South Africa is on the verge of a major shift in its automotive sector, as the electric vehicle (EV) market is set to grow rapidly.

Recent reports highlight new opportunities for both local and international investors, with the country preparing to produce its first locally-made EVs by 2026.

The Electric Vehicle Market Intelligence Report from GreenCape pinpoints four key sectors ready for investment: electric micro-mobility, public transportation electrification, freight and logistics, and the local manufacturing of electric passenger vehicles.

The electric micro-mobility market is picking up speed, especially in last-mile delivery services.

This includes electric bicycles, scooters, and motorcycles, which are becoming more popular due to their cost efficiency in cities.

As e-commerce is expected to grow—projected to reach ZAR 225 billion (USD 12 billion) by 2025—the need for efficient delivery options will rise.

The potential market for electric micro-vehicles is projected to reach ZAR 2 billion (USD 107 million) just for bicycles.

Electrifying public transportation is also an attractive business opportunity. Electric buses and minibus taxis can help operators lower fuel and maintenance costs, making them more profitable.

The market for electric buses is expected to see around 900 units a year, valued at ZAR 6.3 billion (USD 337 million), while electric minibuses could reach about 2,400 units, valued at ZAR 3.6 billion (USD 193 million).

However, challenges like high upfront costs and limited financing options need to be addressed.

The freight and logistics sector stands to gain from the shift to electric vehicles as well. The market for electric trucks could be around 3,600 units annually, worth ZAR 25 billion (USD 1.3 billion).

This move not only offers savings in operational costs but also aligns with global moves towards greener transportation.

Government support through financial incentives will be key in driving this transition forward.

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Local production of electric private passenger vehicles is the biggest opportunity within South Africa’s EV market.

With an annual market size estimated at 620,000 vehicles, worth ZAR 620 billion (USD 33.2 billion), there’s strong potential to build a local manufacturing base.

South Africa’s current capacity in commercial vehicle body-building could be adapted to EV production using imported chassis.

However, issues like energy supply and logistical challenges need to be solved for this potential to be fully realized.

Government policies are vital to shaping the future of South Africa’s EV market.

The Department of Trade and Industry and Competition recently introduced the Electric Vehicle White Paper, which sets out a framework to support local EV production.

Starting in March 2026, manufacturers will be able to benefit from a new investment allowance, enabling them to claim 150% of qualifying spending on electric and hydrogen-powered vehicles in their first year of production.

This adds to the support provided under the Automotive Production Development Programme.

Despite these encouraging developments, South Africa faces some challenges that need to be addressed to build a successful EV ecosystem.

High upfront costs, driven by import duties and luxury taxes, make it hard for consumers to afford EVs.

Additionally, the lack of widespread charging infrastructure and ongoing energy supply problems pose risks to the broad adoption of EVs.

As the country gears up for local production and greater use of electric vehicles, strategic investment in infrastructure and supportive policies will be key to unlocking the full potential of this growing industry.

With cooperation from the government and private investors, South Africa can position itself as a leader in sustainable transportation on the continent.