Ermias Abate has been driving his trusty Toyota Corolla for three years, working as a taxi driver to provide for his wife and two children. The sole breadwinner in the family, Ermias can make up to 2,000 birr a day ferrying passengers across Addis Ababa.
The income, though relatively stable, is proving less and less sufficient for supporting a family of four with each passing day. Aside from the soaring prices for household commodities and basic consumer goods, which take up a large portion of his earnings, Ermias must also contend with skyrocketing costs for fuel and spare parts.
Ermias paid just 26 birr for a liter of benzene at gas stations when he got started in the taxi business three years ago. Today, a liter costs 78 birr.
RELATED POSTS
He is considering making a switch to an electric car in a bid to save on gas but Ermias is hesitant. Reliable information on electric car performance in Ethiopia is hard to come by, and Ermias’ comprehension of the subject is based largely on hearsay.
For instance, Ermias is concerned about rumors that electric cars are more prone to damage on rough Ethiopian roads as the batteries are most often fitted underneath the vehicle. The prospective cost of replacing batteries – a whopping half a billion birr apiece – keeps Ermias apprehensive about making the switch.
Birhanu Kebede, CEO of Hambd Trading Plc, an importer of electric vehicles, argues the fears are unfounded. He explains that the battery is sealed and positioned above the chassis, which is the car’s strong under body skeleton that also serves as a protective frame.
Birhanu says the chassis protects the batteries from any damage. But Ermias has other concerns about the availability of after-sale services, maintenance options, and spare parts availability in Ethiopia.
Electric cars were a rarity in Ethiopia until very recently. Hambd Trading was the first company to engage in the import of electric vehicles (EVs) three and a half years ago.
Birhanu recalls the hurdles the firm had to overcome in the early days.
On the market side, there was very little demand for electric cars; people were unsure about the technology and worried about potential risks. Back then, Hambd struggled to sell off its first batch of 10 EVs it imported from China as buyers were reluctant to invest in what was then largely viewed as a novelty.
Things have since changed dramatically for Hambd. The company now sells around 200 electric cars a year. This indicates a growth, albeit limited, in demand for EVs in Ethiopia.
But demand was not the only issue Hambd had to deal with when it was setting out in the EV market. There were no clear import regulations, including tariff guidelines, for EV imports. Cars were held up at customs for months while officials attempted to work out how much to charge importers.
But the scenario has changed over the last couple of years, led by a surge in demand. An EV import tariff was initially set at 30 percent, but has since dropped by half, encouraging importers like Hambd. There are also no tariffs on spare part imports for EVs assembled domestically.
Birhanu observes a growing preference for electric cars in the market. He sees more and more people are transitioning from combustion cars to electric-powered vehicles.
“There’s significant demand now,” Birhanu said. “The only issue is the availability of electric cars. There are no problems on the demand side.”
Hambd Trading is an authorized agent for Yutong Bus, a large automotive manufacturer in China. Hambd sources its EVs from Sinogold, a prominent Chinese EV manufacturer. Birhanu says the company has plans to erect an EV assembly plant in Ethiopia next year.
The increasing popularity of electric vehicles has resulted in the number of both imported and domestically assembled electric vehicles surpassing 100,000, according to government data.
Among the domestic firms seizing the opportunity by importing knocked down parts and assembling electric vehicles in Ethiopia is the Belayneh Kindie Group, a conglomerate of 22 companies, which debuted in the EV assembly industry a year ago.
The Group imports the knocked down parts for its EVs from Golden Dragon, another Chinese manufacturer. It puts the parts together at three assembly plants – two in Gelan town and one in Debre Birhan. The latter is dedicated exclusively to electric vehicle assembly, particularly public transport vehicles, according to company representatives.
According to Setegn Engidaw, communications director for the Belayneh Kindie Group, the decision to launch the assembly plant was prompted by the increasing demand for electric vehicles, coupled with what he described as “the government’s supportive policies in this regard.”
No less than 216 electric minibuses were assembled at the Debre Birhan plant during a trial production phase, according to Setegn. He says the plant has the capacity to assemble four electric minibuses and two buses daily.
A sister company under the Group, dubbed Velocity Express, operates a fleet of 20 electric minibuses and two electric buses in Addis Ababa, marking it the first ever in Ethiopia to render the service. The fleet of 20 electric minibuses transport 5,500 people daily in addition to the 4,000 passengers who commute by the 90-100 seat capacity e-buses. The company offers after-sales service and maintenance for these electric cars through its sister company, Golden Bus S.C., according to Setegn. He also said that the company offers an 8-year warranty, with batteries covered by a 12-year warranty.
The company is also looking to venture into the business of charging stations across Addis Ababa, according to Setegn. He says the Group has imported over 100 fast charging cables and plans to establish five fast charging stations around the Stadium area. According to Setegn, each cable at the charging stations will be able to charge two cars per hour.
Currently, they offer fast charging services at one charging station located within their garage in the Kera neighborhood.
Setegn says that there is significant demand for these electric cars, with most buyers being organizations such as government offices and hotels. He explains that the increasing cost of fuel, along with disruptions in fuel supply and long queues at fuel stations, is driving people to switch to electric cars.
Electric cars are experiencing a global surge in popularity. As per the International Energy Agency, sales of electric cars have seen exponential growth, surpassing 10 million in 2022. The proportion of electric cars in total car sales has tripled from 4 percent in 2020 to 14 percent in 2022. Norway remains at the forefront of EV adoption, with electric car sales accounting for 88 percent in 2022.
Global electric car sales increased by 31 percent in 2023, reaching 13.6 million units worldwide. In China, 22 percent of passenger vehicles sold in 2022 were electric, rising to 37 percent in 2023.
Countries are actively promoting electric vehicles and phasing out fossil fuel cars. In December 2021, US President Joe Biden issued an executive order banning the sale of fuel vehicles nationwide by 2035 in favour of electric cars.
However, Birhanu highlights that the shortage of foreign currency continues to be a primary challenge for Hambd and other EV and spare parts importers.
The scarcity of foreign currency and the increasing expense of importing fuel have prompted the government to prohibit the importation of assembled fuel-powered automobiles for private use and promote electric cars instead. Ethiopia spends around 7.6 billion USD annually on fuel imports.
Adding to the appeal of electric cars in Ethiopia is the country’s incredibly cheap electricity rates. For perspective, the average global price for household electricity is around 15 USD cents per kilowatt-hour (kWh). In Ethiopia, however, household electricity is offered at approximately 6 USD cents per kWh, making it one of the cheapest rates globally. This significant cost difference makes running an electric car even more economical compared to gasoline-powered vehicles.
Ethiopia currently produces approximately 5,200 MW of electricity. Ninety percent of Ethiopia’s electricity production comes from hydroelectric sources, with wind power contributing 404 megawatts and waste-to-energy projects providing an additional 25 megawatts.
But there are some glaring problems standing in the way of Ethiopia’s EV ambitions.
Importers say they face long delays in obtaining letters of credit from banks for the import of EVs. The disruption of maritime navigation in the Red Sea due to Houthi attacks has exacerbated delays in the supply chain, extending the import process by as much as five months.
An importer who spoke to The Reporter argues the government should be focused on establishing a mechanism to convert fuel cars into electric cars, saying that should have been the case before implementing the ban on combustion engine imports.
Another crucial problem is the lack of charging infrastructure.
Electric car models like those sold by Hambd, with a range of around 419 kilometers on a single charge, take a significant 6 to 7 hours to fully charge at home.
Ethiopia lacks charging stations that can quickly recharge an EV battery, unlike gas stations that offer a quick refuel. This limited infrastructure could potentially discourage some potential buyers.
Moges Negash, an automotive expert, observes that Ethiopia is currently in a transition phase from fuel cars to electric cars. He notes that many individuals are considering making the switch from fuel to electric vehicles due to the attractive low cost of electricity.
He foresees electric cars will likely become more competitive due to the lower cost of electricity and reduced expenses for spare parts and recurrent costs for things like oil and filters.
Moges predicts that while familiarity will continue to work in the favor of combustion engine vehicles, high fuel costs and the affordability of electricity will be driving factors for the imminent transition from carbon fuel to electric.
Moges does, however, acknowledge the significant challenge that the lack of infrastructure will pose as the number of electric cars grows. He suggests that people can currently charge their cars at home during nighttimes, when the grid is less congested, but anticipates challenges as the number of electric cars increases in the coming years.
Moges warns that a surge in the number of electric cars being charged at home could strain the grid and potentially lead to outages. To address this, he recommends the establishment of charging stations at various locations such as offices, supermarkets, restaurants, and hotels.
The expert also emphasizes the importance of establishing maintenance shops with well-trained mechanics to support the growing number of electric cars. He further anticipates that the promising business opportunity of establishing charging stations will attract investors.
The issues of after-sales service and maintenance for electric cars pose yet another realm of difficulty. There are no established maintenance shops specifically catering to electric vehicles yet.
Yohannes Ejigu, the owner of Car Care Ethiopia, an auto care service provider, notes the absence of warranties for electric cars and the lack of after-sales service by importers and maintenance shops.
He emphasizes the importance of importers offering warranties to electric car buyers and making spare parts readily available.
Access to spare parts for electric cars is limited, posing a potential inconvenience for repairs and maintenance.
Yohannes highlights the deficiency in knowledge and expertise among maintenance shops when it comes to servicing electric cars, as they are more accustomed to working with fuel-powered vehicles.
He explains that there is a need for learning and training in this area, with efforts being made to acquire knowledge through reading and online training. Yohannes mentions ongoing discussions with importers about the necessity of training for auto care service providers regarding electric vehicles.
Car Care plans to install a fast-charging station and acquire diagnostic equipment specifically for electric vehicles, according to Yohannes.
Ermias, the taxi driver, told The Reporter he is leaning towards buying an electric car because of the significant savings on fuel. He also expects that the cost of electric cars will eventually decrease, making them more affordable in the future.
