Nepal's Electric Vehicle Market Sees Significant Growth, Dominated by Chinese Brands

Kathmandu. Nepal's journey of electric transportation, which began with trolley buses, has now reached modern 'smart' electric cars. Amidst the rising prices of petroleum products, many are increasingly attracted to electric vehicles. Furthermore, as citizens become more aware of environmental pollution, EVs are dominating Nepali roads. According to a detailed study report prepared by a task force recently formed by the Ministry of Physical Infrastructure and Transport, electric vehicles account for 76 percent of the share of small four-wheeled vehicles imported into Nepal. The task force, formed under the convenership of Krishnaraj Panth, prepared the report by studying the necessary policy, legal, and institutional arrangements, current status, opportunities, challenges, and possibilities for the promotion of electric vehicles (EVs) in Nepal. This report shows a significant share of vehicles plying on Nepal's roads. However, this success has not been achieved overnight; it has a history of five decades, immense possibilities, and equally serious challenges. History from Trolley Bus to Clean Tempo The history of electric vehicles in Nepal is about 50 years old. In 2032 BS (1975 AD), with the cooperation of the friendly nation China, 22 trolley buses were brought in, marking the formal start of electric vehicles in Nepal. These buses ran on electric wires on a 13-kilometer stretch from Ratnapark in Kathmandu to Suryabinayak in Bhaktapur. At that time, the trolley bus was a model transportation system in South Asia. However, due to political interference, lack of maintenance, and management weaknesses, these buses were shut down in 058 BS (2001 AD). Although three buses were somehow operated in 060 BS (2003 AD), the trolley bus completely became a part of history in 066 BS (2009 AD). As the trolley bus was shutting down, another electric revolution had already begun in Nepal. In 050 BS (1993 AD), with the support of the US Agency for International Development (USAID) and the Global Resources Institute, 7 petroleum tempos were converted to electric, initiating the 'Clean Tempo'. By 057 BS (2000 AD), 60 percent of tempos in Kathmandu had become electric. However, due to low government interest, high battery prices, and unhealthy competition with petroleum vehicles, clean tempos could not make significant progress as expected. After a long time, around 073 BS (2016 AD), the import of two and three-wheeled electric vehicles resumed. However, the real modern era of electric vehicles can be considered to have started after 2077/078 BS (2020/2021 AD), when four-wheeled electric cars and jeeps became the main attraction for Nepali consumers. Chinese EVs Dominate the Market Today, Nepal's EV market is very encouraging and competitive. According to the Department of Customs, in the fiscal year 2080/081 BS (2023/2024 AD) alone, electric vehicles worth 34 billion 372.7 million rupees were imported into Nepal. This amount is 16 percent higher than the previous year. Another interesting statistic shown by the report is the dominance of Chinese brands in Nepal's imported electric vehicles. 80 percent of the total imports come from China alone. In the last year, 16,886 vehicles were imported from China, 4,943 from India, and the rest from countries including America, Korea, and Germany. Chinese brands like BYD, MG, Omoda, Nio, and India's Tata have a strong presence in the Nepali market. Chinese vehicles are relatively cheaper and are modified according to the demands of Nepali consumers, making them a preferred choice. However, road conditions continue to challenge the expansion of EVs. Out of Nepal's total road network of 101,500 kilometers, only 19,163 kilometers are paved. Electric cars with low ground clearance have not yet reached the rural areas of Nepal, where 72 percent of the roads are unpaved. Why are EVs Essential? Nepal spends about 300 billion rupees annually just to import fossil fuels (including petroleum products). The transportation sector alone contributes 24 percent to the country's carbon emissions. According to one study, diesel vehicles in the Kathmandu Valley alone emit 19,811 tons of carbon dioxide annually. The study shows that EVs can be the biggest weapon against the large amount of money going abroad for petroleum imports and carbon emissions. According to 2023 data, 65 percent of Nepal's total energy demand is met by biomass fuel and 25 percent by petroleum products. Nepal has now reached a hydropower capacity of 13,966 megawatts, with a target to reach 15,000 megawatts by 2030. However, only 11 percent of the total energy consumption in the transportation sector is electricity. By increasing the use of electric vehicles and utilizing the electricity that goes to waste at night for EV charging, petroleum imports will decrease, and the country's trade deficit will certainly be reduced. Major Challenges on the Roads Despite the growing attraction of EVs, serious challenges stand before their users and stakeholders, which, if not addressed in time, could turn this enthusiasm into disappointment, according to the study. Although a significant number of electric vehicles have entered Nepal, there is an extreme shortage of charging infrastructure. Charging stations are the lifeline of electric vehicles. So far, there are only about 1,000 public charging stations in Nepal. The Nepal Electricity Authority operates 62 fast chargers. The remaining chargers are built by private companies (Sipradi, BYD, MG, etc.) only for their customers. The lack of charging facilities on highways, rural areas, and villages makes long-distance travel still arduous. Consumers are also suffering due to the lack of a uniform standard (e.g., plugs compatible with all vehicles) at charging stations. Furthermore, battery management poses a future challenge. Batteries account for about 50 percent of the total cost of electric vehicles. There is no clear policy in Nepal for the safe disposal or recycling of batteries after their lifespan (7 to 10 years) ends. The risk of chemicals like lithium and cobalt, released from thousands of unusable vehicle batteries, causing significant environmental hazards to Nepal's soil and water in the future is a major concern. There is a shortage of skilled manpower and workshops for the maintenance of electric vehicles. Mechanics who can fix petrol/diesel vehicles are available in every village in Nepal. However, there is an extreme shortage of skilled technicians who can repair electric vehicles that run on software and high-voltage batteries. Repairing EVs outside the company's official service center is almost impossible. Similarly, the fluctuations in customs and excise duty rates made by the Government of Nepal in the budget every year have increased uncertainty for both investors and consumers. Consumers are also troubled by different vehicle registration and annual taxes in different provinces. Despite the increasing pressure of small vehicles, the study shows that EVs are being neglected in public transportation. While EVs constitute 76 percent of small private cars, the use of electric vehicles in large public buses and trucks is extremely low. Sajha Yatayat operates 42 and private sector operators run only 8 large EV buses. Due to the high initial cost, businesses are hesitant to invest in public EVs. These are the main recommendations of the report The Government of Nepal has set an ambitious target of achieving 90 percent share of electric vehicles in the sales of private and public vehicles by 2035. To achieve this goal, the task force has made various recommendations. For example, it has suggested investment by the government and the private sector (Public-Private Partnership - PPP) in the construction of charging infrastructure, and the implementation of a mandatory legal provision for a battery 'take-back' policy, meaning importers must take back old batteries to the manufacturing country or recycle them. It has also suggested tax and financial incentives: arranging for banks to provide concessional loans of up to 80 percent for EV purchases and keeping the tax system stable for at least 5 years. It has also recommended establishing national standards for charging stations and amending laws to convert old petrol/diesel vehicles to electric.