The tax future of electric vehicles: Current tax position for the consumer and the possibility of legislative change in South Africa

Abstract

Background: The rapid rise of electric vehicles (EVs) in South Africa has sparked two competing fiscal narratives: one calling for alternative taxation mechanisms to offset declining fuel-related revenues, and the other advocating for expanded tax incentives to accelerate adoption.
Aim: To examine the current tax position of EVs for consumers and to explore potential legislative changes that may affect their taxation in South Africa.
Setting: Uncertainty exists in South Africa regarding the current tax position for EV consumers and potential legislative responses, creating a need for evidence to guide policy.
Method: A qualitative exploratory approach was adopted. Ten semi-structured interviews were conducted with tax experts and analysed using thematic analysis, supported by a document analysis of the current tax framework.
Results: Electric vehicles provide savings on fuel and carbon-related levies; however, higher import duties, purchase prices (increasing value-added tax [VAT] and ad valorem tax) and electricity levies offset some of these benefits. Although declining fuel revenue is a concern for the National Treasury, practical, administrative, ideological and socio-economic constraints limit the feasibility of additional taxes or consumer-side incentives. Short-term EV adoption is expected to remain modest due to electricity supply constraints, a carbon-intensive energy mix, limited charging infrastructure, high costs and geographic factors.
Conclusion: South Africa’s economic, fiscal, and infrastructural realities necessitate a distinctly context-specific approach to EV taxation.
Contribution: The clarification of the current tax position of EVs and potential legislative changes extends knowledge of South Africa-specific barriers and provides evidence to guide policy that supports adoption while safeguarding government revenue.