Auto show to feature only EVs (!)

Since 1998, Nepal Automobile Dealers Association (NADA) has been organising automobile show every year except in the coronavirus pandemic years. The events used to be an opportunity of the users to meet with attractive newly introduced cars, SUVs, vans, motorcycles and scooters. Construction equipment with wheels like excavators and heavy earth movers also include in the events. Thus, the shows were considerably instrumental in drawing attention of the automobile users and market development of the automobile vendors – agents and dealers of globally renowned and other automobile producers.

After recovering from coronavirus pandemic, the organisers were planning for a milestone exhibition this year too. But the Government policy stopped import of fossil fuel run vehicles.

It is to recall that Nepal Rastra Bank, the central bank in December 2021, unveiled a new policy making it mandatory for importers to keep 100 percent margin amount to open a letter of credit to import 10 types of listed goods, including automobiles.

The central bank has decided to discourage the import of these goods considering that they are “non-essential”.

In April, the government announced a complete ban on the import of vehicles running on petrol and diesel and motorcycles with a capacity of over 250cc.

On July 18, the government extended an 81-day-old import ban on 10 types of goods for another one and a half months, citing a lack of improvement in the country’s foreign currency reserves. The ban is said to remain in effect until August-end.

Consequently, of the import restriction, organisation has decided not to hold its annual NADA Auto Show this year too. Later NADA switched to showcase electric vehicle only. The NADA EV Expo, the reshaped event will be held during 22 -25 Sept 2022 in Kathmandu.

This NADA move is something like expressing dissatisfaction of the automobile dealers’ association on the governmental policy on vehicles import.

Earlier, NADA leaders meet Prime Minister to open up importing fossil fuel run vehicles with necessary reforms on the policy and instructions to the central bank and commercial banks. They also stressed that tax on import of vehicles is one of the big revenue generator for the country’s coffer and it provide a larger employment as well.

It is worth to recall that Nepal brought in a record number of EVs in the last fiscal year 2021-22 after seeing their imports up and down trends in Fiscal Year 2020-21, 2021-22 and 2022-23 after a good tax rule provisioned in the FY 2016-17.

In FY 2019-20, imports amounted to 575 units before dropping by more than a half to 249 units in 2020-21 due to Covid-19 restrictions and higher taxes. But in the last fiscal year that ended July 16, imports jumped sevenfold to 1,807 units.

The Department of Customs says that, battery-run cars, jeeps and vans valued at an all-time high of Rs. 5.32 billion entered Nepal in 2021-22. While dealers say that car buyers had made bookings seven months ago which show that there is high demand of EVs.

From the current FY 2022-23, the government has decided to levy excise duty on top of the customs duty on high performance electric vehicles, which has made them more expensive, insiders say. Previously, there was no excise duty for electric vehicles.

The tax rule slapped 30 percent excise duty on vehicles fitted with 100-200 kW motors. Likewise, a 45 percent excise duty has been levied on the import of EVs equipped with motors of 201-300 kW capacity. Similarly 60 percent excise duty has been slapped on EVs with a motor capacity of more than 300 kW.

The Government of Nepal had made bank financing from commercial banks supportive to promotion of EVs. The users can get up to 80 per cent of the value as loan from the commercial banks. The rate of interest is also lower than on auto loan to fossil fuel vehicles.

Above statement shows that promotion of EVs in Nepal is bright which support actions to reduce climate change effects, reduce vehicular air pollution, and reduce import of fossil fuel which is one of the major factors of greater gap in the import and export of the country. Moreover, EVs support consumption of electricity generated in the country.

So far the electric vehicles imported are mainly focused to private and institutional uses while electric vehicles for public transportation have not yet been a focus agenda at governmental and private sectors.

The buses and minibuses run by energy stored in the batteries are costly even in the international market. The tax policy and financial policy are not supportive to transport entrepreneurs. The entrepreneurs may compromise for small ratio of profit by operating EVs for public transportation. That can be possible if the government waive taxes on import of such vehicles and credit facilities including subsidised interest rate on bank loans.

That is one vital reason that NADA and concerned government agencies have to consider to promote EVs for public transportation. Therefore, the upcoming autoshow may be expected to take an influential role to this aspect.

Moreover, EVs for public transportation is more important part which carries the country’s commitments expressed in the global forums and charters –Net Zero Emission, Nationally Determined Contributions, Energy White Paper of Nepal Government, 15th Five Year Planand others. As such, this aspect should be the guideline for Nepal Government to act appropriately and create conducive environment for private sector to be engaged with electric buses and other means which run with electrical power.