Ethiopia's Clean-Car Push Runs Into a Hard Trade-Off

Mar 21 , 2026
By Birhanu Beshah (PhD)

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One of the biggest uncertainties in transitioning to electric vehicles is battery life. Most manufacturers promise batteries will last eight to 10 years. But questions remain over the conditions required to reach that lifespan and what happens after it - the question of whether replacement batteries are available or affordable remains open. Early adopters may be willing to look past this issue. For wider adoption, they are likely to become decisive, argued Birhanu Beshah (PhD) - birhanu.beshah@aait.edu.et - an associate professor in the School of Mechanical & Industrial Engineering of the Addis Abeba University (AAU). The author acknowledges the E-Mobility Ecosystem team at the College of Technology & Built Environment for their contributions.

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Experiments with electric vehicles (EVs) began in the early 20th Century, around the same time internal-combustion engines appeared. Yet by the years around the Second World War, the internal-combustion engine had secured a commanding hold over the global automobile market.

Nearly a century later, advances in battery technology have made EVs a credible alternative. They are no longer mainly an innovation challenge. Their recent rise owes much to higher energy costs, concern over pollution, lower operating costs and advances in battery performance.

For Ethiopia, which imports fuel with scarce hard currency while generating relatively clean electricity from hydropower, the case is especially compelling. Replacing imported fuel with domestic electricity offers a way to cut foreign-currency outflows and use local energy resources more efficiently. In response to that opening, the federal government has rolled out incentives for EVs, removing import duties and restricting imports of internal-combustion vehicles.

However, the policy shift has drawn controversy and resistance at home and abroad. Even so, Ethiopia has become an early and notable case of policy experimentation in EV adoption.

Policymakers' intervention in the transport sector has been direct, trying to shape the market not only by making EV imports cheaper. They have made internal-combustion vehicles harder to bring in, a policy that has made Ethiopia stand out, even among countries trying to accelerate green public mobility. It also explains why the debate around the policy has been so sharp, where supporters see an opportunity to save foreign exchange, while critics worry about the costs and distortions that could follow.

The results are already visible. Over the past six years, annual EV imports have climbed from only a few dozen vehicles to tens of thousands.

The transition is spreading across different user groups. Private owners are leading the move, followed by institutions such as Ethiopian Electric Power, Ethiopian Broadcasting Corporation and Awash Bank. Government procurement offices have also bought EVs in bulk for public institutions. Electric buses are beginning to appear as another option for public transport.

However, the share of EVs remains small, although the growth rate is exponential. That alone can be counted as a meaningful achievement. But the harder task now is to keep the transition moving, which requires transport authorities to address micro- and macroeconomic constraints.

At the micro level, one of the biggest uncertainties is battery life. Most manufacturers promise batteries will last eight to 10 years. But questions remain over the conditions required to reach that lifespan and what happens after it. The question of whether replacement batteries are available or affordable remains open. Other micro-level constraints include access to bank loans, insurance costs, and the availability of charging infrastructure and maintenance services. Early adopters may be willing to look past such issues. For wider adoption, they are likely to become decisive.

That is especially true where vehicles are not treated simply as consumer goods. They are also regarded as assets that can be sold when cash is needed. Because the used-car market for EVs remains weak, many buyers may see a higher opportunity cost in choosing an EV.

At the macro level, the biggest concerns are foreign-currency availability and technological dependence. According to the Ministry of Transport & Logistics (MoTL), there is a plan to raise the number of EVs to half a million within the next five years. Such growth could come through a mix of imports, retrofitting and domestic assembly. Still, imports would require a large amount of foreign exchange.

Assuming an annual growth of 100,000 vehicles and an average price of 30,000 dollars each, the foreign-currency bill would come to about three billion dollars a year. More EVs would reduce fuel imports. But setting aside three billion dollars a year to import a single commodity could create another macroeconomic vulnerability.

Today, EVs on the streets of Addis Abeba carry badges from Tesla, BYD and Volkswagen to Mercedes, Toyota, Honda and Hyundai. The line-up looks diverse. But many of these vehicles are made or assembled in China. While EV adoption cuts dependence on imported fuel, it may also deepen technological dependence. Sustaining the current pace of growth will depend on how policymakers respond to micro and macroeconomic constraints.

At the micro level, the country needs to build local technical capacity to inspect, test, maintain and modify EV systems. Already, there has been a strong experience in maintaining conventional vehicles through local expertise. Ties with universities and the creation of specialised centres of excellence could help deepen that capability.

At the macro level, diversification into domestic manufacturing will be essential. Federal transport officials have pledged to encourage domestic production. According to the Transport Ministry, around 30 companies are already involved in the sector, most of which focus on assembly and offer limited local value addition. That deserves closer examination.

Experience from China and the European Union (EU) showed that leadership in EV manufacturing has been driven largely by advances in battery technology. Battery systems are also vital inputs for many electronics industries. Investment in this field could, therefore, bring benefits beyond the auto sector. Ethiopia is believed to have lithium deposits, a key raw material for battery production. Prioritising battery manufacturing could help attract EV producers and other emerging technology industries.

The success of the EV transition may rest not only on how many vehicles are adopted, but on whether policymakers develop the industrial and technological capabilities behind them.

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PUBLISHED ON Mar 21,2026 [ VOL 26 , NO 1351]

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