Nepal’s electric vehicle (EV) market has witnessed explosive growth in recent years, largely fueled by a suite of government incentives designed to make EV ownership more affordable and accessible. As of fiscal year 2024-25, electric vehicles account for over 70% of new passenger vehicle imports, a remarkable milestone that reflects the effectiveness of Nepal’s policy framework. This article breaks down the key government incentives that buyers need to know in 2025 and how these policies are shaping Nepal’s green transport future.
1. Reduced Import Duties and Taxes
One of the most significant incentives is the government’s
decision to maintain low import duties on electric vehicles. While internal
combustion engine (ICE) vehicles face customs duties as high as 80%, EVs enjoy
a substantially reduced rate of around 15%. This differential pricing makes
electric cars more competitive and affordable in the Nepali market.
In the federal budget for fiscal year 2025-26, Finance
Minister Bishnu Paudel confirmed that all existing taxes and duties on EVs
would remain unchanged, signaling the government’s commitment to supporting
cleaner transport. Additionally, import duties on equipment for EV charging
stations and assembly industries have been slashed to just 1%, with exemptions
on other taxes and fees, encouraging infrastructure development.
2. Favorable Financing Terms
Banks in Nepal have played a pivotal role by offering
preferential loan-to-value (LTV) ratios for EV buyers. Initially, borrowers
could finance up to 90% of the vehicle’s value, compared to 50-70% for ICE
vehicles. Although the mid-year monetary policy review in 2024-25 adjusted this
limit to 60%, EV loans still enjoy relatively favorable terms, helping reduce
the upfront financial burden on buyers.
3. Subsidized Electricity Tariffs for Charging
To further lower the cost of EV ownership, electricity
tariffs for charging stations and home chargers are subsidized. This incentive
reduces operational costs and encourages the expansion of public and private
charging infrastructure, which is critical for alleviating range anxiety among
potential EV buyers.
4. Tax Holidays and Support for EV Industry
The government also offers a five-year income tax exemption
for industries involved in the production and assembly of EV charging stations
and related infrastructure. This policy aims to stimulate local manufacturing
and service sectors, creating jobs and reducing dependency on imports.
5. Impact on Market Growth: Case Study of Sajha Yatayat
Kathmandu’s Sajha Yatayat cooperative, a pioneer in electric
public transport, operates around 40 electric buses supported by government
incentives and charging infrastructure. This initiative has reduced urban air
pollution and operating costs, demonstrating how government policies can
accelerate EV adoption beyond private vehicles.
Conclusion
For Nepali consumers considering an electric vehicle
purchase, understanding these government incentives is crucial. By leveraging
reduced import duties, favorable financing, subsidized electricity, and growing
infrastructure, buyers can enjoy cost savings and contribute to Nepal’s
sustainable transport goals.
