Kenya’s electric vehicle (EV) sector is emerging as a beneficiary of rising tensions in the global oil market, with the government’s move to procure locally assembled units signalling accelerated mass adoption locally.
The Treasury has announced plans to switch from purchasing 2,500 internal combustion engine (ICE) cars to 3,000 locally assembled electric ones, citing the economic risks posed by the escalating tensions in the Middle East.
Treasury Cabinet Secretary John Mbadi told lawmakers this week that the move seeks to cut fuel import costs while supporting the domestic EV industry.
“The government is moving from petroleum-powered vehicles to electric vehicles. The supplier will assemble them here,” Mr Mbadi said, adding that incentives are being prepared to boost uptake.
The policy shift comes against the backdrop of a global energy shock triggered by the conflict involving Iran, Israel and the United States, which has disrupted oil flows through the Strait of Hormuz, a critical route for roughly a quarter of global seaborne oil.
For Kenya, where petroleum imports account for about 20 percent of the import bill, industry players say the government’s move could mark a turning point.
Hezbon Mose, President of the Electric Mobility Association of Kenya (Emak), said government procurement could help unlock scale in the electric car market, which has struggled to scale compared to electric two-wheelers and buses.
“To accelerate uptake, we need critical mass. The more vehicles in the market, the lower the prices become,” Mr Mose told the Business Daily.
Electric cars remain a small fraction of Kenya’s EV landscape. Emak data shows that of the 14,750 EVs registered between 2018 and 2024, only 326 were passenger cars. Overall, two- and three-wheelers account for about 90 percent of the country’s EV fleet, reflecting stronger uptake in commercial transport segments such as boda bodas.
Industry players have pointed out that cost remains a key barrier. While EV assemblers benefit from tax incentives, including exemption from the 35 percent import duty on fully built units and zero-rated VAT, pricing still favours used petrol vehicles.
This is partly due to the Kenya Revenue Authority’s depreciation-based tax system, which lowers taxes on older imported cars. Because most electric cars are new, they attract higher taxes, pushing them out of reach for many buyers.
“As is, the incentives favour electric bicycles, motorbikes, and buses. Electric cars are still not competitive in a market dominated by used internal combustion engine imports,” Mr Mose said.
Electricity remains significantly cheaper than petrol on a per-kilometre basis, offering immediate savings for high-usage drivers.
Globally, the energy crisis has already triggered a spike in EV interest, particularly in the United States and Europe, where consumers are seeking insulation from fuel price volatility.
Treasury’s planned incentives are expected to complement existing measures, including reduced excise duty and lower import levies on EV components.
Industry players are also pushing for additional tax breaks specifically targeting electric passenger cars to close the affordability gap.
“We are in the process of engaging with the government in the lead up to this year’s finance bill for more incentives on electric cars to spur uptake in the entire sector,” the Emak president said.
Kenya’s renewed push comes as regional peers move faster to switch to electric mobility.
Ethiopia has taken the most aggressive approach, banning imports of internal combustion engine vehicles and rapidly scaling its EV fleet to more than 115,000 units, about eight percent of its total vehicles.
Rwanda has also made steady progress through targeted incentives and regulatory support, particularly in motorcycle electrification.
By contrast, Kenya’s approach has been largely market-driven, with private firms leading investment in areas such as electric motorcycles.
“Progress has been limited by incomplete national policy frameworks, gaps in institutional coordination, and uncertain fiscal incentives often tied to short-term budget cycles,” said a recent study by Berlin-based think tank Agora Verkehrswende and the German Agency for International Cooperation (Giz).
Furthermore, charging networks are still limited and concentrated in urban centres, constraining the practicality of electric cars for many users.
“The government adopting e-cars on such a scale helps the private buyers because a large State fleet will justify investment in charging infrastructure,” Mr Mose said.
Mr Mbadi has framed the shift as both an economic necessity and a strategic pivot. “We must reduce reliance on fossil fuels and go to electric vehicles,” he said, warning that continued global instability could further strain energy markets and economic growth.
