Surging Fuel Prices Drive Demand for Electric Two-Wheelers in Nepal

Kathmandu. The demand for electric two-wheelers in the market has surged significantly due to rising petroleum prices. The impact of increased global fuel costs, exacerbated by geopolitical conflicts in West Asia, has heightened the appeal of electric two-wheelers. Stakeholders note that the demand for electric scooters, in particular, has been overwhelming.

 Before the rise in fuel prices, customers were rarely seen in the market. Now, there is a rush of inquiries. Umid Shrestha, Director of Kuju Nepal, the official distributor for Yadea two-wheelers, states that sales have doubled compared to the past.

 The demand for mid-range scooters is so high that EV importers and dealers are struggling to keep up with imports and market supply. They report that best-selling models are currently out of stock, necessitating further orders.

•  What is the demand for different types of two-wheeler EVs?

 Market trends indicate that mid-range and mid-priced EVs are currently in the highest demand. Sellers report that scooters priced between 150,000 and 300,000 rupees with a range of 80 to 120 kilometers are the most sought after.

 Based on price and capacity, two-wheeler EVs in the market are generally categorized into three types. The first is the low-range category, which includes scooters and mini-scooters with a range of 30 to 50 kilometers, priced between 70,000-80,000 and 150,000 rupees. Some of these require registration, while others do not.

 Second, mid-range two-wheeler EVs, priced between 150,000 and 300,000 rupees, offer a range of 60 to 120 kilometers. However, sellers note that in reality, these vehicles typically provide a range of 60 to 100 kilometers. Such vehicles are the preferred choice for lower-middle-class individuals who commute to work regularly.

 Third are long-range vehicles, which offer a range of 120 to 200 kilometers. Some sellers even claim a range of up to 300 kilometers for these vehicles. The price for these vehicles is set between 300,000 and 600,000 rupees.

•  Attraction to mid-range due to cost-effectiveness

 Recently, the largest share of those looking to shift to electric vehicles belongs to the lower-middle class. Sellers note that there is a higher attraction to EVs among individuals who already own petrol-powered motorcycles or scooters but are facing financial burdens in daily commuting due to high fuel prices. 

 ‘Many people want to sell their existing motorcycle or scooter and purchase a new one with a small down payment and installments. Because a small amount covers the down payment and the EMI is manageable with the money saved on petrol, there is high demand for the mid-range,’ says a dealer operator, ‘The cost of electricity for an EV is not even 10 percent of the cost of petrol, and the rest covers the EMI. The costs of engine oil and servicing are separate matters.’

 On the other hand, despite being expensive, long-range scooters are the choice for those involved in ride-sharing and food or goods delivery. Currently, there is an attraction to these EVs among youth working in ride-sharing apps like Pathao and inDrive, as well as those in the e-commerce delivery sector.

 However, since scooters used for ride-sharing need to be more powerful and there is a fear of running out of charge throughout the day, riders are also focusing on purchasing EVs with battery-swapping facilities as a reliable alternative.

•  Sales increase, but customer skepticism remains

 Although there has been a boom in the sales of two-wheeler EVs, Nepali consumers have not yet fully trusted them. Sellers say this is due to some serious technical, policy, and market management reasons.

 The first reason is the absence of large and reliable brands. Internationally, companies like BYD, Tata, and Tesla have already monopolized the four-wheeler market. Most major manufacturers of petroleum (ICE) vehicles have also shifted to EVs. However, two-wheeler vehicles have not expanded to that level.

 Although established companies like Mahindra, Bajaj, and TVS have introduced electric scooters and motorcycles, there is no variety, which is why those brands have not been able to make much of an impact in the Nepali market. Yamaha has not yet provided a full EV facility, but has brought a hybrid-type product to the market.

 Nevertheless, business houses that are official distributors of major brands in Nepal are trying to win customer trust by selling new brand scooters. For example, the Vaidya Organization, the official distributor of Toyota, is selling Indian Ather brand scooters through Vaidya Energy.

 Apart from this, some brands have been providing good service in Nepal for the past 5-7 years. They have been providing after-sales service through various service centers and giving full guarantees on warranties. Despite this, the general perception of two-wheeler EVs is not very positive.

•  Obstacles to EV expansion: Policy instability and ‘under the table’ transactions

 Shankar Sharma, Sales Head of Sarathi Nepal, says the main reason for this is policy instability and the weakness of regulatory bodies. He says the government process for testing and approving EVs imported into Nepal is not transparent at all.

 ‘In some cases, low-quality and unsuitable vehicles are approved for import into Nepal based on influence and access. But in other cases, suitable vehicles are delayed on various pretexts,’ he says, ‘When transactions have to be done under the table anyway, there is no sense of fear or responsibility among the sellers.’

He adds, ‘Buying a vehicle is not like buying clothes where it is over after the sale. Here, after-sales service is as important as the sale. But the trend of selling 200-400 scooters overnight and disappearing has broken the customers' trust in EVs.’

 According to him, even well-known brands do not provide good service, but because there is no shortage of spare parts in the market for them, this problem has not surfaced to the same extent.

 Sharma suggests that the government should introduce a strict policy to solve this problem. He says there should be a mandatory provision for such vehicle importers or dealers to deposit a certain amount with the government, ensure the availability of spare parts and service centers, and if that is not done and customers complain, the government should confiscate that deposit amount to manage the customers.

•  Resale value is another obstacle

 Another main reason for the skepticism regarding two-wheeler EVs is the uncertainty of resale value. Kuju Nepal's Shrestha says that currently, if any customer wants to sell their two-wheeler EV in the second-hand market, there is no way to determine its value.

 However, the resale value of petroleum vehicles can at least be estimated. A petrol-powered scooter or motorcycle bought five years ago fetches 30-40 percent of its value when sold now. But in the case of an EV, after 5 years, buyers are barely willing to pay even 10 percent. However, Director Shrestha claims that since EVs have just entered the mass market, their resale value will also increase in the coming days.

 Regarding the low resale value of EVs, sellers try to convince customers in a different way. They claim that even without resale value, EVs are cheaper than petrol. Shrestha says this is how they convince customers. 

 ‘If a customer adds up the expenses from the time of buying the vehicle to the end, the cost of running one petrol motorcycle or scooter is equivalent to buying two scooters,’ he says, ‘We have found that customers are convinced once they understand that they are in profit even without resale value when they add up the daily expenses on petrol and the savings on servicing. But the skepticism still remains.’