Posted on 06 Feb 2024
Ethiopia’s Ministry of Transport and Logistics recently announced the country will ban imports of non-electric vehicles, making it the first country in the world to explicitly ban the entry of fuel vehicles, Kallanish learns.
Alemu Sime, transport minister confirmed this decision when presenting a six-month report to the Urban Development and Transport Standing Committee in the House of People’s Representatives (Ethiopian Parliament) on 29 January.
“All things considered, promoting the development of electric vehicles and the construction of supporting charging stations is a high priority,” said Sime, suggesting an improving ecosystem for EV companies.
The International Monetary Fund (IMF) estimates Ethiopia’s 2023 gross domestic product (GDP) is about $126.2 billion, an on-year increase of 13.5%. The country’s economic growth has been impressive as it achieved two-digit GDP growth in consecutive 15 years, providing some support for the EV business.
Toyota bZ4x EV, Mercedes-Benz EQ range, VW’s ID.4 and ID.6, and the Changan Ben Benn E-Star are frequently seen EVs in Ethiopia. Other Chinese firms such as BYD are likely to be targeting the new market, given its recent policy support.
BYD said it entered the African market in 2004 and its current business scope covers North Africa, West Africa, and South Africa. As Chinese electric vehicles become popular in African countries, China is becoming the main driving force for the electrification transformation of the African automobile industry.
Cheaper EVs made in China are reportedly starting to replace Japanese and European brands and becoming an important player and in the African automotive market.
However, previously, the government had temporarily banned the popular China-made ID series import after VW raised concerns about unofficial imports into Ethiopia from China by independent vehicle importers.
Despite major barriers such as low income, an undeveloped car loan system and emerging EV charging infrastructure, the Ethiopian minister says it would be cheaper and easier to run EVs than combustion cars. The country’s ability to import oil and other raw materials has been exacerbated with a shortage of foreign currency.
“Electricity is produced in Ethiopia and again, the price of electricity is cheaper compared to fuel,” noted Sime. “Ethiopia is a supporter of green development, and it is a country that is working hard for that.”
The ministry has mentioned a ten-year plan to support the import of at least 4,800 electric buses and 148,000 electric cars, cutting VAT, surtax and excise tax on EVs.
Research institute Mordor Intelligence predicts that by 2027, the value of the African EV market will reach approximately $21.4 billion, with a compound annual growth rate (CAGR) of 10.2%.
Analysis by McKinsey and the Shell Foundation shows that by 2025, sales of electric vehicles in some African countries may reach 340,000 to 820,000 units.
Source:Kallanish
