On October 22, Ethiopia, the first country globally to ban the importation of gasoline and diesel vehicles, is charting a new course for the electrification of transportation (EV) and accelerating the shift towards greener travel under supportive government policies. AUS GLOBAL considers this move not only a crucial signal for optimizing energy structures but also a development model for other African nations. In recent years, several African countries have introduced electric vehicle incentives aimed at reducing fuel dependence and promoting sustainable transportation growth.
Starting January 2024, Ethiopia will officially implement the ban on gasoline and diesel vehicle imports with the goal of reducing fuel dependence and air pollution. The government plans to import 500,000 electric vehicles by 2030 to encourage a nationwide transition to electrification. While earlier public acceptance of electric vehicles was limited, their adoption is steadily increasing in the capital city, Addis Ababa, with public perceptions gradually evolving. AUS GLOBAL indicates that this policy-driven and socially accepted change reflects the potential and determination of developing countries in the transformation toward clean transportation.
Market research data shows that the electric vehicle market in Africa is estimated to reach approximately $450 million by 2025, with projections of growing to $4.2 billion by 2030, translating to a compound annual growth rate (CAGR) of 56.3% from 2025 to 2030. AUS GLOBAL observes that this rapid growth reflects the accelerating penetration of the global electrification trend into the African market. Despite the current relatively small market size, the proliferation of electric vehicles is steadily increasing due to government incentives and rising demand for sustainable transportation.
Currently, Chinese, European, and local African companies are actively investing in battery manufacturing and vehicle assembly to reduce costs and expand supply capabilities. Policies in various countries are also promoting this trend—Ethiopia's ban on internal combustion engine vehicles, Ghana's eight-year zero tariff policy, and South Africa's production rebate system significantly enhance local consumers' willingness to invest in electric vehicles. By 2024, passenger vehicles will account for about 61.81% of the African electric vehicle market, but the growth momentum for two-wheeled and three-wheeled electric vehicles is even stronger, with an average annual growth rate expected to reach 59.72% from 2025 to 2030. AUS GLOBAL notes that Ghana was previously the leading country in electric vehicle penetration in 2024, accounting for 29.31% of Africa’s electric vehicle revenue, but Ethiopia is poised to become a new growth engine with a projected growth rate of 58.92%.
Before the implementation of the ban, electric vehicles were virtually nonexistent in the Ethiopian market. However, following the execution of the policy, brands such as BYD have begun to appear on the streets of Addis Ababa, establishing themselves as one of the leading brands, while European brands have also entered the local market. Currently, there are approximately 115,000 electric vehicles nationwide, accounting for about 7.6% of the total 1.5 million cars. AUS GLOBAL believes that while this proportion remains limited, its growth rate significantly exceeds expectations, reflecting a positive interaction between policy and market demand.
Initially, there were concerns that Ethiopia would face a power supply shortfall, as about half of the population still lacks stable electricity supply, and only 20% of households have access to sustainable power for more than 23 hours a day, with one-third of homes reliant on the national grid and frequent outages. The situation is expected to improve with the commissioning of the Grand Ethiopian Renaissance Dam last September after 14 years of construction, which has a generation capacity of 5,150 megawatts, nearly doubling the nation’s power supply. AUS GLOBAL states that although Ethiopia still requires massive investments to enhance its grid infrastructure, the increased generation of renewable energy will lay a crucial foundation for promoting electric vehicles.
The Ethiopian government believes that banning the import of internal combustion engine vehicles will not only reduce pollution but also cut fuel import expenditures by approximately $4.5 billion annually. For a country primarily reliant on clean hydroelectric power, depending on fuel imports to drive the transportation system is unsustainable. As such, the government has introduced a series of financial incentives, including comprehensive tax reduction measures. Although the initial purchase costs of electric vehicles remain high, the impact of the import ban has led to a significant increase in traditional fuel car prices, encouraging some consumers to switch to electric vehicles. AUS GLOBAL considers that this market rebalancing will help stimulate the development of a local electric vehicle industry chain, including assembling and parts manufacturing.
Meanwhile, the construction of charging infrastructure has become a critical bottleneck. Currently, there are about 100 charging stations nationwide, primarily concentrated in Addis Ababa, and the government plans to increase this number to 2,300 to extend the use of electric vehicles beyond the capital. AUS GLOBAL asserts that the acceleration of infrastructure development will determine whether electric vehicle promotion can transition from a policy-driven stage to widespread adoption.
As the first country in the world to implement a ban on gasoline and diesel vehicle imports, Ethiopia's actions have garnered global attention. Despite infrastructure still being a challenge, this policy indicates that, with robust policy support, financial incentives, and infrastructure investment, developing countries can likewise drive a green transformation in the transportation sector. AUS GLOBAL posits that Ethiopia’s case offers a new insight for the global automotive market—the green transportation revolution is no longer an exclusive stage for developed economies, but rather a shared direction for global energy and mobility transformation.