Electrifying Shift: Nepal's Surge in EV Imports Marks a New Era in Automotive Market

Electrifying Shift: Nepal's Surge in EV Imports Marks a New Era in Automotive Market
Credit goes to Kathmandu post

Nepal's transition towards electric vehicles (EVs) has marked a significant milestone, capturing one-third of the automobile import market by value. In the first half of the current fiscal year, spanning from mid-August 2023 to mid-January 2024, the country witnessed a 158.31 percent surge in EV imports, with 5,107 units valued at Rs12.73 billion being brought in, according to the Department of Customs. This is a stark increase from the previous fiscal year's same period, which saw 1,749 EV units worth Rs4.92 billion imported.

The primary sources of these imports are China and India. Nirmal Khatri, the senior sales manager at Sipradi Trading, the exclusive distributor for Tata Motors in Nepal, highlighted the economic benefits of EVs over traditional petrol and diesel vehicles, noting significant savings in operating and maintenance costs. EVs, he pointed out, run at a cost of Rs1.5 per kilometer, in contrast to the Rs20 per kilometer cost of fossil fuel vehicles.

This cost efficiency is driving a notable trend of consumers trading in their petrol and diesel vehicles for electric ones, with the numbers increasing substantially. Industry professionals suggest that the surge in EV orders is partly due to concerns over potential future government taxation policies.

Despite the high import taxes on petrol and diesel vehicles, which remain a significant source of revenue for Nepal's government, the import of petroleum products has seen a 4.46 percent decline to Rs157.75 billion in the first six months of the current fiscal year. In contrast, automobile imports amounted to Rs36.31 billion, generating Rs26.51 billion in revenue, with EVs contributing Rs5.67 billion in taxes from one-third of the total automobile import value.

The EV market's growth is also attributed to an increase in female buyers, drawn by the vehicles' automatic driving features, and the expanding network of charging stations, now totaling over 150 across the nation. These developments, coupled with government and private sector investment, have significantly bolstered EV demand.

Government policies and incentives, such as lower taxes for EVs compared to fossil fuel vehicles, have played a crucial role in this shift. Additionally, the availability of bank financing for up to 80 percent of the EV purchase price has made these vehicles more accessible to consumers.

Nepal aims to have EVs make up 25 percent of all private passenger vehicle sales by 2025 and 90 percent by 2030, as stated in its second Nationally Determined Contributions. The tax structure for EVs has been adjusted in the current fiscal year to encourage the adoption of cleaner energy vehicles, with varied rates based on power output.

While the import of electric two-wheelers has decreased, there has been an increase in electric three-wheeler imports, indicating a mixed response in different segments of the EV market. The trend suggests a gradual replacement of light petrol and diesel vehicles with EVs over the next five years, contingent on battery longevity and infrastructure development.