How much fuel tax government loses with every electric car sold in South Africa

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While sales of EVs are still very low compared to those of petrol or diesel models, National Treasury stands to lose tens of millions of rand in fuel levies over the next few years based on a growing adoption rate.

The South African government loses an average of nearly R5,000 in general fuel levy taxes for every electric vehicle that replaces a petrol or diesel car.

These funds are used for various government expenditure programmes and are not limited to transport spending. Government has come under pressure to limit these taxes as the price of fuel shot up due to rising international oil costs and the weakening of the Rand.When charging their car’s battery at home using the grid, EV owners contribute to Eskom and electricity distributors’ revenues.

However, the IEA said the average fuel consumption of South African passenger cars decreased by roughly 1.3% each year from 2005 to 2019. With a 6.9ℓ/100km fuel consumption, the average motorist would require 1,108 litres of fuel annually. However, if the 85% year-on-year increase in EV sales is maintained over the next four years, this amount could rise to over R47 million per year by 2027.

 

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