Nepal’s electric vehicle (EV) market is booming, with ambitious government targets aiming for 90% EV adoption by 2030. Positioned strategically between two of the world’s largest EV manufacturing giants—China and India—Nepal has a unique opportunity to evolve from a consumer market into a regional hub for EV innovation and manufacturing. This transition can create jobs, stimulate economic growth, and accelerate the country’s green mobility ambitions.
This article explores how Nepal can leverage its geographic advantage, policy environment, and clean energy resources to become a leading EV innovation and manufacturing center in South Asia.
The Current Landscape of Nepal’s EV Market and Industry
Nepal’s EV market has witnessed exponential growth, with over 20,000 EVs imported in recent years and electric vehicles making up more than 70% of new passenger vehicle imports in 2024 (Nepal Economic Forum, 2025; Business Today, 2025). Despite this, Nepal remains heavily reliant on imports of fully built EVs and components, primarily from China and India.
Several Indian and Chinese investors have submitted proposals to establish EV assembly plants in Nepal, focusing on two-wheelers, three-wheelers, and four-wheelers (Kathmandu Post, 2023). For example:
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One India Technology plans a factory in Hetauda to assemble electric motorcycles, scooters, three-wheelers, and vans.
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Gujarat-based Spurt Electric aims to assemble 2,000 electric motorcycles annually in Bhairahawa.
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Chinese investors propose plants in Lalitpur and Kathmandu Valley to produce thousands of two- and three-wheelers annually.
These developments indicate growing investor confidence and the potential for Nepal to build a local EV manufacturing ecosystem.
Why Nepal Is Well-Positioned to Become a Regional EV Hub
1. Strategic Geographic Location
Nestled between China and India, Nepal benefits from proximity to two of the largest EV manufacturing and battery technology hubs globally. This location facilitates access to supply chains, skilled labor, and technology transfer, reducing logistics costs and lead times.
2. Abundant Clean Energy Resources
Nepal’s electricity generation is nearly 100% hydropower-based, providing clean, renewable energy essential for sustainable EV manufacturing and operation. This green energy advantage aligns with global decarbonization trends and can attract environmentally conscious investors.
3. Government Targets and Policy Support
Nepal’s Nationally Determined Contributions (NDCs) set ambitious EV adoption targets: 25% of private vehicle sales to be electric by 2025 and 90% by 2030 (Nepal Economic Forum, 2025). The government offers tax incentives, reduced import duties on EV components, and plans to develop EV charging infrastructure nationwide.
Finance Minister Bishnu Prasad Paudel announced tax subsidies and land lease offers to attract top global EV manufacturers to Nepal (Kathmandu Post, 2023). These incentives aim to create a conducive environment for investment.
4. Growing Domestic Market
With increasing EV sales and consumer acceptance, Nepal’s domestic market is expanding rapidly. Local assembly and manufacturing can reduce costs, improve supply reliability, and tailor vehicles to Nepali conditions, further stimulating demand.
Key Challenges to Overcome
1. Small Market Size
Nepal’s annual vehicle sales are relatively small (~15,000 units), which limits economies of scale. Local assembly plants may struggle to achieve profitability without export strategies or regional integration.
2. Infrastructure and Regulatory Gaps
Manufacturing requires robust infrastructure, including reliable power, transport, and skilled labor. Regulatory frameworks must be streamlined to facilitate business operations and ensure quality standards.
3. Competition from Established Hubs
India and China’s massive EV industries offer cost advantages and established supply chains. Nepal must find niche opportunities or specialize in certain EV segments to compete effectively.
Opportunities and Strategic Recommendations
1. Focus on Assembly and Component Manufacturing
Starting with assembly of electric two- and three-wheelers, which dominate Nepal’s EV market, can build local expertise and supply chains. Gradually expanding to component manufacturing (batteries, motors) can increase value addition.
2. Leverage Special Economic Zones and Incentives
Utilizing special economic zones (SEZs) with tax breaks and infrastructure support can attract investment. Coordinated policies to reduce tariffs on imported raw materials and components will lower production costs.
3. Promote Public-Private Partnerships and Innovation
Collaboration between government, academia, and private sector can foster R&D in EV technology adapted to Nepal’s terrain and climate. Startups focusing on battery management, charging solutions, and vehicle design can drive innovation.
4. Develop Export-Oriented Strategies
Targeting regional markets like Bangladesh, Bhutan, and parts of India can help Nepal’s EV manufacturers scale production and diversify revenue streams.
5. Capacity Building and Skill Development
Investing in technical training and vocational education will create a skilled workforce essential for EV manufacturing and maintenance.
Case Study: Early Assembly Initiatives in Nepal
Golchha Group and Jagadamba Group currently assemble Bajaj and TVS motorcycles locally, demonstrating the feasibility of assembly operations. Plans by Shyakar Group and Morang Auto Works to assemble Honda and Yamaha two-wheelers indicate growing momentum in domestic manufacturing (Kathmandu Post, 2023).
These examples highlight the potential for scaling up to electric vehicle assembly and manufacturing with proper policy and investment support.
Conclusion
Nepal stands at a crossroads with immense potential to become a regional hub for electric vehicle innovation and manufacturing. By leveraging strategic location, clean energy resources, supportive policies, and growing market demand, Nepal can build a green industrial base that creates jobs, reduces emissions, and positions the country as a leader in South Asia’s EV revolution.
Achieving this vision requires addressing market size limitations, infrastructure gaps, and competition through targeted strategies emphasizing assembly, export, innovation, and capacity building. With coordinated efforts, Nepal’s EV industry can accelerate sustainable development and economic growth.
References
Business Today. (2025, May 6). Nepal chose China over US: Blunt warning sounds alarm for Indian EV carmakers. Retrieved from https://www.businesstoday.in/latest/economy/story/nepal-chose-china-over-us-blunt-warning-sounds-alarm-for-indian-ev-carmakers-474797-2025-05-06
Kathmandu Post. (2023, September 25). Indians, Chinese apply to build electric vehicle plants. Retrieved from https://kathmandupost.com/money/2023/09/25/indians-chinese-apply-to-build-electric-vehicle-plants
Nepal Economic Forum. (2025, January 7). Decoding the rise of electric vehicles in Nepal. Retrieved from https://nepaleconomicforum.org/decoding-the-rise-of-electric-vehicles-in-nepal/
MyRepublica. (2024, August 8). Global EV momentum and Nepal’s ambitions. Retrieved from https://myrepublica.nagariknetwork.com/news/global-ev-momentum-and-nepals-ambitions-53-10.html
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