Fully charged, and ready to go

A combination of tax rebates, the Dasain-Tihar season, and a public fed up with being cooped for nearly two years due to Covid restrictions is driving a spurt in sales of private electric vehicles in Nepal.

Electric car importers are scrambling to meet the surge in post-pandemic and pre-festival demand, but are being held back by global supply chain disruptions due to shortages of microchips, lithium batteries, and maritime cargo capacity.

The KP Oli government in May scrapped taxes imposed last year by his own previous finance minister Yubaraj Khatiwada. The coalition government of Prime Minister Sher Bahadur Deuba has retained the tax breaks.

Under the new tax forumla, the excise duty on battery powered cars was withdrawn, and the customs duty was restored to the 10% that had been in place for the past five years. The tax cuts in 2016 had made electric cars more affordable, and led to a spike in demand. Electric car imports fell to nearly zero after the taxes were reimposed by Khatiwada in May 2020.

The Dasain-Tihar festive season is when Nepalis usually splurge on consumer items, and there is usually a rise in purchases of vehicles as well. This year, the tax rebate has made electric compacts, SUVs, and two-wheelers more competitive compared to fossil fuel vehicles.

Improvement in technology has increased the range and performance of eVs, and the fall in price for batteries has made them more affordable. Till five years ago, battery-powered cars in Nepal had less than 100km range. Today the new models can go up to 500km – enough for a Kathmandu-Pokhara roundtrip on a single charge.

Electric car importers also report a rise in customer demand, a surge in queries from people who are tired of being locked down for nearly two years, and want to be out and about – and that means being able to drive to Biratnagar or Bhairawa and beyond on the new e-SUVs without stopping to recharge.

Brands that have a head start with battery power in Nepal are Hyundai, Kia, Mahindra, MG, TATA, and a plethora of Chinese brands like BYD, Great Wall Motors, Dahe, and Derry.

Besides range, potential buyers in Nepal will be looking at ruggedness, interior space, and ground clearance. While some of the fancier SUVs are attractive to look at and have a rocket-like takeoff, it may be more important in Nepal to see that the cars have more than 180mm ground clearance – otherwise you will be scraping your expensive bottom on road craters.

Much more critical than a formidable acceleration of 0-60km in 4.6 seconds is also charging time and battery life. Most lithium-ion batteries have an 8-year warranty these days, and need 1 hour to recharge 80% with DC fast charge. Charging at home with a 15amp wall plug should not take more than 8 hours.

Despite everything, the electric car’s main attraction with the tax rebate is the money you save on fuel. An average diesel SUV needs Rs5,500 to fill its 40l fuel tank, but an electric version of the same vehicle will cost less than Rs500 for a complete charge for a 350km range. Multiply this by the volume of diesel you burn in an average month, and the savings add up.

The electric vehicles in the market now come with battery packs ranging from 20kWh to 64kWh, giving them ranges of 120km to nearly 500km – depending, of course, on AC use.

Nepalis did not take on to electric cars till now because higher taxes made them more expensive than a diesel vehicle with similar specs, but now there is no excuse. The upfront cost of electric and diesel vehicles are about the same, and energy savings make eVs more competitive.

The other reason eVs had become popular was that owners paid zero in road tax, saving up to Rs35,000 a year. However, this year’s budget has retained the road tax announced by Khatiwada last year: Rs15,000 per year for battery cars in the 50-125kW range, Rs20,000 for e-vehicles of 126-225kW, and Rs30,000 for cars in the 226-and above range. Fair enough, private vehicles are a luxury in this country.

However, after taking one step forward on electric cars in this year’s budget, Finance Minister Janardan Sharma has taken two steps back. Despite the pledge to switch to renewable energy for transport, last month he slashed taxes on the import of 10 or more diesel buses by new luxury hotels to 1%. That move appears to be designed specifically to suit certain business interests. Then it cut by half the duty on petrol motorcycle assembly in Nepal, completely contradicting its policy on pushing electric transport.

Nepal has announced it will stop selling fossil fuel cars by 2031. And this sounds like a bold move, until you realise that India and China (from where most of our cars and two-wheelers are imported) will be switching fully to battery or hydrogen powered vehicles by 2030, anyway.

Read also: The road to electric transportation in Nepal, Diya Rijal