Under current rules, electric cars only had to pay 10% excise and 13%VAT and minimal customs duty. Now, the tax formula has raised the total tax to between 120-140% which would price battery cars higher than a petrol or diesel car of the same size.
Electric vehicles of peak power 50-100kW will now have to pay 40% excise, 50% if it is 100-150kW. The excise goes up to 60% for battery cars with peak power of 150-200kW.
Finance ministry sources said private electric cars were a luxury item that only well-to-do Nepali could afford, and in any case despite the tax rebate of the past five years importers of battery cars had not reduced the markup on the cars making them too expensive for most people.
The government is under pressure to make up for a drop in tax revenue due to the COVID-19 crisis, and the axe has fallen on the only hope to reduce air pollution and the import bill for petroleum. Importers of non-electric vehicles had also been lobbying with the government to scrap the tax incentives for plug-ins by competing firms.
Electric vehicles are being imported by Mahindra, Kia, Hyundai, MG, Peugeot, Audi and BYD. Other importers which were also planning to add electric cars to their showrooms will now cancel their orders.