تThe automotive industry stands as a vital engine of industrial and economic growth for major global powers, driving the creation of thousands of jobs and propelling the national economy forward. Recognizing this strategic imperative, the Egyptian state has prioritized this sector through the launch of the National Automotive Industry Development Program (AIDP), which officially entered into force in July 2025. AIDP aims to transform Egypt into a leading regional manufacturing and export hub, aligning with the nation’s Industrial Development Strategy and the Egypt Vision 2030 sustainable development goals, with a primary focus on accelerating the Green Mobility Transition through unprecedented financial support for electric vehicle manufacturing. This comprehensive guide explores the core components of AIDP, highlighting available fiscal and tax incentives while clarifying the fundamental differences between producing electric and conventional vehicles. It further outlines specific eligibility requirements and details the common pitfalls investors must navigate to ensure informed and strategic decision-making within this promising industrial sector.

What is the National Automotive Industry Development Program (AIDP)?

AIDP serves as the primary executive arm for the state's strategy to advance the automotive sector, having received final approval from the Cabinet and the Supreme Council for the Automotive Industry in May 2025. This move ensures a stable policy environment and a long-term state commitment to the sector over a seven-year period, with structured growth targets for production volumes and local component integration.1.
For full details of the National Automotive Industry Development Program, you can scan the QR code. 

AIDP Targets

•  Increasing the local value-added to reach 60%.
•  Increasing the target local industrial component in automotive manufacturing to over 35%.
•  Increasing the annual quantitative production to 100,000 vehicles.
•  Attracting new investments into the automotive manufacturing sector.
•  Stimulating the transition to electric vehicles and eco-friendly transportation.
•  Establishing factories in priority development zones to drive regional growth.

Incentive Calculation Criteria

•  Local Value-Added Increase Incentive.
•  Quantitative Production Volume Incentive.
•  New Investment Increase Incentive.
•  Environmental Commitment Incentive.
• Local Industrial Component Target Increase Incentive.  In the event that the target local industrial component exceeds 35%, the manufacturer is granted an additional incentive of 5,000 EGP for every 1% increase in the actual local industrial component per vehicle throughout the AIDP’s duration (calculated outside the maximum incentive cap). This increase must consist of actual local components, additional manufacturing operations, or a new product.
• Priority Area Development Incentive.

1. A full refund of land value within these zones for vehicle assembly plants, provided annual production exceeds 100,000 units (for internal combustion engine vehicles) or 10,000 units (for electric vehicles).
2. A 50% land value refund for existing factories operating within established industrial zones.

AIDP’s Eligibility Requirements

• Annual production must be no less than 10,000 vehicles under the AIDP framework, with a minimum output of 5,000 units per model. This volume must increase annually, maintaining a target local industrial component of at least 20% at the outset for internal combustion engine vehicles, rising to 35% by the program’s conclusion.
• Electric Vehicles: A minimum production of 1,000 units is required, scaling to 7,000 units by the end of the program. The actual target local industrial component must be at least 10% initially, subject to annual review. These models qualify for half-value incentives under the value-added and production volume tiers, while investment volume and environmental commitment incentives apply in full.
• The maximum vehicle price eligible for incentives is 1,250,000 EGP, with a maximum engine displacement of 1,600cc. Total aggregate incentives are capped at 30% of the ex-factory price, with an absolute maximum of 150,000 EGP per vehicle.
• •To secure the environmental commitment incentive for natural gas vehicles (NGVs), an approved certificate from a company affiliated with the Ministry of Petroleum and Mineral Resources is mandatory.
• •To qualify for local content recognition, a minimum local value-added ratio of 25% must be achieved through substantive manufacturing operations or genuine local components, rather than the simple assembly of locally manufactured parts.ً
• •Annual quantitative production and local industrial component percentages must progress incrementally over the seven-year program period. Incentives are subject to partial deduction if production volumes or localization percentages remain stagnant..
•  •Exporting companies are eligible for incentives on exported vehicles to bolster international competitiveness. AIDP calculates incentives based on total production, regardless of whether units are directed toward the domestic market or for export..

Why Egypt Stands as a Premier Investment Destination for the Automotive Industry?

Egypt possesses a suite of competitive advantages that position it as an ideal investment landscape for the automotive sector. These core strengths include:
●    Market Scale and Latent Demand 
The Egyptian domestic market currently ranks among the most promising in the region, characterized by a steady upward trajectory in demand that began in mid-2025.
●    Operational Cost Efficiency
The Egyptian market is uniquely characterized by low operating costs relative to global benchmarks, offering a significant competitive edge, particularly in terms of labor and manufacturing wages.
●    Extensive Free Trade Agreement (FTA) Network: 
Egypt leverages a vast network of trade pacts with numerous countries and economic blocs, such as COMESA and the Agadir Agreement. These treaties grant Egyptian-made products duty-free access to member state markets, eliminating tariffs and similar fees to broaden export horizons and maximize profitability.

Strategic Errors Investors Must Navigate

A primary mistake frequently made by new entrants is launching operations with a limited production capacity that barely satisfies AIDP's minimum requirements, without a roadmap for future expansion. This short-sighted approach prevents the investor from fully capturing the available incentive tiers; to mitigate this, manufacturers must focus on penetrating international export markets to drive production volumes, lower unit costs, and ensure the vehicle remains competitive both domestically and abroad.

Failure to Plan for Incremental Localization

Some investors join AIDP without a clear strategy to increase their local component percentage annually. This oversight leads to the forfeiture of a significant portion of the incentives designed to reward industrial deepening and domestic value-add..

Absolute Reliance on Imported Components

The failure to establish strong ties with domestic feeding industries or build a local supply chain represents a fundamental strategic error. Relying exclusively on imports makes it virtually impossible to achieve the mandatory local component thresholds required by the AIDP..

Neglecting Sustainability and Environmental Standards

Even for manufacturers beginning with internal combustion engines, the lack of a transition plan toward electric or eco-friendly vehicles represents a missed "golden opportunity." By failing to pivot, investors lose access to the highest-tier environmental incentive of 20%, which serves as a significant competitive advantage in the global market.

AIDP represents a historic and rare investment window, anchored by a decisive government commitment and a comprehensive incentive framework. The strategic focus on electric vehicles and the "Green Transition" ensures this sector remains aligned with global sustainability trends, safeguarding the longevity and growth of these investments over the long term.
Visionary investors who recognize the magnitude of this opportunity—and implement calculated strategies for gradual expansion and industrial deepening—stand to reap substantial financial returns. Egypt’s massive market, supporting infrastructure, and strategic location as a regional export gateway provide a solid foundation for success and sustainable profits. The time to invest is now; AIDP is stable, the incentives are active, and the market is primed. This is your opportunity to be part of Egypt’s industrial revolution and build a robust national industry that delivers exceptional investment yields.

This is your chance To be part of the major industrial transformation taking place in Egypt, and to contribute to building a strong national industry that serves the country and delivers attractive investment returns for you.