SWITCHING TO EVs

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SWITCHING TO EVs

Stakeholders say transitioning to electric vehicles from vehicles running on fossil fuel will take more time for countries like Nepal.

--BY NEWBIZ TEAM

Electric vehicles (EVs) have become the talk of the town. Governments across the world are promoting EVs to protect the environment and replace the use of fossil fuels in transportation. They are offering producers and consumers a variety of services, from subsidies to tax breaks, to encourage the adoption of EVs. Many automobile companies have made public their intent to switch to all-electric vehicles in the near future. It implies that they will discontinue producing internal combustion (IC) vehicles.

Companies producing IC motor vehicles for years have begun to make heavy investments in electric vehicles. In an effort to significantly reduce carbon emissions, a number of countries in Europe and Asia like Germany, France, the Netherlands, Britain, Norway, China and India have already announced that they would start phasing out motor vehicles with IC engines beginning from 2030. Industry leaders like Ford, General Motors, and Mercedes-Benz have already made a commitment to end the sale of new petrol and diesel car sales by 2040 globally and by 2035 in leading markets. Few others have started manufacturing electric vehicles but haven’t made the pledge yet. It is, however, true that efforts are being made to establish a new direction for the future of the global automobile industry.

As Nepal does not have an automobile company, it relies on importing or assembling to meet its demands for motor vehicles. This means if the world switches to EVs, it doesn’t have another option. EV has been taken as the future of the automobile industry. Even though Nepal hasn't taken any significant moves towards adopting EVs, the worldwide EV craze is gradually beginning to influence the local market. Automobile dealers say they are seeing a growth in the demand for electric vehicles. Recently, the government announced some tax waiver facilities to encourage the use of electric vehicles.

Increasing EV imports
The import of electric vehicles is increasing with every passing year. According to the Department of Customs, 414 electric vehicles worth Rs 1.19 billion were imported into the country in the first two months of the current fiscal year 2022/23, up from 143 units in the same period of the previous fiscal year. This is a rise of a whopping 281%.

Some say the import of EVs grew due to temporary restrictions on the import of fossil-fuel vehicles. But automobile dealers say the import of EVs is witnessing healthy growth. “Electric vehicles are the talk of the town. Even though there used to be some doubts among consumers over electric vehicles initially, they have cleared up now,” Rajan Babu Shrestha, CEO of Sipradi Trading Pvt Ltd and President of the EV Committee of NADA Automobiles Association, said. He added that although people are increasingly becoming accustomed to four-wheel electric vehicles, they already are accustomed to the two-wheelers.

“The belief that electric vehicles would be the future of automobiles is being increasingly embraced by Nepali customers. Such is the demand that dealers are struggling to meet it,” he added.

According to Shrestha, people earlier had doubts about electric vehicles due to a lack of infrastructure. “There were concerns about the availability of charging stations, after-sales service and battery life, among clothes. Things are starting to change now. Infrastructure for the EV ecosystem is being developed by both the government and the private sector. And the development of new technology is increasing the reliability of EV,” he added. “As a result, the demand for EV is increasing significantly.”

EV Not New For Nepal
Even though EVs are becoming popular these days, Nepal has been using electric vehicles in public service for nearly three decades. Safa Tempos, which literally means clean three-wheelers, have been plying Kathmandu roads since 1993. According to Nepal Safa Parivahan Sangh, the association of electric tempo operators, an American NGO named Global Resources Institute developed an electric version of the three-wheeler in 1993 to reduce pollution. The technology was brought to Nepal by the Nepal Electric Vehicles Industries with funding from the USAID after a three-year pilot project.

However, these clean three-wheelers are struggling to survive due to a lack of government support. Only about 450 of the 700 Safa Tempos are currently operational, according to Ram Prasad Ghimire, president of Nepal Safa Parivahan Sangh. “The government neither has concrete plans on EV adoption, nor has it drafted a separate policy for EVs. How can we be confident that the government is now prepared for the upcoming EV era given that it has failed to manage electric three-wheelers operational for nearly three decades?' Ghimire questioned.

The government still recognizes EVs like motor vehicles running on fossil fuel. Ghimire further said prices of both internal combustion and electric vehicles will continue to grow. “Fuel price and battery prices both are growing simultaneously. Therefore, EVs cannot be an alternatives for gasoline powered motor vehicles anytime soon,” he said, expressing scepticism over the government’s preparedness for EV adoption.

Government's planning
Presenting his budget, former finance minister Bishnu Prasad Poudel had announced that the government was planning to halt import of internal combustion engine vehicles by 2030. The government made the announcement following the global trend. A source at the finance ministry also confirmed that the ministry along with other stakeholders are doing internal study on this issue.

Of late, the President and other high-ranking government officials have started using EV. The Nepal Electricity Authority (NEA) has started installing charging stations across the country. The state-owned utility has implemented a plan to install charging stations at 51 locations across the country. Likewise, the NEA has also signed an agreement with Nepal Police and Armed Police Force to install charging stations at different places.

Automobile dealers are already operating charging stations at around 100 different locations across the country. The government has continued its previous policy of charging only 15% excise duty on the import of electric vehicles fitted with up to 100 kW motors For EVs fitted with 101-200 kW motors, the government charges excise fee and customs tax of 30% each. Similarly, EVs with 201-300 kW are levied 45% excise fee and customs duty each, while such taxes and fees on import of EVs with more than 300 kW motors are 60% each.

Stakeholders say the government doesn't have a clear policy regarding EVs and said it is not yet prepared for EV adoption.

Is Nepal prepared?
Though the government has stated in its policy that investment in EVs will be important in the fight against air pollution, the policy overlooks a number of issues. First, the government lacks a detailed plan for electrifying or inducting a fleet of EVs in public transportation. “The country's strategy for dealing with these problems is inadequate,” said Bhesh Bahadur Thapa, chairman of Sundar Yatayat Pvt Ltd.

Stating that a complete switch to EV is not possible with the current policies of the government, Thapa said the government has to show flexibility on import of not only EVs, but on their spare parts also.

Meanwhile, Anjan Shrestha, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said although the private sector is prepared for EV adoption, the government is still not ready. “The government should be more prepared than the private sector,” he said, emphasising the need for a separate policy for EVs.

Shrestha of Sipradi Trading also said the government should address the major issue in EV adoption i.e. infrastructure development. “The first thing that we need to ensure is the infrastructure for the smooth operation of EVs,” he said, adding: “The problem of battery and availability of spare parts will be addressed gradually as EV technology is evolving at a very fast pace. Our responsibility is to build proper infrastructure.”

He added that there still was a lot more to do in terms of after sales service of EVs. “Workshops dedicated to EVs for repair and maintenance is another part that needs to be addressed. Even though the private sector is pouring their investments in the industry, the transition from gasoline vehicles to EV will take more time for a country like Nepal,” Shrestha concluded.

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