Policy Tracker: EV firms face mixed bag of rule changes

From the newsletter

Electric bicycles, motorcycles, buses and lithium-ion batteries will cost more in Kenya if a proposed amendment to the law is passed by Parliament. The Finance Bill, 2025 has proposed to scrap VAT exemption on the products effective July. This is one of 16 major policy proposals and changes in the EV sector that Mobility Rising has tracked this year. 

• Our analysis shows that nine of the policies have the potential to have a very positive impact for the electric mobility sector in relevant countries, three could have a very negative impact, two may have a moderately negative impact, while two are neutral.

• The majority of the policy proposals and changes relate to taxes and levies, with a number of countries introducing tax cuts for EVs, completely knocked down (CKD) or semi-knockdown (SKD) components and charging equipment to boost the sector. 

More details

• Kenya’s reclassification of electric bicycles, motorcycles, buses and lithium-ion batteries from zero-rated to exempt means that local assemblers and manufacturers will lose the ability to claim input VAT on costs incurred in producing these goods. This will be a major setback for the East African country’s budding EV assembly and manufacturing industry.

• On the flip side, Kenya has also proposed a National Tolling Policy, which plans to offer discounts to electric vehicle owners. This initiative could serve as a financial incentive for consumers to switch to EVs, making them more attractive compared to traditional vehicles due to lower operational costs associated with toll charges.

• This year, Cameroon introduced a 50% tax reduction on the value of imported EVs (cars, motorcycles, batteries, and charging stations) for 24 months. Zimbabwe also reduced the import duty on EVs from 40% to 25%. This is likely to significantly reduce the cost of owning EVs, potentially increasing their adoption rate. The incentive targets importers and aims to make EVs more accessible in the market.

• In January, Ethiopia released new guidelines for the installation and operation of EV charging stations, mandating fast-charging stations every 50 km on major roads. This will likely address range anxiety and encourage EV adoption by ensuring a more robust charging infrastructure across the country.

• Morocco is also proposing additional training for electric scooter drivers who already hold a standard driving license (Class B). The proposed policy suggests a focus on safety and regulation of new forms of electric mobility. This could lead to increased road safety but might also create a barrier for some individuals looking to use electric scooters.

• Another North African country, Egypt, has been in the spotlight recently after it discontinued electricity supply to Chinese-standard EV fast charging stations in favour of the European CCS2 standard. The shift will likely impact a significant portion of existing EV users (around 80% with Chinese EVs) who will need to find alternative charging solutions.

• At the same time, Egypt has also introduced a policy allowing Egyptians to import only one car every five years, which aims to regulate the inflow of personal vehicles. This could have several impacts, such as potentially increasing the demand for locally available vehicles, affecting the used car market, and influencing household transportation choices over the long term.

• These policy changes indicate a growing focus on electric mobility across several African countries. However, countries are choosing various approaches to electric mobility based on their priorities. Kenya, for instance, is raising taxes on EVs to plug the huge national budget deficit, while others like Egypt are restricting imports to protect their local manufacturing industries.

Our take

• African countries should prioritise long-term incentives and a stable, supportive regulatory framework. While countries face budget deficits, short-term tax increases can cripple a nascent industry.

• Ethiopia's mandate for fast-charging stations every 50 km on major roads is an excellent example of proactive infrastructure development that directly tackles range anxiety. Given the high reliance on electric two and three-wheelers in many African cities, policies should prioritize the development of charging infrastructure tailored to these segments.

• Import restrictions can be a double-edged sword. While protecting local manufacturing is vital, it shouldn't come at the expense of limiting consumer choice or making EVs prohibitively expensive. Policies should encourage local assembly and manufacturing through incentives and skill development, but also ensure that a diverse range of affordable EVs (including imported models) is available to consumers.