An evaluation of a tax incentive for business owners for investment in electric vehicles

Abstract

The world is moving towards more energy-efficient methods of transport and some countries have started to implement tax incentives to promote and encourage the adoption of electric vehicles to facilitate the transition. The number of electric vehicles on the roads of South Africa is increasing but not at the rate seen in countries such as the United States of America. South Africa has yet to implement incentives to promote this change and increase the number of electric vehicles on the roads. Announcements have been made to implement an incentive to promote the manufacturing of electric vehicles in South Africa, to protect the automobile market, but there has been no mention of an incentive to encourage the adoption of electric vehicles for the users thereof. This study aimed to evaluate and recommend an incentive for possible implementation that could facilitate this transition from internal combustion engine to electric vehicles in South African business. To achieve this objective, a qualitative research method was used to gather information which was mostly acquired from government sources, explaining the legislation implemented in the countries compared, such as the United States of America, China and Canada. Furthermore, academic literature was used to evaluate the effect that the incentives had in these countries and to investigate which, if any, could be applied in the South African context. The market for electric vehicles in South Africa does exist but is growing at a rather slow pace.This growth rate could be increased by implementing a relevant tax incentive. This study concluded with a recommendation of an incentive to be considered for implementation that is aimed to be beneficial for both business owners and the government.