Ethiopia’s Ministry of Finance recently exempted all-electric vehicles (EVs) from VAT, Surtax, and Excise Tax in an effort to accelerate the adoption of electric vehicles in the nation! They went a step further and exempted CKDs from the customs duty levy.
This action will promote the production of electric car components and local assembly lines. Completely built (CBU) electric vehicles will incur a customs duty of 15%, compared to 5% for semi-knocked-down kits. According to sources, Ethiopia’s Minister of Transport and Logistics has a 10-year strategy that includes supporting the import of at least 4,800 electric buses and 148,000 electric cars in order to accelerate the penetration of electric vehicles in the nation.
This is an extremely encouraging development. The elimination of VAT, Surtax, and Excise Tax will immediately decrease the cost of fully manufactured imported EVs while local assembly firms ramp up.
Related: Zimbabwe to Start Making Own Cars
Fuel imports in Ethiopia consume approximately $4 billion each year. But, accelerating the adoption of electric vehicles and subsequently replacing foreign currency-draining fossil fuel imports with locally produced clean electricity will go a long way towards improving its economy.
Ethiopia’s grid is entirely fueled by renewable energy (hydro and some wind). According to statistics, 14,404 GWh of the 15,075 GWh generated in 2020 came from “hydro and marine,” with wind contributing 609 GWh. Ethiopia is gradually increasing hydro capacity as the 5,150 MW Great Ethiopian Renaissance Dam (GERD) units come online. The GERD will contribute an additional 15,500 GWh of clean electricity to the country’s energy mix.
Prices of EVs in Ethiopia
Despite tax exemptions, prices of electric vehicles remain exorbitantly high in Ethiopia. A Volkswagen ID.4 SUV in Addis Ababa (the capital and largest city of Ethiopia), currently costs 5.7 million ETB ($106,000), which is more than three times what it costs in Dubai, which is roughly $35,000 at this time.
Funnily enough, the above price converts into PKR 30,077,297 (Rs 3 crores & 77 thousand and 3 hundred) since 1 Ethiopian Birr equals 5.28 Pakistani Rupees.
VW ID.4 EV in Ethiopia
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com