China push: In Nepal, EVs now account for 76% of all vehicles sold
For its more than 3 million residents, just getting around is a dangerous, eye-stinging ordeal.
But recently, a new kind of motor has started to ease the crush. Sleek electric vehicles glide by with a quiet hum. Gleaming showrooms do a brisk business in the latest models, and charging stations on highways have turned into rest stops with cafes for drivers. Over the past year, EVs accounted for 76% of all passenger vehicles and half of the light commercial vehicles sold in Nepal.
Five years ago, that number was essentially zero.
The EV market share in Nepal is now behind only those of a few countries, including Norway, Singapore and Ethiopia. The average for all countries was 20% in 2024.
The swift turnover is the result of govt policies aimed at leveraging Nepal's wealth of hydropower, easing dependence on imported fossil fuels and clearing the smog. It has been fed by an intense push from Nepal's biggest neighbour, China, world's dominant manufacturer of battery-powered vehicles.
"For us, using EVs is a comparative advantage," said Mahesh Bhattarai, DG of Nepal's department of customs. "In the global market, Chinese EVs are expanding. The same is happening in Nepal." The effort stands in contrast to policies in the US and Europe, which have blocked Chinese EVs to protect their domestic auto industries. And it carries hope for other developing countries that seek to become wealthier without enduring the crucible of pollution from which many rich nations have already emerged.
"We're interested in making sure this rapid growth in these emerging markets doesn't follow the same trajectory as developed markets," said the head of sustainable transportation for UN Environment Programme. But as Nepal has learned, there are obstacles. The country has spent heavily on subsidies, and getting rid of the support too quickly could derail the shift to battery power. Even if gas-powered passenger cars are phased out, cleaning the air will require public transportation to go electric as well.
Asian Development Bank has been a key financier of Nepal's dams, transmission lines and charging networks. The head of ADB's resident mission in Nepa is cautious about the risk of backsliding. "Given the economic sense this EV conversion represents, I think I would see it as unlikely that we would have major policy change."
Businesses and advocates are, however, concerned Nepal may already be backing off its commitment to the transition. It has had three PMs in past five years, and priorities have shifted with each of them. Nepal's central bank doubled down-payment requirements for EVs. Govt has been inching up its tariffs on EVs. And auto dealers worry faulty cars from some smaller Chinese brands could discredit the category. Rajan Babu Shrestha holds the licence to distribute cars in Nepal from Tata Motors.
He has seen sales skyrocket on his EVs, but he could go back to selling gas-powered vehicles if tariffs rose or subsidies for charging stations went away. "Stability is always a question mark."
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