Nepal’s automotive landscape is undergoing a transformative shift, with electric vehicles (EVs) now constituting a significant portion of new car sales. This change is driven by favorable taxation policies, environmental consciousness, and the active participation of Indian EV manufacturers.
High Surge in EV Sales
As of 2023, nearly 83% of new car sales in Nepal were electric vehicles, reflecting a strong consumer shift towards EVs over traditional ICE vehicles—a trend that continues to rise. In contrast, India is striving to achieve a 30% EV market share by 2030 through stricter regulations on ICE vehicles, particularly those running on diesel.
However, India’s market size is nearly 40 times larger than Nepal’s due to its vast population, making a direct percentage comparison less relevant. Still, EV adoption in Nepal remains significantly higher, driven by key factors discussed below.
Taxation Policies: EVs vs. ICE Vehicles in Nepal
A key factor driving EV adoption in Nepal is the significant difference in taxation between EVs and ICE vehicles. While EVs benefit from relatively lower import duties, ICE vehicles are heavily taxed, making them costlier for consumers. The revised EV taxation structure in Nepal includes:
- 0–50 kW EVs: Customs duty at 15%, excise duty at 5%.
- 51–100 kW EVs: Customs duty at 20%, excise duty at 15%.
- 101–200 kW EVs: Customs duty at 30%, excise duty at 20%.
- 201–300 kW EVs: Customs duty at 60%, excise duty at 35%.
- Above 300 kW EVs: Customs duty at 80%, excise duty at 50%.
In Nepal, ICE vehicles are subject to import duties of up to 238%, significantly increasing their cost compared to EVs. This sharp tax disparity has been a key factor in boosting EV adoption across the country. The pricing difference becomes evident when comparing vehicle costs in India and Nepal, as shown below.
Price Comparison: Hyundai Creta & Toyota Innova (Petrol) in India vs. Nepal
Due to Nepal’s high import taxes on ICE vehicles, petrol cars are significantly more expensive compared to their Indian counterparts:
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Hyundai Creta (Petrol):
- India: ₹10 lakh (approx.)
- Nepal: NPR 40 lakh (₹25 lakh approx.)
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Toyota Innova (Petrol):
- India: ₹16 lakh (approx.)
- Nepal: NPR 60 lakh (₹37 lakh approx.)
This massive price gap between ICE vehicles in India and Nepal makes EVs a more attractive option for Nepalese consumers.
Indian EV Brands in Nepal
Indian electric vehicle manufacturers have established a strong presence in Nepal, contributing significantly to the country’s EV boom. Both two-wheeler and four-wheeler brands from India are gaining traction among Nepalese buyers.
Electric Two-Wheelers
- Ola Electric: Ola has expanded into the Nepalese market with its S1 series e-scooters, offering an affordable and efficient mobility solution.
- TVS Motor Company: The TVS iQube is a popular choice, benefiting from Nepal’s lower EV taxation structure.
- Bajaj Auto: The Chetak electric scooter has been well received due to its reliability and competitive pricing.
- Ather Energy: The brand has introduced its high-performance 450X e-scooter in Nepal, targeting urban commuters.
Electric Four-Wheelers
- Tata Motors: Tata leads the Indian four-wheeler EV segment in Nepal, with models like the Tata Nexon EV and Tigor EV, offering affordability and range advantages.
- Mahindra Electric: Mahindra has introduced models like the e-Verito and is preparing to launch the XUV400 EV, tapping into the growing demand.
Conclusion
Nepal’s shift towards electric mobility is largely driven by its taxation policies, making EVs a financially viable option over traditional petrol and diesel vehicles. Indian EV brands—both in the two-wheeler and four-wheeler segments—are playing a crucial role in this transformation. With strong demand, increasing model availability, and government incentives, Nepal is well on its way to becoming a dominant EV market in South Asia.
