While inaugurating the battery-operated public buses of Sajha Yatayat in 2018, Prime Minister KP Sharma Oli had also announced the National Action Plan for Electric Mobility. The goal was to increase countrywide adoption of electric transport by at least 20 percent in the next two years. Two years on, the ambitious plan seems like a distant dream.
When Finance Minister Yubaraj Khatiwada presented the new budget, the auto industry expected the government to announce measures to revive it. To the contrary, the finance minister presented a contentious policy that now puts the EV dealers in a difficult spot.
According to the new budget, excise duty on electric cars has now been raised to a range of 40-60 percent, depending on their peak power. Electric cars with peak power ranging between 50-100kW will now face excise duty of 40 percent, those between 100-150kW, 50 percent, and those in the 150-200kW range, 60 percent. Earlier it was only 10 percent, regardless of the peak output. To make matters worse, an extra 80 percent customs duty (of which 50 percent will be reimbursed) has been slapped. This will further be subjected to 13 percent VAT and a 5 percent road toll.
Until now, electric cars had to pay only 28 percent in total taxes, which has now gone up to a massive 120-140 percent. Although the dealers are yet to take their call on the new pricing, it is rumored that the prices may increase two to three folds. The retail price of conventional petrol and diesel cars reaches 261 percent above cost price. The onus is on the government to provide a convincing justification for such a shocking measure as this is a ‘slap on the face’ of consumers and businesses that have decided to go electric.
Though the EV segment is still in its infancy, its market share was projected to rise exponentially. Low cost of ownership and subsidies incentivized EV importers in Nepal. This was further complemented by the government’s willingness to set up charging infrastructures across the public spectrum. Although these short-term policies accelerated the adoption of EVs, the government’s failure to devise a long-term strategy to solve revenue and taxation issues has put a dampener on this trend.
This is disheartening as it effectively brings the progress of electric vehicles in Nepal to a screeching halt. The increase in the purchase of premium electric vehicles had indicated a possibility of the general public accepting them as their primary mode of transport. In the long run, and assuming the infrastructure required would be established, adoption of electric vehicles would nudge the Nepal towards a cleaner and greener tomorrow.
With the automotive world making great progress in R&D, electric vehicles seemed set to be a sustainable alternative to conventional fossil fuel-driven vehicles. However, with the new budget, these development dreams will have to be shelved. Most of the effort put into creating better infrastructure for electric vehicles in Nepal will also go to waste. There is a clear dichotomy between what the government said it would do and what it actually did.
Did the rise of electric cars threaten the fuel excise revenues or did the government fall victim to excessive lobbying? Regardless, we are still hopeful about the future for electric vehicles in Nepal. There is no question of where the automotive world is headed, and the importance of a sustainable future is all too evident. One can only hope Nepal can play an instrumental role in ushering in this paradigm shift.