Vehicle Efficiency Standards and Fleet Transformation in Kenya

The model tracks Kenya's light-duty vehicle fleet as a stock that turns over: vehicles entering as used imports or local assembly, ageing through the fleet, and retiring out of it. Because more than 90% of registrations are used imports — predominantly from Japan — the composition of what enters the country largely determines fuel consumption, emissions, and trade exposure for years afterwards.

Against that structure it tests the policy levers actually available: import age limits, efficiency standards at first registration, incentives for cleaner vehicles, and growth in domestic assembly. The purpose is to establish which levers move fleet outcomes on a policy-relevant timescale in a market with limited domestic manufacturing.

The work supports regulatory design directly and carries a capacity-building component across Kenyan government agencies, so the model remains usable by the people who will maintain the standard.

Electric vehicles are cheaper to run and more expensive to buy. In a market where nearly all passenger cars arrive as used imports and financing is short and costly, the question is whether the running-cost advantage arrives early enough to matter at the point of purchase — and if not, which part of the cost stack has to change.

The brief pairs a total-cost-of-ownership model with a market assessment of what is actually on sale. The TCO compares new and used battery-electric cars against equivalent petrol vehicles over ten years, accounting for price, duties and taxes, financing, fuel or electricity, maintenance, insurance, and residual value. The market analysis then examines 193 distinct BEV models across Kenya and five reference markets to test where model availability and price come from.

The Toyota Corolla Axio 1.5L serves as the reference petrol car, given how common it is in Kenya, and is compared against the BYD Dolphin Surf — one of the lower-cost BEVs currently available there. Both are modeled over a ten-year ownership period at an 8% discount rate, with financing at 80% loan-to-value and 14% interest over four years. Used cases take a four-year-old vehicle and apply the Kenya Revenue Authority's depreciation schedule to estimate import value.

Three sensitivity cases test how fiscal policy and market structure change the answer: Kenya's proposed import-duty exemption for the first 100,000 EVs; Rwanda, which exempts BEVs from import duty, excise duty and VAT; and a locally assembled model, the TAD Motors Amani, which avoids the 35% import duty entirely.

Ten-year discounted TCO by component, in USD. The electric cases carry a heavier tax burden in absolute terms despite a lower excise rate — 10% against 35% — because duty is levied on a much higher customs value.

Source: Jamhar, Jain, Hwang & Ramji (2026), Figures 1–6.

1. 01

   The electric car is already cheaper to own

   A new BEV reaches a lower ten-year TCO than the comparable petrol car — $44,976 against $46,785 — on energy savings of about $16,185 alone.

2. 02

   But the penalty is all upfront

   Vehicle price, taxes and financing make up a far larger share of BEV cost. The advantage arrives over a decade; the barrier arrives on day one.

3. 03

   A lower excise rate still means a higher tax bill

   BEVs pay 10% excise against 35% for petrol cars, yet carry $2,392 more tax, because duty is assessed on a much higher customs value.

4. 04

   Used EVs are the accessible entry point

   A four-year-old BEV costs $28,736 to own against $37,481 for the equivalent petrol car — 23% less, on a down payment of $3,956.

5. 05

   The same car costs 2.5× more in Kenya than Thailand

   A BYD Atto 3 retails near $58k in Kenya and $23k in Thailand. Duties and levies alone account for $25k of the Kenyan price.

6. 06

   Local assembly changes the arithmetic outright

   Exempt from the 35% import duty, a locally assembled BEV reaches a $19,934 TCO — under half the imported equivalent, and the lowest of any case tested.

The brief argues for a three-pronged strategy. First, a vehicle efficiency regulation or ZEV sales requirement to create long-term market certainty — the same instrument that lifted electric passenger car sales roughly 150% in India's first year of CAFE Phase II, and raised the BEV share of available models in Chile from 2.5% to 10% in two years.

Second, targeted and time-bound fiscal measures to cut the upfront cost of electric light-duty vehicles, building on the proposed exemption for the first 100,000 EVs. Rwanda's full exemption and Tanzania's reduced 10% duty provide regional precedent; the measures should be reviewed against vehicle prices, model availability and uptake, then phased out as the cost differential narrows.

Third, reform of the vehicle import pricing process. Many lower-cost models are absent from the KRA's CRSP schedule, forcing manual valuation, delays and higher costs. Treating EVs as consumer goods rather than luxury items, and benchmarking valuations to global market prices, would remove a barrier that costs importers time rather than duty.

Alongside these, targeted financing for high-utilisation segments — taxis, ride-hailing, corporate and government fleets — would reach the users who capture the operating-cost advantage fastest, and emerging local assembly investment should be linked to the longer-term industrial policy framework.