Kenya’s e-mobility progress at risk in proposed Finance Bill changes

Kenya has made notable strides in building a more sustainable transport system, with electric motorcycles and vehicles emerging as a key part of this shift.

The growth of electric mobility offers a practical path to reducing emissions, lowering operating costs, and creating new opportunities for passengers.

However, recent proposals in the Finance Bill 2025 risk disrupting this progress. Electric motorcycles have quickly gained traction.

According to the Electric Mobility Association of Kenya, 4,862 electric motorcycles in 2024 were registered, nearly twice as many as the previous year.

This sharp increase reflects growing interest in affordable, energy-efficient transport options, especially among boda boda riders and other informal sector operators looking to cut fuel and maintenance costs.

Momentum in Kenya’s electric vehicles (EV) sector remains fragile due to limited charging infrastructure, high upfront costs, and low consumer uptake. Without targeted incentives, reliable charging access, and policy clarity, adoption risks stalling before it can meaningfully scale.

The Finance Bill proposes changing the value added tax (VAT) classification for electric motorcycles and their components from zero-rated to VAT-exempt. While this may seem like a minor technical adjustment, the impact is significant.

Under a zero-rated system, manufacturers can reclaim input VAT on materials and services used in production, helping to keep costs and consumer prices low.

However, if reclassified as VAT-exempt, producers lose this ability, prompting price increases to maintain margins. This shift could make electric motorcycles less affordable, undermining efforts to accelerate EV adoption.

Many of the people looking to adopt electric motorcycles do so because the bikes offer long-term savings, but only if the upfront cost is manageable. If prices rise, fewer users will be able to afford them, and we risk slowing the adoption of clean transport options in communities that stand to benefit the most.

Players in the e-mobility sector have experienced the impact of this shift to electric. They have partner with EV manufacturers and financiers while supporting programmes that allow riders to access electric bikes with reduced energy maintenance costs. These efforts are part of a broader plan to improve earnings for drivers, as well as support Kenya’s climate goals.

If the cost of acquiring EV bikes increases, we may see fewer drivers joining such programmes. Those already participating may struggle with higher financing terms.

This would not only reduce the reach of electric mobility in Kenya but could also increase the financial pressure on drivers already managing tight margins.

Kenya is well-placed to lead on electric motorcycles in Africa. To maintain this position, the country must create an enabling environment for growth, including keeping electric mobility affordable for the people who rely on it the most.

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E-mobility players acknowledge the government’s need to review tax policies and raise revenue fairly and efficiently. However, tax changes must also consider the broader social and economic impact.

With Kenya emerging as a regional leader in electric mobility, policies must continue to support the expansion of electric bikes. There is a strong case for maintaining zero-rated VAT status on electric motorcycles and key components like lithium-ion batteries and chargers.

This approach ensures affordability, strengthens local assembly efforts, and keeps the country on track to meet its climate commitments.

A shift to VAT exemption might reduce short-term tax refunds, but the long-term costs, in terms of slower adoption, reduced innovation, and missed environmental targets, could be much higher.

Moreover, this is not just a question of emissions or economics. It's about access. Many drivers turning to electric motorcycles are drawn from underserved groups, including the underbanked and youth seeking flexible income opportunities. Making these vehicles more expensive will only widen existing gaps in mobility access and economic inclusion.

As the Finance Bill moves into the public participation phase, it is important that this issue receives close attention. Sustainable transport should remain a national priority, and policies must reflect that commitment. Industry players, government agencies, and civil society all have a role to play in ensuring that tax policy supports innovation and clean mobility.

The writer is the Public Policy Manager at Bolt.