Bethelhem Eshetie gave up driving her taxi two years ago. The rising cost of gas and the spare parts needed to keep her old car on the road meant that she couldn\u2019t earn enough to make ends meet. \u201cIt was no longer worth it,\u201d she said. Six months later, though, she was back on the road, this time in a brand new BenBen E-Star, an electric vehicle made by the Chinese carmaker Chang\u2019an.<\/p>\n
Unlike the second and third-hand vehicles that make up most of the traffic in Addis Ababa, the EV is new, reliable, and relatively affordable to run. \u201cI like the car\u2019s comfort, its air conditioning system,\u201d she said. \u201cAnd not having to go to the repair shop regularly.\u201d<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449515388-555x370.jpg\")
<\/p>\nBethelhem Eshetie and her Chang?an BenBen E-Star. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
In 2024, the Ethiopian government banned the import of fossil fuel-powered vehicles and slashed tariffs on their electric equivalents. It was a policy driven less by the country\u2019s climate ambitions and more by fiscal pressures. For years, subsidising gasoline for consumers has been a major drag on Ethiopia\u2019s budget, costing the state billions of dollars over the past decade. The country defaulted on its sovereign bonds in 2023 after rising interest rates drove up the costs of servicing its debts, and it received a $3.4 billion bailout from the International Monetary Fund the following year.<\/p>\n
In the two years since the ban on internal combustion engine vehicles, EV adoption has grown from less than 1%\u00a0 to nearly 6% of all of the vehicles on the road in the country \u2014 according to the government\u2019s own figures, some way above the global average of 4%.<\/p>\n
\u201cThe Ethiopia story is fascinating,\u201d said Colin McKerracher, head of clean transport at BloombergNEF. \u201cWhat you\u2019re seeing in places that don\u2019t make a lot of vehicles of any type, they\u2019re saying: \u2018Well, look, if I\u2019m going to import the cars anyway, then I\u2019d rather import less oil. We may as well import the one that cleans up local air quality and is cheaper to buy.\u2019\u201d<\/p>\n
For decades, Ethiopia\u2019s high import tariffs on vehicles put new car ownership out of the reach of most of the country\u2019s population. Per capita gross domestic product is only about $1 000, and even by the standards of low-income countries, it has among the lowest car ownership rates. At 13 vehicles per 1,000 people, it\u2019s a fraction of the African average of 73. With few cars manufactured in the country, the vast majority are imported, and most are bought used.<\/p>\n
The government\u2019s import policy has upended the market. In parallel, tariffs for EVs were dropped to 15% for completed cars, 5% for parts and semi-assembled vehicles, and zero for \u201cfully knocked down\u201d \u2014 vehicles shipped in parts and assembled locally. That has made new EVs cost-competitive with old gasoline cars.<\/p>\n
At one of Hallel Cars\u2019 showrooms in central Addis Ababa, a Seagull hatchback made by the Chinese carmaker BYD sells for 3.6 million Ethiopian birr ($23 000), while a BYD subcompact SUV Yuan Up costs 4.9 million Ethiopian birr. Before the import ban, a secondhand compact Suzuki Dzire gasoline sedan cost more than 4.2 million birr.<\/p>\n
\u201cThe majority of our customers are those making the switch from fuel cars to EVs,\u201d said Moges Negash, Hallel Cars\u2019 sales and marketing manager.<\/p>\n
Hallel sells Toyota, Honda and Citro\u00ebn EVs too, but models from BYD \u2014 which last year surpassed Tesla as the world\u2019s biggest seller of EVs \u2014 dominate its showroom. Other dealerships around the city sell Chang\u2019an vehicles, as well as those from Volkswagen and the Vietnamese manufacturer VinFast.<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449521548-555x370.jpg\")
<\/p>\nWorkers cleaning a BYD Tang at a Hallel Cars showroom in Addis Ababa. Image: Amanuel Sileshi\/Bloomberg<\/p>\n
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Although the price tag is still relatively high for a country where incomes are low, middle-class consumers find it easier to get credit to buy new EVs than they did for secondhand gas-powered ones, which banks often wouldn\u2019t lend against.<\/p>\n
\u201cBanks are reluctant to provide consumer credit for the purchase of vehicles that have an uncertain fate,\u201d said Abdulmenan Mohammed, a financial analyst based in London who covers Ethiopian banks. \u201cEVs are a new technology and are increasingly being used in the country, so it\u2019s a better opportunity for banks to provide credit.\u201d<\/p>\n
For the government, the growth in EV sales is a vindication of its import policy, which in turn has been made possible by its investments in electricity infrastructure. The Grand Ethiopian Renaissance dam, completed in 2025 at a cost of $5 billion, produces 5 150 megawatts of power. Combined with other generating assets, including wind farms and solar, the country has excess generation capacity, which it sells to neighbouring Kenya, Tanzania and Djibouti.<\/p>\n
The price of delivering power to Ethiopian customers is about $0.10 per kWh, which is about half that of neighbouring countries, and considerably less than the US average of $0.18 per kWh. Many Ethiopian consumers pay significantly less than that, due to consumption-based subsidies on electricity.<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449521225-555x370.jpg\")
<\/p>\nIn 2024, the Ethiopian government banned the import of fossil fuel-powered vehicles and slashed tariffs on their electric equivalents. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
\u201cOur transition to EVs is aimed at ensuring our energy sovereignty,\u201d said Bareo Hassen Bareo, Ethiopia\u2019s state minister for transport and logistics. \u201cAs a net importer of fuel, we are affected by global supply and price fluctuations. In contrast, EVs use electricity, which we produce locally and can price ourselves.\u201d<\/p>\n
The majority of the Renaissance dam\u2019s financing came from Ethiopian banks, though China provided two tranches of loans in 2013 and 2019 worth a combined $3 billion toward electrical equipment and transmission lines that carry the dam\u2019s power to major cities. The support wasn\u2019t explicitly designed to help build markets for EVs, but China has become a global leader in exporting low-carbon energy technologies, from power generation through to vehicles.<\/p>\n
\u201cChina is a leading nation in EV adoption and technology, particularly in battery advancements, making collaboration with China ideal for us,\u201d Bareo said. \u201cHowever, we are also open to working with any country.\u201d<\/p>\n
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<\/p>\n
Chinese companies are also heavily involved in Ethiopia\u2019s nascent EV manufacturing business, which the government hopes will grow on the back of its import tariffs and other support mechanisms.<\/p>\n
At a plant in Sheger City, about 40 kilometres from the capital, workers at Belayneh Kindie Group\u2019s factory installed a battery in a 15-seat minibus before sending it out for a test drive. On the factory floor, three dozen vehicles were lined up in various states of completion, with workers installing their seats, floors, and windows. Before the finished minibuses \u2014 which are commonly used as shared taxis in Ethiopian cities \u2014 are sent to customers, they are checked by engineers. That day the inspection involved staff of the Nanjing Golden Dragon Bus, the Chinese EV company that designed and produced the parts for the vehicles.<\/p>\n
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![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449516921-555x370.jpg\")
<\/p>\nMinibuses in various stages of assembly at the BKG factory in Sheger City. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449517086-555x370.jpg\")
<\/p>\nEV technicians working on the battery for an electric minibus at the BKG plant. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
BKG Manufacturing launched in 2018, assembling fossil fuel-powered cars. Now it assembles electric vehicles in most categories, keeping fossil fuel engines only for heavy-duty trucks. To test the demand, the company imported some electric cars, \u201cand the market reaction was incredible,\u201d Besufekad Shewaye, the company\u2019s chief executive officer, said. \u201cAs a result, we decided to establish assembly plants.\u201d<\/p>\n
BKG already has two factories and has acquired land for a third, he said. The company\u2019s biggest customer is the Addis Ababa City Administration, which has purchased 150 minibuses and 100 large buses as part of a government policy to use investments in electric public transport to support manufacturers.<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449642085-555x370.jpg\")
<\/p>\nPeople board one of the 100 Nanjing Golden Dragon electric public buses, supplied by BKG, that are in operation in Addis Ababa. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
The government has also\u00a0begun to issue licenses for electric motorbikes. In many developing countries, two-wheelers far outnumber cars, but Addis Ababa stopped issuing\u00a0licenses for them in 2019\u00a0because of security concerns, stunting a market that could have huge potential, particularly as the food delivery industry takes off in the city.<\/p>\n
\u201cI estimate the potential market for gig worker two-wheelers is between 150,000 and 200,000 units once the ecosystem matures over the next 10-15 years,\u201d Yuma Sasaki, founder of Addis Ababa-based electric two-wheeler startup Dodai, said. Sasaki spent two years convincing government officials that the vehicles were safe and cheap. He said his company has now assembled and sold more than 1 800 Chinese electric bikes.<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449641952-555x370.jpg\")
<\/p>\nA delivery rider for Klik, a logistics company that supplies everything from meals to medicines, on his electric bike. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
There are now 17 EV assembly plants in Ethiopia, according to Bareo, and the government aims to have 60 by 2030.<\/p>\n
The market is too small for full-scale manufacturing plants, \u201cbut assembling EVs is a huge value add,\u201d says Adam Ward, co-lead of the International Energy Agency\u2019s Africa investment portfolio. \u201cSo even if Ethiopia doesn\u2019t manufacture everything from scratch, just assembling is great for the country\u2019s economy.\u201d<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449516847-555x370.jpg\")
<\/p>\nThe startup has now assembled and sold more than 1,800 Chinese electric two-wheelers. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
Manufacturing in Ethiopia is challenging. As of 2023, the sector contributed less than 7% of the country\u2019s gross domestic product, with a difficult regulatory environment and a high cost of capital constraining its growth. And although the pace of EV adoption has been high, it\u2019s come from a low base. There are only 1.7 million vehicles in Ethiopia, for a population of 130 million.<\/p>\n
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The figures on Ethiopia\u2019s EV penetration of more than 100 000 vehicles come from the government, and independent sources are rare. The US International Trade Organization put the figure at 30 000 before the fuel-powered vehicle ban was brought in.<\/p>\n
\u201cEthiopia had a distorted car market and there was a huge suppressed demand among the few who could afford to buy cars,\u201d said Rose Mutiso, science adviser at the Energy for Growth Hub, a thinktank. \u201cThat\u2019s why the policy change has led to such a surge in EV sales, but I don\u2019t think the pace of sales can be sustained.\u201d<\/p>\n
While the charging network is growing, it\u2019s a long way from what\u2019s needed. The government has mandated that all fuel stations and car showrooms must have EV chargers, which Bareo said has led to 500 being installed, mostly in Addis Ababa, where the majority of EVs have been sold. However, the capital alone needs 1 000 chargers, he said, which is why the government has put out new requirements for new housing developments, parks and hotels to deploy chargers too.<\/p>\n
The vast majority of existing chargers still take between four to six hours to fully replenish an EV battery, and there are only a handful of fast chargers that can charge\u00a0the battery in as little as 30 minutes in the country. Ethio Telecom has deployed three fast and ultra-fast charging stations in Addis Ababa, each equipped with 16 charging ports, while TotalEnergies is integrating EV charging points into its gas stations throughout the city.<\/p>\n
Despite Ethiopia\u2019s success in building generation capacity, access to electricity is patchy outside the capital. World Bank figures show that only 55% of the population has access to electricity, though people in big cities have near-universal access. That means it could be hard to sustain a broader transition to EVs, according to a 2025 report by the Energy for Growth Hub.<\/p>\n
![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/02\/449521687-555x370.jpg\")
<\/p>\nOne of the three Ethio Telecom charging stations in Addis Ababa. Image: Amanuel Sileshi\/Bloomberg<\/p>\n<\/div>\n
\u201cOnly two African countries have built a substantial car manufacturing industry: South Africa and Morocco,\u201d said Mutiso of Energy for Growth Hub. \u201cSo Ethiopia has to right-size its ambition on EV manufacturing and focus on high-value assembling.\u201d<\/p>\n
Those ambitions remain high. Ethiopia \u2014 which will host the United Nations\u2019 annual climate summit COP32 in 2027 \u2014 has made increasing the rate of electrification in transport a key part of its most recent climate plan, which was submitted in 2025. It aims to reach 500 000 EVs by 2032. In the previous plan submitted in 2021, there were only two mentions of electric vehicles in the entire document.<\/p>\n
For the early adopters who have made the switch to EVs already, there is a growing community. Bethlehem, the taxi driver, has become more than just a user, and is now a bona fide EV influencer, using her 180 000-follower TikTok account and a Telegram channel with 3 000 members to evangelise for electric vehicles. \u201cWhen people see me driving an electric vehicle, they often stop and honk their horns to ask for details,\u201d she said.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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