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Bloomberg Originals16 min

The World's Most Aggressive EV Push Isn't in China | Bloomberg Primer

Statement
  • In 2024, Ethiopia became the first country to completely ban the import of new gasoline and diesel vehicles, a decision enacted overnight rather than through a decade-long phase-out.
    • Pre-existing gas-powered vehicles remain legal on the roads; no confiscations occurred.
    • Unlike pledges made by the UK, Canada, and EU members (many of which have been delayed), Ethiopia's ban applies immediately to all new imports.
  • The ban is driven primarily by economic necessity rather than climate policy goals, as Ethiopia faces a severe balance-of-payments crisis.
    • The country imports up to $5 billion annually in fuel, a cost it could not sustain.
    • Ethiopia defaulted on its debt in 2023, missing an interest payment on a bond.
    • The International Monetary Fund provided a $3.4 billion bailout to help avert a financial meltdown.
  • Fuel scarcity previously forced drastic daily hardships on the population.
    • Gas stations in Addis Ababa experienced queues lasting hours or days.
    • One taxi driver reported spending roughly 150 USD monthly on fuel, representing approximately 31% of his total income of 480 USD.
  • Electric vehicle adoption has accelerated rapidly since the ban took effect, despite initial infrastructure deficits.
    • Government figures state EVs on Ethiopian roads rose from 7,000 in 2022 to over 100,000 in 2025; the U.S. International Trade Organization estimates a pre-ban figure closer to 30,000.
    • EV penetration in Addis Ababa reached over 60% of newly registered cars in 2024, compared to less than 1% prior to the ban.
    • As of the reporting period, EVs constitute 6% of the national vehicle fleet, surpassing the 4% global average.
    • Public charging infrastructure grew from near zero to approximately 200 stations, expanding into cities like Adama and Hawassa.
  • Ethiopia's transition is enabled by its unique energy profile and supply chain strategy with China.
    • The Grand Ethiopian Renaissance Dam, a 5,000-megawatt hydroelectric facility costing $5 billion over 14 years, generates 96% of the nation's electricity.
    • Electricity costs average 10 cents per kWh, significantly lower than the U.S. (18 cents) and UK (40 cents).
    • Only 55% of the 130 million population has access to electricity, and blackouts remain common, complicating charging logistics.
    • Almost all EVs are imported from China, with pricing tariffs incentivizing local assembly: 15% for fully assembled cars, 5% for semi-knockdown (SKD) kits, and 0% for completely knocked down (CKD) parts.
  • Local manufacturing efforts are underway but remain in early stages.
    • The government has licensed 17 EV assembly companies, though only Bulaene Kinde Group (BKG) has commenced operations.
    • BKG currently assembles minibuses (shared taxis) supplied by the Chinese firm Nanjing Golden Dragon Bus Company, producing roughly one vehicle per day.
    • A second plant for passenger cars is scheduled to begin assembly in 2027.
  • Affordability and ownership rates present significant contradictions in the current market.
    • The sticker price of an EV (e.g., BYD Seagull at ~$23,000) vastly exceeds the average annual income per person, which is under $1,000.
    • Despite high EV share relative to gasoline cars, car ownership remains extremely low at 13 per 1,000 people, compared to 73 per 1,000 on the African continent.
  • Future targets and geopolitical factors influence the trajectory of the transition.
    • Ethiopia's 2025 climate plan aims to reach 500,000 electric vehicles and over 2,000 charging stations by 2033.
    • A new hydropower plant is under construction to support further electrification by the end of the decade.
    • Ethiopia is scheduled to host the UN Climate Summit in Addis Ababa in 2027.
  • Regional instability poses a potential risk to the country's energy and transport logistics.
    • Fighting erupted in the Tigray region in September 2026, with Ethiopia accusing Eritrea, Egypt, and Sudan of supporting rebels; all three nations deny involvement.
    • The conflict has contributed to Ethiopia's regional isolation, partly exacerbated by tensions over the Grand Ethiopian Renaissance Dam.
    • Rising global oil prices (up 40-50%) following regional conflicts in the Middle East may further accelerate the urgency of the transition away from fossil fuels.