Cimex Inc. Pvt. Ltd., the authorized distributor of BYD EVs in Nepal shows massive concern regarding the recently revised taxation which has resulted in a drastic increase in the prices of EVs sold in Nepal.
The concern is not related to business but instead the environmental aspects and the impact it can have on the very slow but steadily growing Nepali EV market. The revised taxation demonstrates a major policy departure from the government which sets a dangerous precedent not only in the eyes of investors but also the general public.
Electric vehicles constitute a small 5% market share of the total automobile industry in Nepal. In FY 2078/79, 1400 (approx.) EVs were imported while the numbers for non-electric vehicles were 15000, which highlights the initial adaptation of electric vehicles.
Right now the cost of electric vehicle technology is high, which results in automakers using the higher motor capacity to add the premium value to balance the cost. Thus automakers choose standard or optimum motor capacity rather than small motor capacity. Given the standardization going on in EVs, it is scientifically wrong to relate motor capacity with luxury.
Furthermore, consumers’ adaptation of electric vehicles is more to the mid-range versions because of utility, range, and global market trends. The proposed new taxation policy promotes the EV in the entry-level segment which is still in development globally and isn’t so widely adopted right now. The same has been and will be reflected in the Nepal market trends.
With the proposed new taxation, there won’t be any motivation to buy EVs for the end-user reflecting revenue loss to the government, more adaptation of ICE vehicles, and subsequent use of fuel. This contradicts the government policy of adaptation of electric vehicles and increases the domestic consumption of electricity.
The proposed taxation is unscientific and illogical which is also highlighted by the increase in custom duty from 10% to 30% and excise duty of 5% on the Electric Goods Carrier. This highlight major flow in the proposed taxation since commercial application of electric vehicle is fundamental to the adaptation of electric mobility in the nation.
Continuation of favorable electric vehicle policies means Nepal can demonstrate flexibility in the adoption of EVs within one or two years and this new technology can be localized further giving Nepal’s first-mover advantage. In that time, Nepal can nourish this innovative technology to develop its capacity for assembling, manufacturing, and producing, which in itself is an undeniable advantage.
Nepal can use this to portray its image in the global arena as its commitment to fighting climate change, aggressive adoption of new technologies, and an opportunity to localize new sustainable technologies like EVs.
