Electric vehicles gaining traction in Nepal

Electric vehicles were introduced in 1993 in Kathmandu valley and within the past few years they have started gaining more attention across the country with new variants being launched along with superior features.

These vehicles were launched primarily to curb the growing pollution in the urban areas. The government’s positive intervention, advancement of non-government organisations, and international donor support contributed to the promising beginning for the EV industry. However, of late the EV sector has not been able to gain momentum as expected.

For instance, two years back, Prime Minister KP Sharma Oli had announced a National Action Plan for Electric Mobility which was supposed to increase the country-wise adoption of electric vehicles by at least 20 per cent. The plan was to be implemented by 2020, however it still has not been started.

The global carbon dioxide level has been increasing to a dangerous level with the transportation sector contributing nearly one-third of the global greenhouse gas emissions. While, electric mobility can contribute significantly to reducing the greenhouse gas emissions the decision of the government to increase excise duty and customs duty on electric vehicles has had a direct impact on their import.

According to Rupesh Sharma Bhatta, General Manager of Laxmi Intercontinental, the sole authorised distributor of Hyundai vehicles in Nepal, “The EV industry is still in a primitive state in Nepal. The public is not fully aware about the EV industry and its benefits to the environment.”

He adds that previously very low quality electric vehicles were available in Nepal and the public still has the same impression about it till now, which is not true. “What also has dented the EV industry’s growth is the hike in taxes. This has made it even more difficult to convince and inform the public about the EV industry,” Bhatta shares.

“Since taxes have been raised we have no alternative other than to increase the price of our vehicles which has led to loss in our revenue,” he says, adding that there aren’t many customers interested in buying electric vehicles since prices were increased.

Laxmi Intercontinental has been selling the Hyundai Kona in Nepal.

Through the current year’s budget, the government has fixed 30% excise duty for a 50 kW motor, 40% for 50 to 100 kW, 50% for 100 to 150 kW, 60% for 150 to 200 kW and 70% duty for 200 to 300 kW motors for those above 300 kW the excise duty has been fixed at 80%. These rates were fixed according to the capacity of the vehicle. The customs duty on electric vehicles was increased from 10% to 40% and the excise duty was fixed at a higher rate for the first time during the budget for fiscal year 2077/78.

Meanwhile, Sanjeeb Shilpakar, Director of YOMA MA E MOTORS, says, “The government should be more active in spreading awareness among the public instead of raising taxes which is only discouraging the sale of electric vehicles.”

He further mentions that Nepal has been producing enough electricity, so much so that it is being wasted and not being utilised enough. “If we start utilising the resources that we have instead of spending billions on the import of fossil fuels we would be saving a lot of money that flows out of the country,” Shilpakar adds.

“It will also help in developing the country since most of the revenue will be staying inside the country.”

As per statistics of the Department of Customs, the country imported fuel worth Rs 214.48 billion in fiscal 2018/19. Nepal’s oil import bill in 2017/18 was recorded to be Rs 171 billion.

Shilpakar informs that due to the condition of the roads in Kathmandu and other areas too at least a motor with 1,500 watt capacity is necessary for an electric vehicle to run. “This makes it difficult for the EV industry since taxes have been raised according to the motor capacity,” he mentions.

Though Nepal is yet to take a strong step in adopting electric vehicles the international EV frenzy has slowly started to catch on in the Nepali market. As per available data, in just the first three months of fiscal year 2018/19, the country imported EVs worth Rs 274 million while EVs worth Rs 768 million were imported during fiscal year 2017/18.

Most of the electric vehicles are being imported from China, India, South Korea and Thailand.