Gov’t weighs 5% tariff on imported EVs to protect local assembly

The government is considering imposing a 5% customs tariff on fully imported electric vehicles (EVs) for the first time, looking to protect the domestic assembly market. The finance, investment, and industry ministries are still assessing the proposal before sending it to cabinet, with a final decision targeted before year-end.

The rationale: While fully imported EVs currently enter the country dutyfree — subject only to the standard 14% VAT — companies establishing local manufacturing lines face a 2% customs tariff on imported production inputs and machinery. This tariff distortion penalizes local assembly, making finished imports cheaper than domestic capital expenditure. This has already prompted three automakers to petition the Industry Ministry for a customs overhaul as they finalize plans for local EV lines.

REMEMBER- The exemption has been under fire for a while. Government officials told us back in December that the government was weighing a rollback of the dutyfree status for imported EVs to favor domestic assembly. In June, government sources told us that the coming customs reset would put production inputs in a 2-5% tariff bracket while raising duties on some finished goods as high as 60%, with EVs among the sectors covered. The proposed 5% rate now under consideration puts a concrete number on the imported-EV side of that overhaul.

MEANWHILE- Local assembly is gaining momentum. Local production for China’s Rox ESI — a JV between Chinese luxury EV maker Rox Global and Ezz El Arab Elsewedy Investments — is slated to kick off by mid-2027. Al Mansour Automotive is preparing a future EV assembly line with Saic’s MG brand and introducing General Motors’ Spark EUV to prime the market. Furthermore, Raya Auto is establishing a USD 50 mn Chinese-backed EV plant, Al Amal Group is investing USD 20 mn to assemble Dongfeng’s Forthing hybrids and EVs, and Guide Automotive Technology is committing USD 63.9 mn to a multi-stage EV and battery facility in the Suez Canal Economic Zone.

A tax break for solar?

The Senate is studying legislative amendments to temporarily lift customs duties, VAT, and other administrative charges on imported solar equipment and components, Al Mal reports, citing Senate Energy Committee Chair Osama Kamal. The relief would remain temporary while Egypt builds out a broader local manufacturing base, a process Kamal expects to take three to five years. The committee aims to put forward its priority draft legislation before year-end.

Why it matters: Solar players have been pushing for similar relief, with the Sustainable Energy Development Association’s (Seda) Shams Misr initiative calling for five years of customs and VAT exemptions on imported components and engineering, procurement, and construction (EPC) contracts. Solar installers have long argued that current fiscal friction limits the financial viability of small-to-medium commercial installations, pointing to a 2% customs duty on panels, 5% on intermediate components, and the standard 14% VAT that developers must absorb upfront.

It’s good news, but the proposed relief would be a temporary bridge while the country’s utility-scale manufacturing pipeline scales. China’s Elite Solar brought two Sokhna factories online in January, with 2 GW of annual solar-cell capacity and 3 GW of panel and component capacity, while several more projects are in the pipeline. Also in the works is Atom Solar’s USD 220 mn cell-and-storage complex, Sunrev Solar’s USD 200 mn integrated facility, and Kemet Group’s USD 500 mn partnerships for a 5 GW cell plant and an inverter factory. And we recently knew the government is reportedly weighing a fully integrated USD 1 bn solar panel plant in Zafarana that would run the entire value chain, from domestic quartz ore to finished panels.

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