade.
The briefing focuses on the South African Automotive Master Plan (SAAM) 2035, a policy framework designed to double the industry’s employment and increase local content to 60%. However, the atmosphere in the NCOP building was said to be one of industrial reckoning, rather than celebration.
Localisation and the NEV Pivot
The Department of Trade, Industry and Competition (the dtic), alongside key industry bodies like NAACAM and Naamsa, presented sobering progress reports on the transition to New Energy Vehicles (NEVs). The stakes have never been higher:
Localisation: Current levels hover at 39.1%, a marginal increase from previous years but far short of the linear trajectory required to hit the 60% goal by 2035.
The NEV Shift: With the EU and UK—SA’s primary export markets—moving toward internal combustion engine (ICE) restrictions by 2035, the local industry must pivot.
Parks Tau welcomes Chinese investment
A major highlight of the briefing was the recent announcement that the Chinese giant Chery South Africa will acquire Nissan’s Rosslyn plant. Minister Parks Tau hailed this as a critical "vote of confidence."
"The South African automotive sector remains a key anchor industry for manufacturing and job creation," the Minister noted, emphasising that the deal secures thousands of jobs at a site that has produced vehicles for nearly 60 years.
The March 1st countdown
The most urgent topic is the March 1, 2026, deadline. In just over a month, the government’s new tax incentive will go live, allowing manufacturers to claim 150% of their investment into facilities and machinery for electric and hydrogen vehicles.
This R500 million investment allowance for the 2026/27 tax year is designed to level the playing field. Industry experts describe this as a "one-shot" opportunity for local plants operated by Toyota, Ford, VW, and BMW to convince their global parent companies to keep production lines in South Africa.
The Morocco factor
The urgency is underscored by a sobering reality: Morocco has officially overtaken South Africa as the continent’s largest vehicle producer.
| Metric | South Africa (2025) | Morocco (2025) |
| Annual Production | ~597 000 units | ~1 000 000 units |
| Local Content | 39% | 60%+ |
| Primary Advantage | Established Tier 1 Base | Proximity to EU & Green Grid |
Morocco’s success is attributed to its "nearshoring" strategy for Europe and a reliable, green-energy-powered manufacturing grid. Parliamentarians today are grappling with how to reclaim this competitive edge while South Africa still faces logistical and energy constraints.
Key takeaways
The dtic and NAACAM highlighted specific areas where the "gears are grinding":
Component deepening: There is a critical need to move beyond "bolt-on" assembly toward high-value components like drivetrain electronics and battery casing.
Logistics improvement plan: Modernising customs and reducing delays at the Durban and Eastern Cape ports is now categorised as a "national security" priority for the industry.
Tier 2 & 3 Support: The Automotive Industry Transformation Fund (AITF) reported that while Tier 1 suppliers (large multinationals) are stable, smaller black-owned Tier 2 and 3 suppliers require urgent capital for machinery upgrades to handle NEV requirements.
Looking ahead
The briefing concluded with a call for more rapid infrastructure development to support the NEV rollout. As the committee adjourned, the message was clear: 2026 is the year South Africa either plugs into the future of motoring or risks being left in the rearview mirror.
