Policy Tracker: Eight major rule changes in June

June 25, 2025

From the newsletter

African countries made eight policies adjustments for electric vehicles and related components in June, according to the Mobility Rising Policy Tracker. While some governments have introduced subsidies and incentives meant to support the growth of the EV industry, others seek to introduce taxes on EVs to raise revenue, which may slow adoption.    

  • Six out of the eight policies relate to taxes. These policies were announced in East Africa, where Kenya, Tanzania and Rwanda unveiled their budgets for the fiscal year 2025/26, which starts on July 1, as well as in South Africa.   

  • Our analysis shows that five of the policies could have a very positive impact on the sector in the respective countries, while three could have a very negative impact by raising the cost of EVs and related components.

More details

  • In Kenya, the Finance Bill of 2025 has reclassified locally assembled motor vehicles used for transportation of tourists and inputs and raw materials used for manufacture of passenger motor vehicles from exempt to taxable at 16%. This will be a blow to Kenya’s emerging motor vehicle industry and will increase the cost of production.

  • The Bill, which is set to be assented to by Kenyan President William Ruto, has also reclassified the supply of electric motorcycles, electric bicycles, electric buses, solar and lithium batteries from zero-rated to VAT exempt. This means the companies will not be able to claim input tax from the Kenya Revenue Authority (KRA), raising their production costs.

  • In Rwanda, hybrid vehicles that were previously exempt from withholding tax are now subject to a withholding tax at 5%. At the same time, hybrid vehicles that were previously exempt from VAT are now subject to VAT at 18%. These additional taxes will make hybrid vehicles more expensive, which will likely slow down their adoption.   

  • Rwanda however retained exemption from VAT on electric vehicles up to 30 June 2028. Fully electric vehicles enjoy a complete tax exemption in Rwanda, regardless of their age or model. This means they do not pay VAT, withholding tax, or excise duty, helping lower their cost and potentially driving up their sales.  

  • Similarly, Tanzania has granted duty remission at a rate of 0% instead of 25% for one year on lithium-ion electric accumulators used in the assembly or manufacture of electric vehicles and motorcycles. The objective of this measure is to reduce cost of production and encourage local investment in the sector, ensuring availability of the final product at an affordable price in the country.

  • During the month, Egypt also allocated EGP 3 billion ($60,000) in its 2025/2026 budget to support the local automotive industry, including its accessories and components. Egypt is implementing an integrated plan to localize technology and transfer expertise, particularly in the field of electric and hybrid vehicle manufacturing, while providing facilities for investors and component manufacturing.

  • At the same time, South Africa’s International Trade Administration Commission (ITAC) has proposed a 15% customs duty on new energy vehicle battery imports to protect its local manufacturing industry. South Africa relies on battery imports, mainly from China. In 2024, it imported electric batteries worth $651 million, making it the country’s 20th largest import.

  • In North Africa, Tunisia announced the end of government regulation of EV charging prices. The deregulation means that charging companies will now set their own prices in a move that is aimed at attracting investment in the sector. “Charging tariffs will be unregulated and not fixed by the government,” said Fethi Hanchi, the Director General of Tunisia’s National Agency for Energy Management (ANME). 

Our take

  • Countries like Rwanda and Tanzania, which are doubling down on EV incentives, could become regional magnets for investment and assembly, while tax-heavy environments like Kenya risk slowing local industry momentum unless offset by other supportive measures.

  • Egypt’s budget allocation and South Africa’s proposed battery duties signal a pivot toward domestic value addition. More countries may follow suit, seeking to reduce import dependence and capture more of the EV supply chain.

  • Tunisia’s deregulation move may inspire similar reforms in other African governments aiming to attract private capital. However, without safeguards, this could reignite debates over affordability and access.