Ethiopia mulls ban on local fuel vehicles assembly

From the newsletter

Ethiopia banned the importation of fuel vehicles in January 2024, the first country to do so in the world. But Africa’s second largest country is now considering taking this a further step and banning the local assembly of non-electric vehicles, says Yizengaw Yitayih, a senior advisor to the Ethiopian Minister for Transport in an interview with Mobility Rising.  

• Ethiopia has a growing automotive assembly industry, with companies like Kaki Motors assembling Isuzu vehicles. Other brands assembled locally include Kia, Hyundai, Peugeot, and IVECO, as well as some less-known Chinese brands. These companies have been capitalising on the import ban to increase their local production and sales. 

• This could change as a ban on the local assembly of fossil fuel vehicles is a possibility in future, said Mr Yitayih. While the import ban has accelerated the adoption of electric vehicles in the country, a further ban on local assembly of fuel vehicles could propel EVs to new heights. 

More details

• Ethiopia has taken one of Africa’s most aggressive stances on EVs. Besides banning the import of gas-powered cars, it has also slashed EV taxes, and set an ambitious target of half a million EVs by the year 2030. And at the center of this transformation are Chinese automakers, local assembly plants, and a growing charging infrastructure network.

• There are currently more than 60 local EV assemblers in Ethiopia, which include 17 that produce various types of vehicles, including motorcycles and buses. Additionally, 100 electric buses have been deployed this year, all assembled in Ethiopia, which has more than 100,000 EVs, mainly motorcycles.

• According to Mr Yitayih, the Ethiopian government is also considering establishing emission standards for existing fuel-based vehicles and exploring strategies to convert them to electric vehicles or reduce emissions through technology.

• “We have established an emission standard for existing fuel-based vehicles. For vehicles that do not fit the standard, there will be an alternative. We will have a set strategy that converts fuel vehicles to electric vehicles or use a technology that could decrease the amount of emission from the vehicle,” he said.  

• Ethiopia has introduced policies to encourage EV adoption, such as duty-free imports for EV parts and reduced taxes on assembled EVs. The government has also begun establishing charging infrastructure, particularly in Addis Ababa and regional cities. Companies like Belayneh Kindie Metal Engineering Complex are assembling electric minibuses, signaling a growing local industry.

• While Ethiopia is making progress, challenges such as limited charging infrastructure and high upfront costs for EVs remain. However, the growing private sector involvement and international partnerships could accelerate adoption of EVs in addition to the entry of major players like BYD into the market with cheaper models.  

Our take

• While not imminent, Ethiopia is likely to implement a ban on the local assembly of fossil fuel vehicles in future to reinforce its commitment to becoming a fully electric mobility market. This could lead to heightened government incentives for EV assembly plants to plug the resulting gap.

• Ethiopia has tasked government-owned companies and agencies to invest in public charging infrastructure. Ethio Telecom has heeded this call and installed two major charging stations in Addis Ababa, underscoring the success of the approach. This is something that other countries can borrow.

• With the Ethiopian government's proactive approach and a growing demand for EVs, private companies, both domestic and international, are expected to expand assembly operations and charging infrastructure in Ethiopia. We are already seeing global firms like Hyundai partner with local companies to assemble EVs locally, and this is a trend that could grow.