The Ministry of Transport and Logistics revealed in October 2025 a plan to gradually replace internal combustion engine vehicles (ICEVs) currently in use across Ethiopia with electric vehicles through a retrofitting process.
Officials argue the move is part of a broader national strategy to cut dependence on fossil fuels, reduce pollution, and accelerate the transition toward renewable energy-based mobility.
However, experts and people in the automotive industry are wary of the initiative and raise questions about its feasibility.
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Globally, the EV revolution is accelerating, driven by advancements in battery technology and policy shifts such as zero-emission targets. Electric vehicles are expected to account for nearly a third of the world’s total fleet by 20250, representing an estimated 672 million vehicles.
Ethiopia itself now counts over 100,000 Electric Vehicles (EVs) on its roads, representing roughly 8.3 percent of the nation’s 1.3 million registered vehicles, according to the Transport Ministry.
The relatively quick uptake of EVs in the country has spurred Ministry officials to set an ambitious target: they want to see EVs account for 95 percent of all imported vehicles within a decade.
This marks a significant shift in a country where, like most African nations, the vast majority of cars are used imports. These vehicles currently make up about 85 percent of Ethiopia’s fleet, reflecting the combined effects of high import duties, in some cases up to 200 percent, and chronic forex shortages that have long made owning a car unaffordable for many Ethiopians.
The conditions have created an unusual situation where used cars in Ethiopia often appreciate in value regardless of how long they have been driven. This rarely seen phenomenon underscores the depth of the market’s dysfunction.
Ministry officials believe retrofitting can serve as a remedy to this problem.
“The ICEVs will be converted to renewable energy alternatives, EVs, to significantly slash the consumption of fuel,” said Assefa Addis, transport service and supervision advisor at the Ministry.
He envisions a future where the financial burden imposed by combustion engine vehicles will gradually shift towards EVs, reducing fuel import costs and mitigating environmental pollution.
Ethiopia, Assefa explained, intends to align itself with international agreements that commit countries to reduce greenhouse gas emissions and transition toward clean energy.
Retrofitting, however, will not be mandatory.
“It depends on the interest of ICE vehicle owners,” Assefa explained. “Owners will decide whether the cost-benefit ratio works for them. What the government is doing is preparing directives based on standards already drafted by the Institute of Ethiopian Standards.”
Assefa hopes to harness the global EV momentum by creating space for private retrofitting businesses once these directives are finalized.
Yet industry players remain divided about the feasibility of the plan.
Michael Ashenafi, general manager of Korenti Motors, a firm engaged in EV imports, expressed his skepticism to The Reporter Magazine.
“Retrofitting is not an economically feasible business model,” he argued. “The number of components you can save from an ICEV is very limited.”
Michael observes the body structure of traditional combustion engine vehicles is ill-suited for installing heavy EV batteries.
“And the suspensions are not designed to carry that load,” he said.
The industry insider argues the economics simply do not add up, citing his previous attempts at converting three-wheel autorickshaws (commonly referred to as Bajaj), which revealed that retrofitting one costs more than three times the asking price for a brand new bajaj.
“A Bajaj in good condition costs about 150,000 to 200,000 Birr, but retrofitting pushes the cost to over 600,000 Birr. How can that be justified?” asked Michael.
His concerns reflect broader industry realities.
Studies indicate that retrofitting passenger vehicles can cost anywhere between USD 7,000 and 20,000, while the cost for buses or heavy-duty vehicles climbs even higher. In India, for instance, the cost of retrofitting a mid-sized bus is equivalent to around half the price for a new electric bus.
Yet, life-cycle cost analyses also show that retrofitted vehicles can recover investment within three to five years due to lower fuel and maintenance costs, especially if they are intensively used.
Michael nevertheless insists the barriers are structural.
Using the example of the ubiquitous Toyota Vitz, he explained that replacing the engine and modifying the body structure would be inconvenient or even infeasible. Fuel cars are not designed with flat battery compartments, making it impossible to properly install a large-capacity battery.
“At best, you squeeze in a smaller battery under the seats, but this drastically reduces range,” he said. “And the cost of doing so is not less than that of buying a new SUV.”
To make retrofitting feasible, he suggested, Ethiopia would need to produce EV batteries locally. Importing battery cells and assembling them domestically could lower costs, but without such capacity, Michael sees little promise.
Academics, however, present another perspective.
Edom Tsegaye, a lecturer at the faculty of Electrical and Computer Engineering at Bahir Dar University, emphasized that retrofitting can be feasible under the right conditions.
“Conversion is most viable in fleet-based systems such as taxis, buses, or even railways, where economies of scale can be implemented,” she explained. “In Ethiopia, feasibility will depend on three factors: infrastructure readiness, regulatory frameworks, and economic incentives.”
Charging infrastructure and grid capacity must be strengthened, safety and certification standards enforced, and subsidies or tax relief provided to make retrofitting attractive, according to the engineering expert.
Comparative studies suggest that in markets with mature supply chains, buying new EVs is more cost-effective in the long run. But in developing countries, retrofitting is often promoted as a transitional strategy to avoid stranded assets and expedite decarbonization.
“For Ethiopia, a mixed approach could be most rational, which is to retrofit high-usage fleets like buses and taxis while gradually importing or even manufacturing new EVs,” Edom said.
Bereket Tesfaye, an electric mobility (e-mobility) consultant, highlighted both the promises and challenges involved in the Ministry’s retrofitting scheme.
“Retrofitting is technically feasible in Ethiopia, but implementation requires planning across technical, regulatory, and institutional dimensions,” said Bereket.
He sees light-duty vehicles, taxis, and small buses as the most suitable, while arguing that heavy duty vehicles face cost and structural limitations. Retrofitting costs generally range from USD 5,000 to 15,000, and for buses can exceed USD 30,000. But once again, Bereket stressed that additional costs—battery replacements, specialized maintenance, and regulatory compliance—can make new EVs more attractive for certain categories of vehicles.
The Institute of Ethiopian Standards has already issued performance and safety requirements for retrofitted EVs. These include mandates on high-voltage system safety, certified and securely installed batteries, prevention of overheating or chemical hazards, and minimum driving ranges of 200 kilometers per charge. Retrofitted vehicles must also operate within a voltage range of 300 to 400 and deliver power between 50 to 300 kilowatts.
But compliance with such standards comes at a price.
“Certification, maintenance, and replacement costs can make retrofitting less economical than purchasing new EVs, especially for older vehicles with heavy wear,” Bereket indicated.
Industry practitioners like Eshetu Mekonnen, CEO of Universal Engineering Manufacturing and Training, a company engaged in retrofitting, believe retrofitting can work—if done at scale.
“It’s profitable if at least 100 vehicles are converted at once,” he explained. “Engineering costs can be divided and mass or bulk production makes it cheaper.”
Eshetu stated that converting a single vehicle can cost up to two million Birr, but mass retrofitting could reduce the per-vehicle cost down to 600,000 Birr.
He draws inspiration from Sri Lanka, where the UN Development Programme funded the retrofitting of 500,000 autorickshaws—a project that proved both technically feasible and socially beneficial.
The project benefited not only individual operators but also contributed to spring boarding the country’s economic recovery process.
But high custom duties on imported spare parts remain a major obstacle in Ethiopia. Eshetu recalled that he paid 200,000 Birr in duties for importing materials to convert a single fuel vehicle. With over 30 years of experience at Mercedes-Benz, a reputable automobile brand globally, he has seen large-scale retrofitting projects succeed in Germany, India, and Tanzania, where buses and pickup trucks have been converted.
“It can be done in Ethiopia too, but we need battery assembly plants here to lower costs,” he argues.
Retrofitting raises not only a technological or economic debate but also an environmental and social one.
Addis Ababa is among Africa’s most polluted cities, largely due to vehicle emissions. Transitioning to EVs could significantly reduce pollution, improve public health, and lower the country’s dependence on imported fuel, which costs nearly USD five billion a year, equivalent to the cost of building the Grand Ethiopian Renaissance Dam (GERD).
At current electricity rates—around 10 Birr per kilowatt-hour (kWh) compared to 200 to 300 birr in Europe—Ethiopia enjoys one of the cheapest energy costs globally, providing a strong economic case for electrification. Eshetu estimates that converting 1,000 vehicles annually could save millions of dollars in reduced fuel imports.
A study titled ‘Internal combustion engine to electric vehicle retrofitting: Potential customer’s needs, public perception and business model implications’ by researchers at the University of York found that motivators for ICE-to-EV retrofitting are wide-ranging.
Vehicle and use related motivators include potential environmental benefits, quieter operation, improved acceleration, lower operating and maintenance costs, extending the vehicle lifetime and enthusiasm for EV technology.
Further potential purchase motivators include driving an EV as a status symbol, a positive image for firms, avoidance of potential ICE restrictions, and a greater variety of vehicles with electric drives as opposed to the limited selection of today’s new EVs.
Perceived limitations and other concerns include limited range, high initial investment, unfamiliarity, as well as emotional attachment to the ICE and its characteristic noise.
Meanwhile, researchers like Edom argue beyond savings, retrofitting could stimulate job creation in workshops, technical training, and battery management sectors. It could also enhance energy security, reduce greenhouse gas emissions, and align Ethiopia with global climate goals.
But experts caution that full-scale conversion of all vehicles is unlikely in the short term.
“A phase-by-phase targeted approach focusing on fleets such as taxis, buses, and government vehicles is more realistic,” Edom said.
Globally, several countries are experimenting with incentives to encourage retrofitting. France, for example, included EV conversion in its rebates scheme in 2022, offering between 1,100 and 9,000 Euros depending on the type of vehicle, data from the Global Green Growth Institute indicates.
In Kenya, converted vehicles are registered as new EVs and granted incentives similar to factory-produced ones. Such models could pave the way for Ethiopia’s own regulatory and incentive frameworks.
The debate in Ethiopia ultimately reflects broader trade-offs. For critics, retrofitting is too costly and structurally impractical. For proponents, it is a pragmatic interim solution that buys time while supply chains and local manufacturing mature. For the government, it is a policy instrument to reduce imports, cut pollution, and meet climate commitments.
“Not all vehicles can be retrofitted, and it’s not a permanent way out,” Edom said, “But for select fleets, it can be a practical way to accelerate decarbonization.”
With rising vehicle demand, mounting environmental pressures, and limited foreign currency, Ethiopia should innovate to reconcile development with sustainability. Retrofitting, though contested, offers a pathway forward—if implemented strategically at scale, and with strong institutionalized backing.
Natural Gas: Sudden Policy Decision or Feasible Project?
In line with the government’s EV policy, the Ministry of Finance announced on October 10 that it would grant tax exemptions for all freight and public transport vehicles powered by natural gas.
The announcement came on the heels of the launch of a major natural gas project in the Somali Regional State with an annual production capacity of 111 million liters.
Prime Minister Abiy Ahmed (PhD) inaugurated the first phase of the Ogaden Liquefied Natural Gas (LNG) Project and laid the foundation stone for two additional mega-projects in the region last month.
The launch also marked the start of the project’s second phase, which is expected to produce an additional 1.33 billion liters per year. Officials envision the project contributing to energy production, with plans to generate 1,000 megawatts from natural gas, as well as backing domestic fertilizer production.
Despite the optimism surrounding these developments, experts have raised several concerns and called for a more cautious approach.
Energy policy advisor Bereket says that while the government’s decision was expected following the start of gas production, he did not think it would come so quickly.
“Such a quick decision is madness given the long-standing insecurity in the Ogaden area,” he said.
He recalled past reports of violence and insecurity following the discovery of natural gas reserves in the region.
“The political and security situation remains volatile,” Bereket warned. “I am worried about how the government plans to deploy security forces to stabilize the area, since previous administrations also failed to solve this problem. It may seem simple, but it’s a very serious issue.”
Bereket also criticized the government’s approach as being akin to putting the cart before the horse. He argued that importing natural gas-powered vehicles before establishing full-scale extraction and production is “unrealistic and overambitious.”
Instead, he recommended a phased implementation plan, with sufficient time devoted to consultations, infrastructure development, and strategic planning.
Bereket emphasized the need for public awareness campaigns and broader consultations, noting that “Raising awareness and building understanding could take at least two years, but this process has been neglected.”
Bereket praised the government’s broader energy-mix policy—especially efforts to promote electric vehicles—but said the decision to allow duty-free imports of natural gas vehicles lacked detailed planning.
He also expressed concern about potential political risks, stating, “Many African countries, including South Sudan, have faced disintegration due to resource conflicts. The Somali region’s natural gas could face similar political challenges.”
From a technical perspective, Bereket said essential project management and feasibility studies had not yet been conducted.
“Months ago, the government banned the import of combustion-engine vehicles,” he said. “Now, it allows duty-free imports of natural gas-powered vehicles. Such contradictory decisions create policy confusion.”
He added that while importing natural gas-powered buses and trucks might make sense, the country has also been promoting electric buses.
“It’s a bizarre mix of policies,” he said.
Michael offered a more balanced view.
He explained that diesel compressed natural gas (CNG), and petrol engines all emit carbon gases, but their environmental impact depends on emission standards such as Euro 4 and Euro 6.
“As long as the government ensures compliance with pollution and emission standards, these vehicles can be acceptable,” he said.
Euro 4 and Euro 6 engines are part of a series of European emissions standards with different pollution limits, where Euro 6 is significantly stricter and was phased in later than Euro 4.
Michael added that the availability of domestic natural gas gives Ethiopia more control over its energy resources and reduces external pressure. However, he noted that LNG-powered vehicles still produce carbon emissions, and the economic benefits remain unclear.
“The price per ton of LNG has not yet been decided,” he said. “Without knowing that, we can’t assess the cost-effectiveness or the fuel efficiency of these vehicles.”
He also stressed that infrastructure such as gas storage depots and distribution systems must be established before importing natural gas vehicles.
“Importing vehicles without these facilities is premature,” he said. “Consumers should be free to choose between diesel and electric vehicles—banning one type is unnecessary.
According to Michael, the government should prioritize investments in EVs given Ethiopia’s abundant renewable energy sources. “These resources make the operating cost of EVs much cheaper,” he said.
He also argued for stronger incentives to promote EVs, including tax holidays for both buyers and investors in charging infrastructure.
The government currently imposes a total tax of about 27 percent on EVs, including five percent duty, 15 percent value-added tax, three percent withhold tax and a three percent social tax.
“All of these taxes are a burden on consumers,” he said. “Instead, tax exemptions and financial support for EV infrastructure would make electric vehicles far more attractive.”
While acknowledging the potential benefits of LNG-powered vehicles, Michael explained that a clear, consistent, and forward looking policy is essential.
“The government’s goal to diversity energy sources is commendable,” he said, “But such major transitions must be guided by sound planning, public dialogue, and infrastructural readiness.”
