The cost of soaring gasoline prices has helped boost the sales of electric vehicles (EVs) in Nepal.

Industry insiders say EVs are gaining popularity and market share in Nepal even though the fuel prices are now trudging backward.

One major attraction, according to industry insiders, is the Tata Nexon EV.

Nirmal Khatri, product manager of Nexon EVs, said more consumers, businesses and offices are looking toward electric-powered vehicles as the future of transportation.

The import figures say as much.

The import of EVs has increased by 60.95 percent in the first seven months of the current fiscal year, compared to the same period a year ago, according to the Department of Customs.

The customs department statistics show that Nepal imported 2,009 EV units worth Rs5.62 billion in the seven months of the current fiscal year that ended in mid-February.

The import of EVs during the same period last fiscal year stood at 1,191 units, cumulatively worth Rs3.49 billion.

Auto dealers say the import boost for EVs is mainly due to the easy financing services by banks.

Banks are lending up to 90 percent of the cost of the vehicle. The import ban on diesel and petrol vehicles has also forced consumers to shift towards the electric ones.

Nepal imported 1,807 EVs worth Rs5.32 billion in the last fiscal year.

According to Khatri, they sold 600 units of Nexon EVs from April 2021 to March 2022. “Since March 2022, we have sold more than 2,000 units of EVs. The Nexon sales share in the market is 90 percent. Out of the total imports made in the first seven months of the current fiscal year, we imported and sold 1,800 units.”

Khatri said the rising fuel prices, reaching Rs180 per litre last year, was a key reason behind the EVs’ sales boom.

The Nexon EVs price ranges from Rs3.89 million to Rs4.39 million in Nepal. India is the largest supplier of EVs for Nepal, followed by China.

According to the statistics of the first seven months of the current fiscal year, 1,435 units of EVs worth Rs3.89 billion were imported from India. The country imported 294 EVs worth Rs643.59 million from China, and 227 EVs worth Rs861.41 million from South Korea during the same period.

“The inquiry for EVs is growing. We have increased our supply, accordingly,” said Sandeep Sharma, marketing manager of Laxmi Intercontinental, the authorised distributor of Hyundai cars in Nepal. “Our monthly sales of Hyundai’s Kona is around 50 units. The sales of Ioniq is around 10.”

Hyundai’s most popular brand in Nepal’s market, Kona, is available at Rs6 million and Ioniq costs Rs16 million.

“Fuel-powered vehicles were in shortage during the eight months-long import ban,” said Sharma. “Besides, easy bank finance services offered to EVs have boosted their sales.”

In April last year, the government announced a complete ban on the import of vehicles running on petrol and diesel and motorcycles with a capacity of over 250cc, which was lifted in December.

The automobile dealers say the regular electricity supply has attracted more consumers to buy battery-powered vehicles, moving on from gasoline vehicles to electric.

Despite a lack of charging stations, high-interest rates and inflation, the demand for EVs is increasing, Sharma said. “The demand for electric vehicles is rising due to mobility needs, lifestyle, tax policy and liberal banking finance services.”

The government through the budget of the current fiscal year announced that Nepal Electricity Authority (NEA) will operate charging stations at 50 places to increase the use of electric vehicles.

The private sector will also be encouraged to set up charging stations at petrol pumps, as mentioned in the budget.

The government in the budget even provisioned that if a new industry of four-wheel electrical passenger vehicles is established for production or assembly, they will be exempted from 40 percent income tax for 5 years from the starting date of production.

Dhruba Thapa, president of the Nepal Automobile Dealers Association, said that the banks have been providing easy and maximum financing for EVs. “The banks, however, are reluctant to finance fossil fuel-driven automobiles.”

During the KP Sharma Oli administration, the then finance minister Bishnu Prasad Paudel announced Nepal’s plan to shift from gasoline-powered light vehicles to electric ones by 2031.

The Indian government through the budget for the fiscal year 2023-24 has extended the customs duty exemption on the import of capital goods and machinery required for the manufacturing of lithium-ion cells for batteries used in electric vehicles as part of its green mobility drive.

Meanwhile, the domestic automobile dealers said the tax exemptions provided by the Indian government will likely make Indian electric vehicles cheaper in Nepal.

The government through the budget of the current fiscal year had announced plans to convert both the private and public petroleum-based vehicles into electric vehicles in the Kathmandu Valley. The government through the budget of the current fiscal year has also targeted to increase the annual per capita electricity consumption to 400 kilowatts (kW) per hour.

As matters stand, the infrastructure development for an electric vehicle is still lacking in Nepal as the government’s work towards building charging stations is moving at a snail’s pace, Thapa said.

Electric cars are being used for city rides rather than long drives due to a lack of charging stations, he added.