The EV market in Nepal has experienced a remarkable growth in recent years, with 3,870 EVs worth NPR 11.23 billion being imported in the first 11 months of FY 2022/23. It is a 122% increase in value compared to the same period in the previous fiscal year 2021/22.
Nepal submitted its first Nationally Determined Contributions (NDC) in 2016. One of the targets was to increase the share of Electric Vehicles (EVs) to 20% of all passenger vehicles by 2020. Nepal was only able to achieve an estimated 1% of the total vehicle fleet being electric. In the same year, Nepal submitted its second NDC with various targets for mitigation for short-term (by 2025) and long-term (by 2030). This included some lofty goals for EV shares. In its second NDC, Nepal has declared EV to comprise 25% of all private passenger vehicle sales by 2025 and 90% by 2030. Similarly, it aims to reach a target of 20% for four-wheeler public passenger vehicles by 2025 and 60% by 2030. These targets have been portrayed in Table 1 below.
Table 1: Nepal’s NDC Targets for EV Market Share
| Deadline year | Percent of Private Passenger Vehicle Sales (Including two-wheelers) | Percent of Four-Wheeler Public Passenger Vehicle Sales |
| 2025 | 25% | 20% |
| 2030 | 90% | 60% |
Source: “Second Nationally Determined Contribution (NDC),” December 2020. Government of Nepal
A study analyzing Nepal’s first NDC highlights the insufficient engagement with key stakeholders and lack of need-based research during its formulation. Further, it lacked proper implementation through policies, programs, and budgets. Nepal’s inability to fulfill its first NDC due to multi-level gaps, which remain unaddressed, poses recurring challenges that impede its progress toward achieving the new targets. Given Nepal’s high vulnerability to climate change, it is crucial to take proactive steps and prioritize comprehensive measures aimed at mitigating and adapting to its impacts. This article looks into a few challenges Nepal would face before achieving its EV goals.
A Growing Market
The EV market in Nepal has experienced a remarkable growth in recent years, with 3,870 EVs worth NPR 11.23 billion being imported in the first 11 months of FY 2022/23. It is a 122% increase in value compared to the same period in the previous fiscal year 2021/22. Evidently, there is a growing share of EVs in the Nepali market due to their affordability. This has been further fueled by lowered excise and customs duties, and the EV adoption in India.
EVs are recognized for their energy efficiency and reduced emissions, offering the potential to mitigate air pollution. Transport-related emissions are the leading cause of deteriorating air quality in Nepal, contributing 50% of energy-related CO2 emissions. Furthermore, petroleum products are the most imported products in Nepal. In the first eleven months of FY 2022/23, Nepal had spent NPR 321 billion on petroleum imports. Prioritizing EV adoption would encourage the decarbonization of the Nepali transport sector. Alongside environmental benefits, it provides a possibility for Nepal to reduce its fuel dependency and trade deficit.
Inconsistent Government Efforts
The government has planned to increase electricity access to 100% of the population in the upcoming two years, from the current 95%, prioritizing the promotion of green energy and clean energy projects. Despite this, Nepal has reached an expensive agreement with India for the construction of two petroleum pipelines and a storage facility, with India estimated to spend over INR 17 billion. The agreement has been criticized to go against Nepal’s climate commitments and NDCs, its goal to achieve net zero emissions by 2045, and reducing its fossil fuel dependency.
The Nepal Electricity Authority (NEA) has committed to purchasing only EVs to create an ecosystem where e-mobility is supported and encouraged. Additionally, NEA is working on establishing multiple charging stations across the country. On the other hand, the government has raised the taxes on entry-level EVs (up to 100kW) in the budget for FY 2023/24. The excise duty and customs duty have been increased to 10% and 15% from 0% and 10%, respectively from the previous fiscal year. Of the 3,870 units of EVs imported in the first 11 months of FY 2022/23, 3,752 units fall in this category. The decision to increase taxation on the most-imported segment of EVs would increase their prices by around 15–20%. This can deter prospective customers who show interest in EVs due to the lower cost among other benefits.
People’s Apprehensions
NEA and multiple private sector actors have been working to establish charging stations across the country to make e-mobility more reliable and accessible to EV owners. While EVs have grown popular compared to previous years, a lot of people are still hesitant about the charge on EVs running out mid-journey and their limited range. A majority of charging stations are located in big cities and are extremely sparse compared to access to petrol pumps. People continue to be apprehensive about EVs being feasible in remote areas with rough terrains or for longer trips. EVs will not be able to make up a majority of the vehicle market share as long as people view them as a limited but cheaper alternative for internal combustion engine (ICE) vehicles. In addition to the limited number of charging stations, Nepal also needs to be able to meet electricity demands using clean power projects. Existing power cuts could prevent people from timely charging EVs, which makes them view EVs as less reliable than their ICE counterpart.
Policy Gaps in the Path
In 2019, Nepal tossed out 28,000 tons of e-waste. This is a lowball number that only included wastes in the scrap market. Most of the generated waste is dumped in landfills or sold to scrap dealers, and less than 20% being refurbished or recycled. The increasing number of EVs will also contribute to the increasing e-waste at the end of their lifecycles, which Nepal is not prepared to manage. EV batteries contain elements such as copper, lithium, cobalt, and nickel, among others. These can be hazardous to the environment and human health, if disposed improperly.
Nepal has been a signatory to the Basel Convention since 1996. It prohibits the transboundary movement of hazardous waste unless no local solution is present. Despite this, Nepal is yet to develop facilities to manage and recycle its e-waste. The Solid Waste Management Rules, 2013 has made provisions for the management of harmful and chemical waste. However, it does not prevent the mismanaged disposal of hazardous e-waste, as it holds producers and manufacturers responsible. This is not enforceable because Nepal mainly imports its EVs. Nepal not prioritizing its waste management brings into question whether the push to adopt environmentally-friendlier alternatives would be sustainable or if it would create an impending issue.
Way forward
While Nepal is vulnerable to climate change and related impacts, its contributions to global greenhouse gas emissions are negligible at only 0.027%. Yet, Nepal’s NDC is focused on mitigation rather than adaptation measures, including those for loss and damages that it faces due to climate-induced disasters. This has raised uncertainties about whether the NDC targets are too ambitious for Nepal, and how beneficial they would be if they are even able to be achieved. Currently, there are multiple challenges that Nepal needs to overcome, on both policy and social level before it can achieve these targets. While the accomplishments of this NDC would be better than those of the previous, it would take more than a decade to realistically achieve the set targets.
Sukeerti Shrestha graduated with a Bachelor's degree in Business Administration (Finance) from Kathmandu University. She's passionate about development economics and sustainability, with a keen interest in using data for decision-making in both business and broader economic contexts. Currently, she works as a Research Fellow at Nepal Economic Forum (NEF), building on her prior experience in management consulting and social enterprises.