Ethiopia now bans import of fuel vehicle parts

June 23, 2025

From the newsletter

The Ethiopian government has banned importation of semi-knocked-down (SKD) and completely-knocked-down (CKD) components for fuel vehicles. This comes more than a year after the country put a total ban on importing fully-built fuel vehicles. The local assembly and manufacturing of fuel vehicles has now effectively been stopped, transitioning the country fully to EVs.       

  • When Ethiopia banned imports of fuel vehicles last year, local assembly increased significantly to plug the deficit. Banning SKD and CKD components will now cripple the industry, boosting the EV sector. 

  • To facilitate a seamless transition from fuel vehicles to EVs, the next step for Ethiopia is to lower taxes on EVs and related components to reduce prices and grow the local EV industry. 

More details

  • When Ethiopia banned the importation of fuel vehicles in January 2024 – the world’s first country to do so – it exempted SKD and CKD kits for ICE vehicles from the ban in a bid to continue support for the local assembly industry and any associated component manufacturing industry.

  • A year and a half later, the Horn of Africa country has decided to double down on its shift to EVs. The new ban on SKD and CKD components excludes electric motor-powered vehicles, hybrid vehicles and ambulances. It however also includes SKD and CKD parts for ICE motorcycles.

  • Ethiopia currently assembles approximately 8,000 commercial and other vehicles annually, with about a quarter being passenger cars. While the country has the capacity to produce more, it is limited by access to foreign exchange for importing vehicle kits. Some of the top assemblers of motor vehicles in Ethiopia include South Korean auto giant Hyundai, Bishoftu Automotive Industry (BAI), and Automotive Manufacturing Company of Ethiopia (AMCE). 

  • Ethiopia's ban is driven by a desire to reduce reliance on imported fuel and capitalise on its abundant hydropower resources. Ethiopia has built the 6,450 MW Grand Ethiopian Renaissance Dam (GERD), giving it one of the cheapest electricity prices in Africa. 

  • The shift to EVs is happening across all vehicle segments, including passenger cars, buses, two-wheelers and three-wheelers. Some of the notable companies include Marathon Motors, which has begun assembling Hyundai EVs and established the first EV charging station in Addis Ababa. Dodai, a startup, is focused on electric motorcycles and scooters, while Belayneh Kindie Motors (BKM) is assembling 12-seat minibuses and 12-meter buses using Chinese components. Tamrin Motors is also importing and later assembling EVs from JAC Motors. 

  • The ban has spurred growth in the EV market, with a significant increase in EV imports and local assembly of EVs. For instance, Ethiopia’s EV imports from China, the world’s largest EV manufacturer, jumped eight times to 1,971 units in 2024 from just 225 units in 2023. Ethiopia aims to have half a million EVs by 2030. 

  • However, challenges remain, particularly the high cost of EVs compared to fuel vehicles. This is worsened by Ethiopia’s restrictions on lending, especially by non-Ethiopian companies, which restricts financing options for EVs. While major companies like Ethio Telecom have made big contributions towards creating public fast chargers, the country still lacks sufficient charging infrastructure to support the sudden shift to EVs.   

Our take

  • Ethiopia should introduce aggressive tax exemptions or rebates for EVs, batteries, and charging equipment. Pair this with targeted incentives for local assemblers and component manufacturers to build a robust domestic EV ecosystem.

  • The government should ease lending restrictions, especially for non-Ethiopian financiers, and encourage green financing schemes. This would make EVs more accessible to consumers and empower local innovators like Dodai and BKM to scale.

  • To future-proof the transition, Ethiopia should invest in training programs for EV technicians, battery specialists, and software engineers. Simultaneously, it should explore regional supply chain integration for batteries and electronics.