EVs, on the other hand, are subject to only a 15% customs duty, which the government hopes will make them more affordable to the average Ethiopian. However, despite this huge tax break, EVs carry the same financial burden as combustion engine vehicles.
"EVs are comparably cheaper for the value. For example, I'd spend ETB 2.5 million in the past for a used car of about five to ten years old. But now, I'd be spending ETB 2.5 million for an EV, but a new car," Tesfaye tells Techpoint Africa.
EVs are not more costly than other non-electric vehicles in Ethiopia; however, even with similar pricing and the offer of a newer, unused vehicle, the majority of Ethiopians who can afford a vehicle still prefer fuel-powered ones over EVs.
A reason for this is the need to purchase vehicles that retain their resale value. For the average Ethiopian who can afford to purchase a car, that purchase is an investment. The used car market, estimated at $482.77 million, is three times the size of the new car market in Ethiopia.
Essentially, there is a huge demand for used cars, and as a result, cars appreciate rather than depreciate, unlike in many other countries. Hence, a car owner in Ethiopia can sell a car for a price significantly higher than its original value after several years of use.