Ethiopia banned imports of petrol and diesel cars in 2024, accelerating a shift to electric vehicles that was already underway. The country had about 7,000 EVs on its roads in 2022. By 2025, that number had reached 100,000, with their share of the vehicle fleet rising from 1% to 6%.
The restriction covers both used and newly manufactured cars. Vehicles already on Ethiopian roads weren’t confiscated, but further imports of cars with internal-combustion engines were halted. The contrast is sharp: while Western European countries and Canada planned lengthy phaseouts and later postponed deadlines, Ethiopia moved almost overnight.
Yet the ban has changed what Ethiopia imports faster than the country has developed domestic EV production or nationwide charging. In Addis Ababa, electric vehicles now account for 60% of new registrations. Across the country, only about 55% of its 130 million people have access to the electricity grid, and frequent outages complicate charging.
Reporting from Bloomberg Originals describes a transition driven primarily by financial necessity rather than climate policy. Ethiopia, one of the world’s poorest countries, couldn’t afford to keep paying its fossil-fuel bill.
A fuel bill Ethiopia couldn’t sustain
Ethiopia imported more fuel than it exported and spent roughly $5 billion a year bringing fossil fuels into the country. For years, the government also subsidized petrol with money it could scarcely afford. In 2023, it defaulted on its bonds and had to turn to the IMF for a $3.4 billion bailout.
Fuel shortages were one consequence. Queues at filling stations could last for days, making the price of petrol only part of the problem for drivers who depended on it.
Taxi drivers switching to electric cars reportedly save more than $150 a month compared with their previous fuel costs. Against the cited average monthly earnings of $480, that’s a substantial reduction in running expenses.
Electricity gives Ethiopia an alternative to imported oil. Bloomberg Originals describes its power as among the cheapest in the world, citing an average price of roughly 10 US cents per kilowatt-hour, or 32 Hungarian forints. Its comparisons put the US at around 18 cents, the UK at about 40 cents and Hungary at approximately 36 forints per kilowatt-hour.
A cornerstone of that supply is the Grand Ethiopian Renaissance Dam, or GERD, on the Blue Nile. Inaugurated in 2025, the 5,000 MW facility is Africa’s largest hydroelectric power plant. Clean sources account for 99% of Ethiopia’s electricity generation, with hydropower alone contributing 96%. The country also exports electricity to its neighbors.
The economic logic is clear: Ethiopia has domestic electricity to sell but must spend scarce money importing fuel. Internal conflicts and regional instability add pressure. Disputes over access to the Red Sea and rising oil prices have contributed to geopolitical tensions, making reduced dependence on fossil fuels more urgent.
Importing EVs is easier than building the whole system
Ethiopia doesn’t want to stop at buying electric cars. Although it lacks an established car-manufacturing industry, it is encouraging local assembly. Imported EVs arrive almost exclusively from China, sometimes as complete vehicles and sometimes as kits.
The tariff structure rewards work done locally. Fully assembled EVs face a 15% import duty; partially assembled vehicles face 5%; completely disassembled parts kits enter duty-free. More than a dozen EV-assembly companies have now received licenses. They assemble passenger cars and electric minibuses, with minibuses forming the backbone of local public transit.
Assembly, however, isn’t the same as a mature domestic manufacturing industry. The growing number of licensed businesses reflects Ethiopia’s effort to keep more of the work in the country, while its reliance on Chinese vehicles and kits reveals how much the transition still depends on imports.
Buying a car remains out of reach for much of the population. Annual income per person is below $1,000, while even a cheaper electric car costs around $23,000. Just 13 out of every 1,000 residents own a car. EV numbers are growing rapidly, but overall car ownership remains very low.
Abundant national electricity generation doesn’t guarantee a dependable socket where a driver needs one, either. Roughly half the population still lacks reliable electricity. With grid access reaching only about 55% and power cuts frequent, expanding the charging network remains a challenge.
Bloomberg Originals’ verdict is that Ethiopia has undertaken an unusually bold experiment because it couldn’t afford to wait, unlike wealthier countries that have repeatedly delayed their plans. The question now is whether affordable vehicles, dependable electricity and charging access can reach beyond the places where EV adoption is already accelerating.
