The Kenyan government is set to introduce a Finance Bill 2024 which would introduce a value-added tax (VAT) on electric bikes and buses, as well as solar and lithium-ion batteries.
The proposed eco-tax would significantly raise the cost of a 60-kilogram solar battery by $312.
Zoom Out
Kenya’s draft e-mobility policy, which was introduced in April, aimed to promote local manufacturing and assembly of EVs, offering incentives to manufacturers and assemblers while supporting local battery manufacturing, recycling, and repurposing efforts.
The new finance bill seems to be at odds with these objectives, potentially undermining the progress made thus far.
Pushback
The Africa eMobility Alliance has already flagged the proposed taxes as a “negative signal” for the industry. Moreover, the shift in policy may drive consumers towards older, fuel-inefficient vehicles, counteracting efforts to reduce carbon emissions and combat climate change.
Why This Matters
The EV market in Kenya, predominantly composed of imported secondhand cars, is at a critical juncture. The introduction of green-colored license plates for EVs was a step towards raising public awareness and encouraging the switch to e-mobility.
However, removing incentives that make EVs more affordable could reverse this positive trend.
By The Numbers
2,694 electric vehicles, including e-bikes and e-buses, were registered in Kenya in 2023 — a massive increase from 475 units registered the previous year.
E-mobility startups in Kenya have raised more than $52 million in capital financing, the highest in Africa.
What They’re Saying
Guy Jack, CEO of Associated Battery Manufacturers, in a statement, described the new taxes as “completely unsustainable” and warned of their impact on jobs.
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