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Bloomberg Originals16 min

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

Statement
  • Ethiopia anticipates rapid electric vehicle adoption exceeding global averages driven by a 2024 ban on new gas cars, with penetration projected to rise from below 1% to 6% of the total vehicle fleet within two years.
  • EV fleet numbers are expected to surge from a baseline of 30,000 to over 100,000 by 2025, supporting a long-term goal of 500,000 EVs and more than 2,000 charging stations by 2033.
  • The government intends to maintain all pre-existing gas-powered vehicles on the road indefinitely without confiscation while expanding the public charging network to approximately 200 stations across cities including Adama and Hawassa.
  • Low electricity costs of roughly 10 cents per kilowatt hour, supported by the 5,000-megawatt Grand Ethiopian Renaissance Dam and a second hydropower plant completing by the end of the decade, will underpin the transition and potential power exports.
  • Import tariffs have been reduced to 5% for semi-assembled (SKD) and 0% for fully knocked down (CKD) vehicles to encourage local assembly, with the government licensing 17 EV manufacturers and targeting a new passenger car plant to begin operations in 2027.
  • Financial stability is currently a priority as officials rely on an International Monetary Fund bailout of $3.4 billion to avert a crisis following a debt default, even as rising oil prices of 40% to 50% increase the urgency of moving away from oil.
  • The 2027 UN Climate Summit in Addis Ababa will serve as a platform to demonstrate a developing nation's electric vehicle transition, which is expected to proceed despite regional instability in the Tigray area and growing international isolation.
  • Current production limitations persist, with BKG Manufacturing producing approximately one vehicle per day against higher targets, though supply issues are being actively managed.
  • The initiative is characterized as a unique national experiment unlikely to be replicated elsewhere due to specific factors such as the Nile River, a small domestic market, and a fuel crisis, while wealthy nations are expected to delay similar transitions by two decades.