Import of EVs increases, what will be the scenario in next FY ?

In recent years, there has been a significant increase in import of electric vehicles in Nepal. More than 7 thousand electric vehicles have been imported in 9 months of the current fiscal year. i.e. from mid-July last year to mid-March this year.

According to the data of the department, the electric vehicles imported are 2,902 units of up to 50 kW, 4,077 from 51 to 100 kW while 91 units were from 101 to 200 kW. Moreover, 21 units were 201 kW and above.

Similarly, 692 electric micro buses used as public transport have been imported. They are equipped with 11 to 14 seats, during the period.

According to the data of the department, a total of 11 trillion 67 billion 36 billion rupees worth of goods have been imported into Nepal during the nine month period of the current fiscal year.

Nepali automobile dealers are importing better quality products by famous automakers is the one reason to increase in import. The EVs available now in Nepal market have better exterior, interior and technical facilities. Better range, even 600 plus kms per full charge, have been brought in the market. Auto loan upto 80 percent of the market price of the EV is given by commercial banks at good interest rate. However, the third reason is users are now shifted to climate friendly transportation and reduce the cost of fossil fuels.

It is predictable that the ratio of EVs import may take a bigger leap in remaining quarter of the period of current FY. The consumers and importers are not sure that the tax rules on EVs will remain the same as of current FY to coming FY. In this context, the Finance Minister had expressed his views on twill also be given as policy saying tax hike may be done but explanations will be provided. That means change is set to happen.

It is recall that, the tax rule on import of EVs for the current FY was widely criticized as the bigger capacity EVs with luxury category have to pay moderate tax while mid-size and luxury are hiked and lower level EVs have to pay comfortable rate of tax.

So as due to doubt in increase in tax, EV importers are planning to import more units before ‘the change’ which will be effective after announcement of Finance Minister’s Budget speech of FY 2081-82 (2024-25). Likewise, the potential buyers are also looking for getting EV before the Budget.

Moreover, increase in import of EVs for private and institutional uses in the current FY, the EVs for public transportation could not make a significant influence.

Sajha Yatayat has recently operated its 40 units of 24 seater electric buses which were imported a year back while Sundar Yatayat has been operating some 10 electric buses in Kathmandu, Kapilbastu and Rupandehi. Moreover, electric microvans which are used as public transport are popular now. The small vehicle public transport operators are happy with such microvans. Some such microvans are seen operated in different routes of the Kathmandu Valley. The density of numbers can be seen in routes over Bardibas, Nuwakot, Chitwan, Baglung which cover a distance of 60 to 200 km. The electric microvan service in some other routes are also successful.

As a matter of fact, the Government should be able to make EVs for public transportation cheaper to attract private sector to invest in electric bus services in the country. The Government need to formulate policies to support private sector technically and financially. The Government also should be capable to well utilise Pollution Control Tax, the fund collected form each litre of petrol and diesel consumed. The fund has not been spent any money but swelled to a sum of 30 billion rupees or near about so far.

Thus, in conclusion, the budget of the coming FY should have an aspect to be supportive to the nation’s commitments expressed in the global climate forums such as COPs, Nationally Determined Contributions, Sustainable Development Goals, Periodic National Plans, Energy White Paper and so on.

The main hindrance is cost of the electric buses. An electric bus can be purchased at a cost of 2 or 3 fossil fuel run buses. That means, tax facilities on fossil fuel buses are very low in comparison to other non-commercial fossil fuel run vehicles. Electric buses are expensive and the tax facility is almost similar to fossil fuel run buses. Therefore, public transport entrepreneurs have not been ready to move to EVs for public transportation. The climate and environment campaigners need to bring the government authorities and public transport entrepreneurs to bring into a platform where the authorities and entrepreneurs listen the facts related to EVs for public transportation in Nepal, it’s benefits, contribution to climate actions, public health, consumption of electricity generated in the country, reduce use of imported fossil fuels, and the possible ways to lower the upfront cost and investment modalities.

Private sector involved in public transportation can operate electric buses easily at the condition that they can make profit by operating electric buses. That means a fair amount of financial support in forms of taxes on import, subsidy on purchase and subsidy on bank interest may be the desired instruments to insert in the policies.

It is worth mention that the Government of Nepal aims to have 25 per cent of private vehicles will be electric driven by the year 2025. That also needs to address commercial vehicles (vehicles for public transport) as well.

Thus, the Budget for the coming FY should bring good things to promote EVs for Public Transportation. The financial support as grant or soft loan, technical and managerial knowledge to entrepreneurs may be worth enough to expand EVs for Public Transportation business. However, the Finance Minister and relevant high ranks must be honest on EVs for Public Transportation to develop keeping in view that extending support to private parties.