With a population of 30 million, Nepal is a small Himalayan country that is well-known throughout the world for its mountains, especially Mount Everest, and trekking tourism. It is also quietly setting an amazing standard for the transition to electric vehicles. Approximately 70% of all new passenger cars sold in Nepal in recent months were electric. Given the widespread belief that EVs are best suited for wealthy nations with sophisticated infrastructure and substantial purchasing power, this statistic is astounding. In contrast, Nepal’s experience teaches policymakers and business executives around the world important lessons.
Nepal’s current economic history has been marked by difficulties brought on by the country’s remote location, unstable political system, and slow industrialisation. The majority of Nepalis are still employed in agriculture, but the country’s economy has steadily diversified, with tourism and remittances from Nepali workers abroad emerging as major revenue streams. With a GDP per capita of about $1,400, Nepal is still among the poorest countries in South Asia, despite modest GDP growth over the last ten years, averaging between 4 and 6% yearly.
With nearly all of its electricity coming from its own hydroelectric resources, which supply nearly all of its energy and enable exports to India, Nepal’s economy is steadily electrifying. Compared to less than 50% two decades ago, almost 94% of Nepal’s population has access to the country’s electrical infrastructure as of 2024. Both the deployment of off-grid solutions in remote locations and the extension of the grid to rural areas have aided in this expansion.
Simultaneously, the Nepal Electricity Authority has made significant investments to increase grid dependability, which includes removing load shedding nationally and enhancing urban distribution facilities. Grid resilience has increased dramatically as a result of these initiatives, enabling a more reliable and steady supply of electricity. To meet the growing demand from industries and areas like electric mobility, the government keeps spending money on modernising transformers, substations, and automated grid management systems.
Since every electric car fuelled in Nepal drastically lowers pollution and dependency on imported petroleum fuels, the country is well-positioned for vehicle electrification thanks to this clean, dependable, and domestically produced electricity. Nepal’s foreign exchange reserves were strained in fiscal year 2022–2023 as a result of spending more than $2.5 billion on petroleum product imports. All nations that lack substantial domestic capability for the extraction and refinement of fossil fuels must acknowledge that the transition to electric vehicles is both ecologically responsible and strategically sound.
The automobile industry in Nepal has undergone a rapid and significant revolution. Electric cars made up a negligible portion of new automobile sales until quite recently. But in recent years, the market underwent a significant shift made possible by aggressive and well-thought-out government regulations. Today, a wide range of electric models from various international manufacturers can be seen on Kathmandu’s streets. Because of their attractive technological bundles and reasonable price, Chinese automakers like BYD, Great Wall, and Neta are in the lead. Nepali consumers’ varied tastes and financial capacities are reflected in the growing presence of premium European models from manufacturers like Volkswagen, Korean brands like Hyundai and Kia, and Indian manufacturers like Tata and Mahindra.
In the area of public transport, this market change has been most apparent. The number of electric three-wheelers in Kathmandu, referred to as safa tempos in the local dialect, has increased dramatically, offering thousands of daily commuters clean, reasonably priced urban transportation options.
Additionally, Sajha Yatayat, the municipal transit operator in Kathmandu, has started electrifying its fleet of buses. Sajha Yatayat is a real-world example of effective public transport electrification, with over 40 electric buses now in operation and 100 more on the horizon. Electric buses have significantly lower operating costs than diesel-powered equivalents. The financial benefits are quick and noticeable. Compared to fuelling an identical diesel bus, charging an electric bus costs about one-thirtieth, which significantly lowers operational costs for public transportation operators.
A substantial part of Nepal’s success can be attributed to wise policy choices. In the past, Nepal imposed exorbitant import taxes on automobiles, which frequently made gasoline-powered vehicles unaffordable for the majority of people. The Nepali government saw a chance to encourage the use of electric vehicles and significantly lowered import taxes, establishing a strong financial incentive. Depending on the vehicle type and battery capacity, EV import duties are usually between 25% and 90%, which is much lower than the import duties for internal combustion engine vehicles, which can still reach 300% or higher.
As a result, electric automobiles frequently wind up being less expensive or around the same in price in the Nepali market as internal combustion engines (ICEs), which is practically unheard of worldwide. Adoption has been further encouraged by complementary policies like reduced annual registration fees for EVs and preferential access to bank funding.
Not all of them are passenger cars. As part of a larger plan to reduce the carbon footprint of government-operated fleets, Nepal has started incorporating electric garbage trucks into its municipal services. There are currently a number of electric rubbish collection trucks operating in Kathmandu, offering a cleaner and quieter substitute for the conventional diesel-powered trucks that greatly increase urban air pollution. Other towns have expressed interest in these pilot deployments since they have shown significant savings in operating expenses and maintenance requirements.
Additionally, the government has pledged to gradually electrify its own fleet of vehicles, which includes public transportation, utility vehicles, and administrative automobiles. Other ministries are anticipated to replicate the Nepal Electricity Authority’s policy of exclusively purchasing electric vehicles for internal use. In addition to being in line with Nepal’s climate pledges, this shift sends a powerful signal to the market that supports the nation’s larger drive towards electrification in all spheres of life.
The quick construction of charging infrastructure has been a key component of Nepal’s electrification campaign. With the help of private sector companies and foreign funders, the Nepal Electricity Authority has launched a massive nationwide rollout of charging stations after realising that convenient and dependable charging is essential to the widespread adoption of EVs. There are now about 400 public charging stations, and in a year, this number is anticipated to increase. Fast chargers are positioned strategically along important routes as part of this network, which greatly lessens drivers’ range anxiety and promotes inter-city electric travel. Although there are still obstacles to overcome, especially in rural and hilly regions where charging infrastructure is lacking, urban areas and important transit routes are becoming more well-served, enabling the majority of Nepali EV drivers to commute with assurance.
The switch to electric vehicles is having a significant positive impact on the environment and public health. The air quality of Kathmandu, which has long been known for having serious air pollution issues made worse by car emissions, is starting to noticeably improve. With zero tailpipe emissions, electric cars remove direct sources of pollutants that significantly worsen heart disease, respiratory disorders, and overall quality of life. In densely populated metropolitan regions, the health advantages of lower vehicle pollution are substantial, leading to improved general well-being, lower healthcare expenses, and higher life expectancy.
Beyond better health and lower fuel import costs, Nepal’s shift has had a significant economic impact. Numerous industries have seen an increase in employment and economic activity as a result of the widespread use of electric vehicles. Dealerships have grown to incorporate EV-specific showrooms and service facilities, which has led to the creation of specialised jobs in electrical and maintenance. Similar job opportunities in engineering, construction, and operational positions have been made possible by the installation of charging infrastructure.
Initiatives for local assembly or manufacture, like those shown by Nepali businesses like Yatri Motorcycles, which is creating locally designed and assembled electric motorcycles, offer additional economic potential. These businesses suggest that Nepal may develop a specialised EV and related component manufacturing industry, which would increase its technological prowess and economic resilience.
Nepal still has issues that need to be resolved if it hopes to maintain its trajectory of fast electrification. Even with its expansion, charging infrastructure still requires a large investment, particularly outside of cities. Proactive improvements in grid management and capacity are necessary to prevent local distribution networks from being overloaded by the spike in EV charging demand. Since thousands of lithium-ion battery packs from automobiles will reach the end of their useful lives in the next ten years, battery waste management is an impending problem that calls for sustainable recycling and second-life applications. Furthermore, due to its heavy reliance on imports, Nepal’s EV supply chain is susceptible to global supply disruptions, price volatility, and geopolitical unrest.
Nepal’s experience has a lot to teach other nations, both developed and developing, with comparable circumstances. By efficiently utilising local renewable energy sources, EVs can be positioned as both environmentally friendly and economically appealing. Strong fiscal incentives are proven to be effective policy measures, especially import duty regimes that make EVs more affordable than ICE automobiles. A effective EV policy framework must include both quick, extensive deployment of charging infrastructure and easily accessible finance for car purchases. Lastly, a well-informed and passionate customer base is produced by effectively conveying the advantages of EVs for the environment and human health.
Further proof that EV adoption is not limited to affluent, developed countries comes from Nepal’s experience. With consistent and well-coordinated legislative measures, smaller, lower-income nations are making the swift transition to electric mobility. Policymakers throughout the world should learn from Nepal’s case that governments can accelerate their transition to clean transport with careful policy design, strategic infrastructure investments, and public involvement.