The Government of Kenya is to introduce a Finance Bill 2024 which will introduce value added tax (VAT) on electric bikes and buses, as well as solar and lithium-ion batteries.
The proposed eco-tax would significantly increase the cost of a 60kg solar battery by $312.
Zoom out
Kenya’s draft e-mobility policy, unveiled in April, aimed to promote local manufacturing and assembly of electric vehicles by offering incentives to manufacturers and assemblers while supporting local battery manufacturing, recycling and reuse efforts.
The new budget bill appears to run counter to these goals, potentially undermining the progress made so far.
Pushback
The Africa eMobility Alliance has already flagged the proposed taxes as a “negative message” for the industry. In addition, the policy change may drive consumers toward older fuel-inefficient vehicles, undermining efforts to reduce carbon emissions and combat climate change.
Because this matters
The electric vehicle market in Kenya, which consists mainly of imported used cars, is at a critical juncture. His introduction green license plates for EVs was a step towards raising public awareness and encouraging the transition to electrification.
However, removing the incentives that make EVs more affordable could reverse this positive trend.
By The Numbers
2,694 electric vehiclesincluding e-bikes and e-buses, were recorded in Kenya in 2023 — a huge increase from 475 units recorded the previous year.
E-mobility startups in Kenya have raised more than 52 million dollars in capital funding, the highest in Africa.
What they say
Guy JackCEO of Connected battery manufacturersin a statement, he described the new taxes as “completely unsustainable” and warned of their impact on jobs.
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