In a country where fewer than half the residents have access to electricity, dealers barely offer petrol cars anymore. Ethiopia became the first in the world to ban imports of vehicles with internal combustion engines at the start of 2024 — and in two years the share of electric vehicles on the roads has grown from less than one percent to five or six percent. This is not a climate campaign but harsh economising: the country was spending up to six billion dollars a year on fuel, draining its foreign currency reserves.
For ordinary drivers, such as taxi drivers in Addis Ababa, the shift has brought a direct benefit. Previously a third of their income went on petrol and queues at filling stations; now charging takes about five percent. New Chinese electric vehicles — BYD, Changan and others — have become more affordable than used petrol cars thanks to reduced duties: up to 15 percent on finished vehicles and zero on assembly from kits. The market reacted instantly: dealers reoriented themselves, and almost all sales are electric cars.
Behind this lies not an abstract "green" policy but a concrete calculation by the government. Fuel imports were eating up foreign currency reserves and required subsidies that weighed on the budget. The ban plus incentives for electric vehicles allowed money to be redirected within the country and to use the hydropower plants already built — more than 96 percent of electricity in Ethiopia is renewable. The driver's personal budget and the state treasury benefited at the same time, although the charging infrastructure still lags behind: fast stations are few and the grid is unstable.
The hidden incentive is obvious: when currency is scarce, any spending on imported fuel becomes an unaffordable luxury. Ethiopia has shown how fiscal pressure can accelerate a technological shift faster than climate agreements. Drivers save not for the sake of the environment but because otherwise they cannot make ends meet; the state saves so as not to spend its last reserves on petrol. Risks remain: if the charging network does not keep up and conflicts return, the transition could stall.
In the long term, success depends on whether the country can turn forced economising into a sustainable system. Already there are more than one hundred thousand electric vehicles out of 1,2 million registered cars, and the goal is half a million by 2030. This is not merely a replacement of transport but a restructuring of how people spend and save: less money on fuel means more for family, business or savings. For developing economies, such an approach could become a model — not waiting for ideal conditions but using constraints as a push.
Money, like water, finds the path of least resistance: when petrol becomes too expensive in currency terms, the flow switches to electricity that is already there inside the country. Ethiopia has proved that even with weak infrastructure a drastic ban can turn the market around in a couple of years. The main question now is whether this momentum will be enough for infrastructure and the economy to keep up with it.
