Electric Vehicles (EVs) are automobiles that operate on electric motors and are powered entirely or partially by electricity. Electric vehicles have been perceived as a potential replacement for current-generation automobiles, and possibly the future of mobility.

The Finance Minister Bishnu Prasad Paudel briefed the budget for the fiscal year 2078/2079 and apprised how the excise duty on electric vehicles has been greatly reduced. The government has also changed the customs taxes for electric vehicles, which were previously set at 1% for public transportation and 10% for private automobiles.

It was also stated that if an existing petroleum vehicle transitions to battery power renewal and road taxes will be waived for 5 years. The government also intends to encourage the production of electric vehicles in Nepal by enabling the top 10 EV brands to participate. Individuals have undoubtedly been urged to purchase electric automobiles as a result of this statement.

Nepal’s ambitious plan to transition out petrol, diesel vehicles and swap them with electric vehicles by 2088 B.S (2031 A.D) is likely to be the inspiration for the current proposals. Particularly as the lockdown increased public awareness of Nepal’s escalating air pollution, which is primarily driven by diesel emissions. The Nepal Electricity Authority (NEA) has made a treaty with Wanwang Digital Energy Corporation of China to install and maintain 50 electric vehicle charging stations across Nepal. According to a notice issued by the NEA a year ago, the charging stations for EVs will be placed in various parks, shopping malls, and open areas.

History and Prior policies on Electric Vehicles in Nepal

EVs have sparked a lot of interest in Nepal over the last few years, regardless of the fact that the concept of EVs has been around for a lot longer. The concept of EVs in Nepal goes long back to the 1960s and 1970s, but they were quickly phased out due to poor management, operational issues, and a lack of adequate policies.

The excise charge on electric automobiles was hiked to 40-80 % based on their power output in the last year’s budget presented by Dr. Yubaraj Khatiwada. Depending on their peak power, some electric automobiles were subjected to excise duties of 40%, 50%, or 60%. The government imposed an additional customs duty of 80% with a 50% compensation. It was rationalized later by asserting that the government needed more money to combat the Covid-19 outbreak and the increase in the tax was necessary then.

Several factors contribute to the delay in the uptake of EVs. Issues such as lack of dedicated routes, an increase in tax and customs incentives, imported batteries that do not meet the standard life cycle targets and are of inferior quality, difficulty competing with dominant transportation unions, a total absence of institutions to train EV sector manpower, and a lack of a centralized maintenance center, have existed for a long time and are the most predominant cause of the EV sector’s sluggish development in Nepal. 

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Nepal would require a solid infrastructure to accommodate Electric Vehicles and a substantial majority of electric charging stations to ease this transition towards EVs. Despite the fact that many people are skeptical of EVs and their potential in the Nepali transport industry, the new excise duty for EVs has undoubtedly contributed to laying the groundwork for mainstream e-mobility and boosting the country’s overall adoption of EVs. The new policies have received a couple of positive feedback, which is a positive indication for the EVs industry in Nepal.


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