Primary stakeholders in the Electric Vehicle industry are lining up to assemble in Kenya, hoping to take advantage of tax incentives granted by the government to encourage industrialization and the expansion of sustainable transportation.
The companies have approached two local assemblers, Kenya Vehicle Manufacturers (KVM) in Thika and Associated Vehicle Assembler (AVA) in Mombasa.
KVM is the latest company to be given the contract to build Roam Move, the company’s first entirely electric shuttle bus. BasiGo, Roam’s rival, has previously cooperated with AVA to manufacture its buses.
According to a report by Business Daily, more electric car manufacturers want to build their models locally in the near to medium term to take advantage of cheaper taxes.
“We have received increased interest from more electric vehicle companies who want to assemble locally,” said Dinesh Kotecha, the chief executive of Simba Corp, which owns Mombasa-based AVA.
He also stated that the parties are in various stages of contract discussions for the assembly. According to dealers, electric vehicles constructed in the nation are free from the 25% import charge on such models sent in completely built from elsewhere.
They are also exempt from the 25% excise charge that applies to fully-assembled imports. The two tax breaks are intended for companies who bring in completely knocked down (CKD) items and transport them to assembly sites where they are assembled using locally obtained components such as tires.
Firms that assemble their models locally might get a pricing edge over companies that import automobiles, thanks to tax breaks.
This can help them increase sales while also providing a chance to earn larger profits. Fully manufactured electric cars are taxed less than those that operate on diesel or gasoline, indicating the government’s objective of encouraging the shift to sustainable transportation.
The import tariff on fully assembled automobiles with internal combustion engines is fixed at 35%. Aside from autos, tax breaks have been extended to electric motorbike assemblers to stimulate local manufacture.
“Completely knocked down (CKD) is duty-free, and if it’s electric, it’s VAT exempt, which is a big difference,” said Vijay Gidoomal, the chief executive of Car & General.
The Treasury emphasized plans to build electric car charging infrastructure in its 2023 Budget Policy Statement in order to anchor the country’s broad adoption of electric transportation.
Already, state-owned firms such as Kenya Power and KenGen have set their sights on e-mobility by converting some of their fleets to electric cars and installing charging stations.
Concerns over pollution from using petroleum fuels, as well as the commodity’ expected depletion, are driving the shift to electric cars.
