E-vehicles prepare for post-lockdown boom

Electric car importers are preparing to meet a post-pandemic demand for electric vehicles after the Nepal government in its new budget scrapped taxes imposed last year.

The new budget presented by Finance Minister Bishnu Paudel on 29 May has completely repealed excise duty on battery operated cars, while cutting customs duty down to the earlier 10%. Earlier tax cuts in 2016 had increased affordability and, combined with improved range of battery cars, had made them gain popularity in Nepal.

Importers of electric vehicles are now rushing to cash in on an expected rise in customer demand once the lockdown is lifted. In addition to the brands that have a head start in e-cars in Nepal like Hyundai, Kia, Mahindra, MG, India’s TATA Motors is planning an aggressive promotion of its electric Nexon model after its launch soon.

Petrol and diesel Nexons are already a familiar silhouette in Nepal’s roads since they were launched in 2017, and TATA hopes to repeat here the success it has in India with the electric version of the compact SUV. More than 4,000 electric Nexons have been sold in India since its launch in January, with the slowdown only because of the second wave lockdowns. This makes the Nexon India’s best-selling electric vehicle with 64% market share already.

The redesigned Nexon EV SUV with its Ziptron powertrain looks identical to the fossil version, except for its blue highlights, snazzy looking projector lights and aerodynamic front grill. 

Potential buyers in Nepal will be looking at ground clearance because of the country’s notoriously bad roads, and here the e-Nexon scores better than its Korean and Japanese counterparts with 205mm clearing underneath (compared to 177mm in the MG, for instance).

The Nexon comes with all the accoutrements of its petroleum-burning cousin, including the ZConnect that allows owners to remotely keep track of the status of the car. The electric motor packs quite a punch in the torque department, giving the Nexon formidable acceleration (0-60km in 4.6 seconds) that will come in handy while overtaking a line of overloaded trucks on the Prithvi Highway. 

Charging is also quite impressive, with its lithium ion batteries (8 year warranty) to get 80% recharge in 1 hour with DC fast charge, and 100% all night home AC recharge with a 15amp plug. A petrol Nexon needs Rs5,500 to fully top up its 44l fuel tank, while it will cost less than Rs500 in the electricity bill for a complete charge. 

The only downside of the Nexon with its 30.2kWH battery pack is perhaps its range which, at 312km on a full charge, is slightly less than the Kia Niro (455km) and the Hyundai Kona (482km) both of which have 64kWH batteries — but then those models cost more. Both ranges depend on AC use. Still, the Nexon's range is more than enough to get from Kathmandu to Pokhara on a single charge even with AC.

This is what is making makes all electric vehicles financially attractive over the long term. Nepali consumers who had turned away from battery cars in the past year because of the higher taxes, will now find both the upfront cost and the energy savings will make e-vehicles much more competitive compared to fossil fuel cars.

Sipradi, the TATA distributors in Nepal have not yet announced the price of the electric Nexon, but it is suggested that it will be less than the Rs 4.9 million price tag of the petrol Nexon. This compares favourably to its nearest rival in the performance range, the smaller Mahindra eKUV which could sell for approximately Rs 4million after the tax revision.

Nepal has announced it will stop selling petroleum cars by 2031, and this is only because neighbours India and China have also announced that they will only be making electric or hydrogen-fuel cars by that time.

Other electric cars in the market include the Kia Niro which had stopped being imported after last year’s budget hike that took its price tag to a whopping Rs 12.5 million. But with the new budget revision, the price is down to Rs7 million again. Similarly, the Hyundai Kona is priced at Rs5.6-Rs7.1 million depending on the capacity, while its Iconiq electric sedan is Rs 5.7 million. 

MG’s Chinese made eZS was also quite popular till the budget hike last year, with dozens of its vehicles stuck at customs because they arrived after the tax increase. The price of these SUVs compare well with the Niro and Kona at Rs 5.1 million.

The pioneer of electric vehicles in Nepal is the Mahindra e2O, and is still the most popular for city driving with a range of 120km, a ground clearance of 170mm and a price that has now come down to Rs2.6 million for the 4-door model. 

Needless to say, all these are approximate, as most dealers are still in wait-and watch mode and have not announced the exact prices yet. Despite the excise and import taxes being scrapped, customers will still have to fork out 13% VAT, and the government has kept Finance Minister Yubaraj Khatiwada’s increase in road tax for electric cars.

E-vehicle owners paid no road tax from 2016 till last year’s budget. Since then, it has gone up to 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. 

Khatiwada last year slapped excise duties on e-vehicles of 30-80% depending on their capacity, and levied customs duty of 60%. He justified it saying electric SUVs were luxury items, and the government needed to augment revenue to fight the Covid-19 pandemic.

This pushed e-vehicles out of the market at a time when sales had just started to pick up, and various brands of electric vehicles were gaining popularity because of their expanded range. But Khatiwada’s move  spiked prices of electric vehicles by 120-140%, making them less competitive vis-a-vis fossil-fuel alternatives.  

Finance Bishnu Paudel’s move appears to be geared to reducing the petroleum import bill, and also to increase electricity consumption as Nepal’s new hydropower plants come online this year, giving an energy surplus.