EV Sales Boom As Ethiopia Bans Fossil-Fuel Car Imports
Source: Slashdot
Background
An anonymous reader quotes a report from the Financial Post: In 2024, the Ethiopian government banned the import of fossil‑fuel‑powered vehicles and slashed tariffs on their electric equivalents. The policy was driven less by climate ambitions and more by fiscal pressures. For years, subsidising gasoline for consumers has been a major drag on Ethiopia’s budget, costing the state billions of dollars over the past decade. The country defaulted on its sovereign bonds in 2023 after rising interest rates increased the cost of servicing its debts, and it received a $3.4 billion bailout from the International Monetary Fund the following year.
EV Adoption Since the Ban
In the two years since the ban on internal combustion‑engine vehicles, EV adoption has grown from less than 1 % to nearly 6 % of all vehicles on the road in the country—according to the government’s own figures—somewhat above the global average of 4 %.1
“The Ethiopia story is fascinating,” said Colin McKerracher, head of clean transport at BloombergNEF. “What you’re seeing in places that don’t make a lot of vehicles of any type, they’re saying: ‘Well, look, if I’m going to import the cars anyway, then I’d rather import less oil. We may as well import the one that cleans up local air quality and is cheaper to buy.’”
Market Effects and Tariff Changes
For decades, Ethiopia’s high import tariffs on vehicles kept new car ownership out of reach for most of the population. With a per‑capita GDP of about $1,000, the country has one of the lowest car‑ownership rates among low‑income nations—13 vehicles per 1,000 people, a fraction of the African average of 73. Most vehicles are imported, and the majority are used.
The government’s new import policy has upended the market. Tariffs for EVs were reduced to:
- 15 % for completed cars
- 5 % for parts and semi‑assembled vehicles
- 0 % for “fully knocked down” vehicles (shipped in parts and assembled locally)
These reduced rates have made new EVs cost‑competitive with older gasoline cars.