Kenya Bets Big On Tax Cuts To Drive EV Race As Tough Road Lies Ahead
Kenya’s new National Electric Mobility Policy is a long-awaited framework packed with tax incentives and ambitious targets designed to catapult the country into a regional leader in electric transportation. The policy arrives amid explosive growth in the sector and aims to tackle the country’s massive fuel import bill, but also raises questions about execution in a market where ambitious climate ventures have recently faltered.
The government has zero-rated Value Added Tax (VAT) on electric buses, bicycles, motorcycles, and lithium-ion batteries, and eliminated excise duty on the latter three. Further tax breaks for EV parts and charging stations are set to begin in July 2026. The most visible change is the introduction of distinctive green reflective license plates for all fully electric vehicles, a move Transport Cabinet Secretary Davis Chirchir called a “signature” of national climate commitment.
Kenya’s petroleum import bill hit a staggering KES 628.4 B (~USD 4.8 B) in 2023, the country’s largest import expense. This reliance drains foreign exchange and exposes the economy to global fuel price swings. The policy estimates that as EVs displace petrol and diesel engines, the government could face a USD 693 M annual shortfall in fuel tax revenue by 2043, a gap it may need to fill with road-use charges or electricity levies.
Kenya’s approach is notably pragmatic, focusing on high-usage commercial vehicles to maximise impact. The market is already responding; EV registrations skyrocketed from 1,378 in 2022 to over 39,000 by 2025, a 2,700% surge driven largely by electric bodaboda motorcycles and fleet vehicles. The economic savings in driving 100 km in a light EV for as little as USD 0.62, compared to USD 6.62 for a petrol vehicle, is a strong draw.
This places Kenya among a group of African nations pursuing distinct EV strategies. Ethiopia has taken the most radical step by banning imports of internal combustion engine cars. South Africa is focusing on production, offering manufacturers a 150% tax deduction to build local capacity. Kenya’s blend of consumer incentives and commercial targeting reflects its specific strengths, including a renewable-heavy grid where over 90% of electricity comes from geothermal, hydro, solar, and wind sources.
The government has set a goal of 10,000 public charging stations by 2030 and will require new commercial buildings to dedicate at least 5% of parking to EV charging. However, Kenya’s electrical grid currently lacks the capacity and reliability for large-scale EV adoption. Partnerships with the national utility, Kenya Power, to install initial charging stations and develop smart-grid solutions are essential but untested at scale.
The recent, abrupt collapse of Kenyan climate-tech pioneer Koko Networks serves as a cautionary backdrop. The clean-cooking company, which had invested over USD 300 M and employed 700 people, failed after years of waiting for a crucial government authorisation to sell its carbon credits. It showed that even well-funded ventures with clear policy alignment can stumble on the rocky path from government announcement to concrete, sustained execution.
For Kenya’s EV ambitions, the policy document is now public, the green plates are ready, and the tax breaks are scheduled. The harder task of building the infrastructure and maintaining the political will to see the transition through has only just begun.
