Potholes on the highway to Nepal’s EV future

Electric vehicles are making a splash in Nepal, sales have seen a spurt in the past two years. But a lot more work needs to be done to make battery-powered transport a sustainable solution in the country.

That was the message of the three-day discussion series, EV Chautari, jointly organised by the Nepal Automobile Dealers’ Association (NADA) and USAID Clean Air to coincide with NADA’s first ever EV-only car show this week in Kathmandu.

EV sales worldwide are gaining momentum. In 2021, there were 16.5 million electric cars on the road, a tripling in just three years. Twenty percent of the vehicles sold in China last year were battery-driven.

Nepal is also keeping up with this global trend. In 2021, the government announced that it would shift from petrol fuelled light weight vehicles to electric vehicles entirely by the year 2031.  While the decision was deemed too ambitious by many at the time, in the context of Nepal, shifting to electric transport makes sense. And the market agrees.

Driven by tax rebates, electric vehicles have seen a dramatic rise in popularity in Nepal market in the past few years. Last year, the import of lightweight electric four-wheelers saw a seven-fold increase. There is currently a six-month waiting list for bookings of some of the popular electric four-wheelers.

Institutional consumers are also starting to make changes. Last week, Daraz, the biggest e-commerce site in Nepal, purchased electric scooters for deliveries within Kathmandu Valley. Earlier this year, Lalitpur Metropolitan City’s Quick Response Team also started using electric scooters for its patrols within the metropolis.

The industry is taking note of the shift towards electric vehicles. At NADA’s first ever EV Expo this week show-cased 51 brands, including nine four-wheeler companies, one three-wheelers, and 16 two-wheelers, and by the end of the four-day exhibition, there had been more than 30,000 footfalls and more than 200 deals signed.

Read also: Nepal’s electric future is here, Sonia Awale

Given these rapid strides, it would not be unreasonable to assume that Nepal is smoothly moving towards electric transport. However, just as Nepal’s highways have many potholes, there are still many legislative, regulatory and technical pitfalls along the way.

The biggest challenge currently facing EVs in Nepal is erratic government policy, both in terms of inconsistent tax rates for EVs as well as lack of standards and protocols for EVs testing, monitoring and the conversion of ICE vehicles into electric vehicles. Furthermore, the lack of policies that support electrification of public transport is holding back investment in this important segment.

In the past few years, the customs and taxes levied on electric vehicles have fluctuated wildly, leading to apprehensions from both dealers and buyers. Speaking at EV Chautari at the NADA EV Expo this week, Yamuna Shrestha, Managing Director of Cimex Pvt Ltd blamed unpredictable changes in tax policy as holding back sales.

“In the past two years, the taxes have changed four times,” she told the meeting. “This has created confusion for the end user. For instance, a consumer buys an EV, then a month later the tax goes down, and suddenly the buyer has lost 20-22 lakhs.”

Government policy doesn’t allow changes in prices of consumer goods of more than 10 per cent in a year, but the current fluctuation is creating much bigger changes in the final price of electric vehicles. Shrestha said an urgent priority should be consistent policy.

During the discussion, Sagar Gajurel, General Secretary at the Journalist Association for Automobiles and Mobility brought up the issue of EV testing, monitoring.

“Right now, we are importing ready-made vehicles from abroad and selling them in Nepal. But before selling them, what we need to do is test how reliable the product is, and how it will support our current transport system, which is lacking,” he said. “As new technologies are introduced, the Department of Transport Management needs to work on monitoring capacity for the imported vehicles.”

Ram Chandra Paudel, Technical Director at the Department of Transport Management states that the government is has drafted the long overdue National Transport Policy of 2078 to replace an existing one which came out more than two decades ago. Whether the new policy gives sufficient clarity on the standards and protocols for EV testing, monitoring and conversion of ICE vehicles into electric vehicles is to be seen.

Another challenge facing the EV industry is technology adoption. According to Dipesh Paudel, EV Training Head at Sipradi Pvt Ltd, technicians need a lot of training and awareness in terms of technology adoption.

“We need to build the competency of four to five hundred thousand local technicians who work on vehicle maintenance. A policy level solution is needed to address this gap,” he says.

Similarly, customers need to be made aware of the workings of EVs in order to build trust toward the new technology. A common concern for the customers is range anxiety – whether their EV will have enough charge to get them through the day. This concern about endurance is related to the lack of charging infrastructure. Some steps are being taken by NEA and other private sector actors, but, but a lot more work needs to go into this to overcome the reluctance of customers used to petrol stations every step of the way along highways.

Earlier this year, NEA launched its first charging station at Ratna Park in Kathmandu and has started a drive to open 51 charging stations across Nepal. According to Manoj Silwal, Deputy Managing Director of NEA, if anyone wants to set up a charging unit, his agency provides free installation of infrastructure for up to 200KVA.

Read also: An electric shock to Nepal’s energy future, Ramesh Kumar

Furthermore, NEA has provided electricity at a low cost specifically for EV charging stations. The cost for charging EVs at peak time is around Rs8/hour and in off peak times, the cost is as low as approximately Rs 4/hr.

Private companies like BYD, Hyundai, TheeGo, Sipradi and others have also set up charging points for their customers. However, the issue here is that these charging stations do not have standardised appliance outlets and only serve their specific vehicles.

Ram Chandra Paudel of the Department of Transport Management says, “The government needs to work with the private sector for charging infrastructure that will be compatible at multiple places with multiple types of vehicles.”

The need for infrastructure development for the EVs is not limited to charging stations only. Electricity transmission lines and infrastructure also needs to be able to withstand the increased load that is inevitably going to accompany widespread vehicle charging.

Current data shows that the market for EVs in the sphere of private four-wheelers has already taken off. However, in order to ensure that the future of transportation in Nepal is electric, the focus now needs to shift towards public transport and two-wheelers.

Two-wheelers make up more than 79% of registered vehicles in Nepal. However, less than 1% of two-wheelers on the streets of Nepal are electric, whereas, worldwide, 42% of two-wheelers sold in 2021 were electric. The supply of electric two-wheelers is there.

At the Expo itself, 16 of the stalls were occupied by two-wheeler companies while only 9 four-wheeler brands were present. But in order to generate demand, consumer confidence and trust needs to be built through awareness campaigns and infrastructure to support electric two-wheelers.

The most important (and largely missing) piece of the puzzle is electrifying Nepal’s public transport network. This is where the biggest gains can be made both in terms of reducing air pollution (and therefore improving public health) and cutting fossil fuel consumption that has sent Nepal’s import bill sky high this year.

Electrification of public transport started a long time ago, with trolley buses in 1975 and the introduction of electric three-wheeler Safa Tempo 30 years ago. However, this early start has not resulted in a sustained growth.

Worldwide, in 2021 44% of sales of buses were electric with China leading the way. However, in Nepal the number of electric buses on the roads is insignificant. Sundar Yatayat has a few e-buses operating in Kathmandu and Butwal-Bhairawa.

Recently, Sajha Yatayat has added 3 electric buses to its fleet, and 37 more are on the way from the factory in Nanjing to the China-Nepal border.

Five buses that were provide to Lumbini Development Trust by the Asian Development Trust three years ago finally started operations two days ago.

Similarly, several e-microbuses provided by TheeGo are now running the Kathmandu-Sindhuli route, as well as ramp buses for Guna Airlines at Kathmandu airport.

But the use of electric buses in Nepal does not extend beyond this. Bagmati province has recently decided to only allow registration of electric cars as taxis, but till date, only one EV has been registered.

Neighbouring India has taken more concrete steps to electrify its public transport system. It has launched two phases of Faster Adoption and Manufacturing of Electric & Hybrid Vehicles (FAME) initiatives with investments of over INR 100 billion to create demand for electric public vehicles and invest in charging infrastructure.

It also recently announced plans to buy 50,000 electric buses worth $10 billion. Nepal also needs to learn from its northern and southern neighbours on having a policy to support electric public transportation and investing in it.

While Nepal might not have a lot of capital to invest in public electric transport, a creative solution might be the use the billions of rupees already collected from the pollution tax of Rs1.50 per litre of petrol and diesel sold in the country in the past years, to support the EV ecosystem as a whole -- particularly public transport operators who want to invest in e-buses.

Another solution would be to convert old internal combustion engine vehicles to battery power. Nepal has successfully experimented with vehicle conversion some 30 years ago when Vikram Tempo three wheelers were converted to electric Safa Tempo. A similar drive to convert old buses to electric could be a solution to pursue.

However, in order to do so, the government need to first provide legal clarity on vehicle conversion, and secondly work on standards, testing and monitoring protocols for the conversion of the vehicles.

There is no question that Nepal needs to swiftly decarbonise the transport sector to manage its energy, economy and environment. However, a lot of homework needs to be done by both the government and the private sector to accelerate this process.

Last year, at the COP 26 climate conference in Glasgow, Prime Minister Deuba said, “Nepal remains firmly committed to the implementation of Paris Agreement. We have submitted an ambitious NDC that plans to decarbonize our economy in all sectors. Nepal aims to reach a net zero emission by 2045.”

It is now high time we walk our talk.

Shreesha Nankhwa is an environmentalist currently engaged with FHI 360 as a Social and Behaviour Change Communication Officer.