The Indian manufacturer made the decision on safety grounds pending further investigation into the exact cause of the problem. It is the first time Mahindra have had to pull out from the race in the championship. Mahindra have been part of Formula E since the inaugural season in 2014.
Customer team ABT CUPRA, which also runs the M9Electro, have also withdrawn from the weekend.
“Mahindra Racing have confirmed their withdrawal from the ABB FIA Formula E World Championship qualifying sessions and the Cape Town E-Prix Round 5 due to rear suspension safety concerns,” said Mahindra in a statement.
“A thorough investigation on the suspension elements of the Mahindra M9Electro race cars will take place on the team’s return to the UK.
“The safety of the drivers and extended teams is of utmost importance at this point in time.”
Mahindra had registered a podium finish in the season opener in Mexico before Oliver Rowland finished sixth in the home race in Hyderabad earlier this month.
The Indian outfit lies seventh in the team standings.