Investors in e-mobility solutions have welcomed a decision by the Government of Rwanda to extend a zero-rated import duty on electric and hybrid cars and motorcycles.

This tax incentive, announced for the 2024/25 fiscal year, is designed to accelerate the uptake of electric vehicles (EVs) and reduce greenhouse gas emissions, the Ministry of Finance and Economic Planning said. The tax decisions are revised on an annual basis.

ALSO READ: Rwanda extends import tax exemption for electric vehicles

Donald Kabanda, chairman of Rwanda E-Mobility and CEO of Rwanda Electric Motors Ltd, expressed optimism about the extension.

He said maintaining the zero-rated import duty will make EVs cheaper and encourage more people to buy them.

"The decision benefits consumers first because they receive products at lower prices,” Kabanda said.

"Taxes significantly affect the price of vehicles entering the country, including motorcycles and electric vehicles. Lower taxes mean more affordable prices for the consumers.”

He also noted that increased consumer demand will drive investment in infrastructure, such as charging stations, across the country.

Addressing concerns about the performance of electric vehicles in hilly areas, Kabanda said it depends on the type of a vehicle. He assured that electric motorcycles and hybrid cars are capable of navigating all terrain in Rwanda.

ALSO READ: Rwanda on course to grow electric mobility market

Iliza Karangwa of Kabisa, one of the e-mobility companies operating in Rwanda, said the extension of the tax exemption on electric vehicles is a "significant step in maintaining the positive momentum we have seen with the adoption of EVs.”

"By reducing the cost barriers, more individuals and businesses are encouraged to make the switch to electric mobility,” Karangwa said.

"This aligns perfectly with our mission to raise awareness about the environmental and personal benefits of going electric.”

With EVs becoming more affordable, she said, "a significant increase in their adoption would be anticipated as people and businesses become more conscious of the need for sustainable and cost-effective transport solutions.

ALSO READ: Nine products exempted from taxes in new budget

She said in order to encourage the widespread use of electric vehicles outside Kigali, a comprehensive public charging infrastructure would be essential.

"This involves strategically placing a variety of charging stations—both fast direct current (DC) and standard alternating current (AC)—along major traffic routes and in important rural areas,” she said. Kabisa has at least 25 chargers in Rwanda.

The government first initiated a tax exemption for electric vehicles in April 2021, as it stepped up efforts to encourage uptake of EVs and investment in the budding sub-sector.