Despite being a developing industry, Kenya is in the race to position e-mobility as a cornerstone of the country’s socio-economic transformation over the medium term.
Through the combination of policy pronouncements, tax incentives and even rebates, e-mobility is slowly but surely taking its place as a facet of the economy.
In its 2023 Budget Policy Statement, the Treasury highlighted plans to roll out electric vehicle charging infrastructure with the view to anchor the mass adoption of electric mobility in the country.
Already, State-affiliated enterprises including Kenya Power and KenGen have set their sights on e-mobility by partly switching their fleets to electric vehicles while setting up their own charging stations.
“The government will roll out electric vehicle charging infrastructure in all urban areas along the highways and create incentives for adoption of electric mass transit systems in all cities and towns," says the Treasury.
It adds the government will "provide financial and tax incentives for public service vehicles and commercial transporters to convert to electric vehicles; leverage the financial support that will be provided to the boda boda sector through the Hustler Fund, to develop the nascent electrical vehicle (EV) and motorcycle assembly industry”.
The transition to e-mobility is a key contributor to the government's emission reduction commitment, cheaper transport and deploying the large local and regional motorcycle market to build an electrical vehicle industry.
The measures contained in the Finance Act show the government’s commitment to e-mobility.
For instance, the supply of electric bicycles has been zero-rated from VAT alongside lithium-ion batteries and electric buses.
The move is expected to incentivise the local production of e-vehicles and their respective components and spare parts.
“This is consistent with the government’s agenda to promote manufacturing and local production. This is a welcome move and will help the sector unlock various opportunities while managing the cost of doing business,” tax analysts at PwC noted.
Moreover, local manufacturers and importers of electric motorcycles will not be subjected to excise duty.
The reprieve is further expected to incentivise the production and importation of electric motorcycles aligning to the government’s net zero agenda on the reduction of carbon emissions.
Even prior to this year, the government has always had an eye on supporting local assemblies and clean energy based on previous legislation.
In 2019, for instance, excise duty on electric-powered motor vehicles was reduced to 10 percent from 20 percent with the view to make EVs cheaper.
Earlier this year, the Energy and Petroleum Regulatory Authority (Epra) added to the Treasury’s input in supporting e-mobility by approving a special tariff under e-mobility category for charging electric vehicles.
The move was intended at encouraging consumers to adopt EVs, noting the modest number of registered electric vehicles at 350 by the end of 2022.
In the set tariff which was effected from April 1, e-mobility charging stations whose consumption stands at between 200 and 15,000 kilowatt hours will enjoy a special tariff of Sh16 per kilowatt hour up to June 2026 when a further revision will fall due.
The special e-mobility tariff is cheaper than charges levied on all households outside the domestic lifeline tariff.