- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Pricing Trends
- 11 Regulatory Trends
- 12 Market Size and Forecast
- 13 Market Outlook
- 14 Distribution Chain Analysis
- 15 Key Market Players
- 16 Strategic Conclusion
- 17 References
Definition / Scope
A electric vehicle, also called as EV, uses one or more electric motors or traction motors for propulsion. An electric vehicle may be powered through a collector system by electricity from off-vehicle sources, or may be self-contained with a battery, solar panels or an electric generator to convert fuel to electricity.
EVs first came into existence in the mid-19th century, when electricity was among the preferred methods for motor vehicle propulsion, providing a level of comfort and ease of operation that could not be achieved by the gasoline cars of the time.
In the 21st century, EVs saw a resurgence due to technological developments, and an increased focus on renewable energy. A great deal of demand for electric vehicles developed and a small core of do-it-yourself (DIY) engineers began sharing technical details for doing electric vehicle conversions.
The battery size and type are critical. There are two types of batteries predominantly used in electric vehicles, namely, nickel-based aqueous batteries and lithium-ion batteries. Due to their high voltage, reliable discharge and good lifecycle, lithium-ion batteries are currently the most
widely used battery system for electric buses.
All forms of transportation including two-wheeler and four-wheeler private vehicles as well as public buses can be replaced with renewable energy-run electric vehicles. Moreover, since Nepal has a comparative advantage in terms of production of hydroelectricity, it has a huge potential to replace fossil fuel in upcoming days.
Electric vehicles still makes a tiny percentage of total vehicles sales in Nepal, but its demand has been increasing rapidly largely due to falling battery prices, which has made such vehicles affordable.Domestic automobiles dealer said that more consumer were gravitating towards electric vehicles due to overall cost savings compared to vehicles compared to fossil fuels.
According to Electric Vehicle Association of Nepal (EVAN), the total number of EVs in Nepal stands at around 21,000 as per the 2017 data. That figure is obviously much smaller compared to millions of internal combustion engine (ICE) vehicles currently plying on Nepal’s roads.In just the first three months of the current fiscal year 2018/19, the country imported EVs worth Rs 274 million while EVs worth Rs 768 million were imported during the last fiscal year, 2017/18.
The data also reveals that the growth of the EVs is accelerating rapidly in the country. Most EVs are imported from China, India, South Korea and Thailand this year. There’s no doubt that the world’s trends in the automobile sector thrust the growth of EVs here in Nepal.
|Base Year||2018||Researched through internet|
Despite the efforts of EV entrepreneurs and public support in Kathmandu, the EV movement is not expanding as expected. Some of the problems that have appeared during the course of three years of EVs operation are:
- Operators' inadequate know-how about battery maintenance and difficulty of life-cycle assessment.
- Relatively long pay-back period due to high initial investment.
- Inadequate charging stations at convenient locations.
- Lack of battery leasing system.
- Inadequate policies and their weak implementation thereby not creating a conducive environment for displacement of polluting vehicles and positive incentives for EVs promotion.
- Lack of a single and authorized institution to regulate and monitor the EVs promotion and management of air quality
Top Market Opportunities
According to a research conducted by Kathmandu Electric Vehicle Alliance (KEVA) during March 2006, operation of electric public vehicles including trolleybuses is completely feasible in Kathmandu.
Furthermore, the research has also found that the financial returns of EVs are higher than diesel-run microbuses. So, it is not only better for the environment, but also for the profit of public transportation. Furthermore, Nepal is capable of developing an infrastructure on its own so that the ecosystem of private two wheeler EVs, private four wheeler EVs as well as large and small public EVs operate in harmony.
Nepal also has a comparative advantage in using EVs as the country has a huge hydroelectricity potential to replace fossil fuel. This use of EVs could also perhaps keep in check the widening trade deficit in which the petroleum products share a major stake. According to the macroeconomic report of Nepal Rastra Bank, the country imported fuel worth Rs170.13 billion in 2017-18.
Though Nepal is yet to take concrete steps in adopting EVs, the global EV enthusiasm has slowly started to grip the Nepali market. The launch of new EVs in the four-wheeler and two-wheeler segments at NADA Auto Show 2018 held in mid-September and the immense attraction of visitors towards the vehicles are indicative of this fact.
A wide range of market constraint were identified across policy and governance, infrastructure and markets, data and monitoring, and financing and resources
- While the government has published a range of high-level policy that support electric mobility, much of this policy requires operationalization. Policy reflects what a ministry hopes to achieve, but typically policy is not legally binding. Nor does policy provide specific instruction, lay out principles of operation and set standards. As such, an absence of directives, programs, standards and legislation for electric mobility currently inhibits the achievement of policy.
- Currently, there is very little investment in electric vehicle infrastructure and facilities in Nepal. This poses a significant barrier to greater electric vehicle adoption, as the availability of especially charging facilities is critical for widespread uptake.
- Private consumers of electric vehicles tend to charge their vehicles at home. This is the case for both electric cars and motorbikes. However, the provision of public charging stations is critical for widespread uptake, especially along intercity routes (for example, between Kathmandu and Pokhara), and at key locations in and around major cities.
- Overall, public awareness of electric vehicles, particularly their benefits, remains low.
The major challenge is cost. Battery technology are expensive and because batteries in electric cars need to be able to hold massive amounts of charge to make the cars practical for most drivers, they have to be built using expensive materials, most of which are tough to procure. Because electric cars cost a lot to build, they also cost more than comparable gasoline cars to buy.
Electric cars could be less expensive if electric car makers could ramp up production volume and use economies of scale. But, for that to happen, lots of consumers need to buy electric cars - something that likely won't happen without prices coming down.
Beyond the costs, electric car makers have a lot of convincing to do with consumers. Not everyone is sold on the idea that electric cars make sense for their life. That's because of range anxiety. Electric car makers are finding that people are worried about how far they can travel in electric cars before their batteries peter out.
Moreover, there are still challenges to overcome before electric vehicles gain greater public acceptance, including the lack of charging stations, undependable electricity supply, and inadequate parking lots. A fast-charge electric station costs a minimum of $30,000 and can charge only 25 vehicles a day. Establishing one requires a government subsidy as well as a regulator to permit the charging of different EV models.
There are competing technologies in electric vehicles for traction, energy storage and overall technology implementation. Currently, most commercially available electric vehicles use onboard chemical batteries as the source of electricity for operation.
The price of electric car and bikes are shown in the table below:
In order to promote EVs in Nepal, the government has adopted certain measures to reduce the cost of production of EVs in order to give them a competitive edge in the market. It has also levied a marginal import duty of 1 per cent on the electric components of EVs as compared to 20 percent for other electric goods. In addition, the Value Added Tax (VAT) Act 2054 has removed VAT on chassis and the battery, the main components of the EVs.
There are a few towns in the Terai region of Nepal in which e-rickshaws are actually replacing pedal-run and ICE vehicles. Similarly, an electrically assisted rickshaw has been developed in Nepal from scratch by Robotics Association of Nepal in collaboration with Karma Coffee and Nepal Communitere. Kinetic energy is produced while pedalling the rickshaw which then assists the movement of the rickshaw. Though the parts required for the rickshaw has been imported from China, it has been developed from ground up by Nepali engineers.
With the expansion of EVs, the EV operators have also extended their routes. EVs are operating in Jamal-Bansbari, Royal Nepal Airlines Corporation (RNAC)-Lagankhel, RNAC-Chabahil-Tinchule and Jorpati, Baluwatar-Mangal Bazaar, and Kalanki-Sundhara. Not all the routes have been chosen on the basis of what is suitable for electric tempos (shorter routes with low speed area).
Nepal Rastra Bank which is the authorized regulatory and monitoring body of the banking sector in Nepal has included EVs in the priority sector. It has been made mandatory for all the government and joint venture banks to direct at least 12 per cent lending of the total loan portfolio to the projects assigned under the priority sector. This decision has undoubtedly helped to increase the volume of finance for EV- related activities and a number of EV entrepreneurs have benefitted from this programme.
Betting on the surplus power in the system by the end of next year along with completion of the 456-megawatt Upper Tamakoshi Hydroelectric Project (UTHEP), Nepal Electricity Authority (NEA) is taking the initiative to promote electric vehicles for competent management of the surplus power.
The power utility has called a tender to install charging stations in different places of major cities to encourage people to shift to electric vehicles. According to the power utility, a charging station in the NEA office premises will be installed shortly and the authority is also mulling over making electric vehicles mandatory for top posts from director level to spread the message that electric vehicles should be given due priority.
Market Size and Forecast
In just the first three months of the current fiscal year 2018/19, the country imported EVs worth Rs 274 million while EVs worth Rs 768 million were imported during the last fiscal year, 2017/18. The data also reveals that the growth of the EVs is accelerating rapidly in the country. Most EVs are imported from China, India, South Korea and Thailand this year.
There’s no doubt that the world’s trends in the automobile sector thrust the growth of EVs here in Nepal. Beside this, there are many factors favouring this escalation. Because of the government’s support for EVs through tax flexibility and free excise duty on the import of EVs in Nepal, EVs are getting the opportunity to grow. Only 10 percent excise duty is levied on the import of private EVs and only 1 percent excise duty is levied for import of public EVs. Likewise, only Rs 300 tax is levied on EVs annually while 240 percent tax is levied on standard four wheeler vehicles.
The consciousness of EVs is gradually developing among people. The government’s Environment-friendly Vehicle and Transport Policy (2014) that aims to increase the share of EVs up to 20 percent by 2020 can help mount EVs in Nepal. In addition to this, the country is supposed to generate surplus electricity production in the coming three years. This will eventually reinforce the constant supply of electricity. Every household needs electric power of at least 32 amperes to charge EVs at home, which is not available at present.
Here in Nepal, electric cars now make up 10% all of all new sales. At present there are over 500 electric cars, more than 1,500 battery two-wheelers and a few thousand electric three-wheelers on Nepal’s roads. But with Sajha and other bus companies poised to induct electric buses, and private owners showing a keen interest, the electric car market is poised for growth.
While the retail price of petrol and diesel reaches up to 261% above the cost price, electric vehicles carry just a 10% tax on the purchase price. Electric cars are exempt from road tax, which can be Rs30-50,000 per year for fossil-fuel cars. Nepal is the only country in the world with such a huge relative tax difference.
In October last year, Prime Minister KP Oli unveiled an electric mobility action plan, proposed to transform at least 20% of the fleet of public vehicles into battery-operated ones by 2020. Amidst much fanfare he inaugurated the first five Chinese, BYD electric buses inducted by Sajha Yatayat.
Distribution Chain Analysis
Today, the auto industry stands at a cross-roads: the increasingly stringent government regulations, a continued reliance on expensive and insecure fossil fuels, and growing concern over global warming, are creating much uncertainty. Battery-powered vehicles are an upcoming contender to the traditional combustion engine dominated automotive industry. Therefore, the world’s automakers are stepping up investment in the development of alternative powertrain technologies.
In spite of its current uncertainties and its disadvantages, the completely new technology used by electric vehicles, will dramatically change existing supply chains. The future shift in the automotive value chain of e-cars, especially the question of battery, electric motor and transmission production, will transform the nature and level of logistics coordination across dispersed plants.
E-car production has an effect not only on the flow of materials from the suppliers to the vehicle plant and the finished car distribution to the markets, but also inhouse material flows have to be taken into account. Therefore, car industry has to rethink existing inbound, inhouse and outbound operations.
The approach advocated in this paper should help contribute to the great demands on the interplay of manufacturing and logistics operations that are so important for the total effectiveness of automotive supply chains. Overall literature review shows that there is a lack of describing supply chain implications of e-car manufacturing.
This lack makes a strong case for further investigation. Therefore this paper!will help in evaluating how car manufacturing transforms actual and future supply chain forms in automotive industry
Key Market Players
- Hyundai Hyundai Ioniq, which was launched at the NADA Auto Show 2018 by Laxmi Intercontinental on 11th September got booked within two months of its entrance in Nepal.
- BYD Getting Extended Charging Stations CimexInc, the authorised distributor of BYD in Nepal has sold 36 units of BYD within two years of their arrival in 2017.
- Renault Advance Automobile, the authorised distributor of Renault in Nepal, is also preparing for the official launch of Renault Zoe in the country in the near future.
- Kia Continental Trading, the authorised dealer of Kia Motors in Nepal, has sold more than 100 units of Kia Soul until now. The company began selling the vehicle since 2016 and has been witnessing the growth of EVs in Nepal.
- Mahindra Agni Energy, the authorised distributor of Mahindra EVs in Nepal, has years of experience in the Nepali EV market.Since 2010, the company has been offering various Mahindra EV models including Reva, e2o and e2o Plus. E-Verito, the latest model of Mahindra in Nepal is gaining popularity in the market.
- NIU, the Leading E-Scooter Within a short period, since its establishment in 2017, Eco Infinity, which is the sole authorised distributor of the NIU scooter in Nepal has sold 150 e-scooters in the fiscal year 2017/18. Now, more than 200 e-scooters have been sold.
Nepal can build up an EV foundation for the biological system to work and it is totally practical, be that as it may, whatever is being done at present from the private part just as the state isn't adequate. This is something which Nepal's capacities compliment just as something it urgently needs, in any case, nobody has had the capacity to produce this potential and market the advantages.