An electric bus in Kathmandu. Image from Wikicommons. License CC BY-SA 4.0

This article was submitted as part of the Global Voices Climate Justice fellowship, which pairs journalists from Sinophone and Global Majority countries to investigate the effects of Chinese development projects abroad. Find more stories here.

Electric Vehicles (EVs) account for 75 percent of all new car sales in Nepal. This is the second largest share of new electric car sales worldwide, only behind Norway, where the figure is at 90 percent. In the financial year 2023–2024, Nepal imported a total of 11,701 electric four-wheelers, up from 1,297 in 2016–2017.

Nepal imports most of its electric vehicles from India and China, but Chinese brands such as BYD, MG, Avatr, and Xpeng have taken over the market. In fact, nearly 70 percent of electric cars last fiscal year (8,065 units) were imported from China.

“Nepal imported most electric vehicles from China last year. These past few days, I saw many popular Chinese EV brands on the streets of Kathmandu,” says Zhu Xiansong, Director of Overseas Sales at CHTC KINWIN, which manufactures electric passenger vehicles in Nanjing, China, and supplied 40 electric buses to Nepal two years ago.

Xiansong, who was in Kathmandu in March 2025 for a Symposium on Transforming Public Transport in South Asia, added that Nepal was a viable market for Chinese EVs as well as a prime entry point to other markets in South Asia, given similar topography and road infrastructure:

As such, we are talking with our partner here in Nepal to start local manufacturing. We also plan to hire Nepali technicians to work with us in Nanjing to further promote our business as well as bring back technical know-how to maintain electric vehicles in Nepal.

For China, Nepal is a perfect market for its supply capacity. Nepal is heavily dependent on imported fossil fuels — particularly for transport — and suffers from severe air pollution in cities like Kathmandu. However, it lacks the capital and manufacturing base to launch an EV transition alone. China can fill this gap with affordable vehicles (anywhere between USD 28,000–62,000), concessional loans, and public-private partnership models.

A transport shift for Nepal’s energy security?

Nepal has an energy grid capacity of nearly 3,400 Megawatts, most of which is clean hydropower. The government has plans to generate 28,500 Megawatts in the next 10 years. While the grid is fairly clean, it’s far from perfect. During the dry season (from October to June), generation reduces to one-third of its total capacity because of low water levels in rivers. Meanwhile, there is a surplus during the monsoon season (June to September).

However, India’s refusal to buy electricity from plants with Chinese involvement means Nepal has a limited export market and must increase domestic demand or risk wasting its precious electricity. Experts say the electrification of transport is one of the low-hanging fruits.

Meanwhile, petroleum makes up nearly 20 percent of the country’s imports and is more than all of their exports combined. Reducing petroleum imports by just 10 percent will save more than USD 220 million a year. As it is, Nepal’s petroleum imports are already falling, aided by the electrification of transport and cooking.

As such, electric transport will not just clean up the air and in turn, improve public health given that air pollution was associated with over 41,000 deaths in Nepal in 2019, but also boost the country’s economy by reducing its trade deficit with India which is over NPR 850 billion (over USD 6 billion).

Government incentives

In addition to hydroelectricity, the growth of electric vehicles in Nepal has been aided by tax rebates and government subsidies.

The budget in 2024  saw overall tax on electric vehicles increase with excise and customs up by 5–20 percent.

Kathmandu residents driving two-wheeled motorbikes. Image from Flickr. License CC BY-SA-2.0

However, there are no tax rebates for electric buses, which makes them about five times as expensive as petrol buses of the same size. Two-wheelers aren’t incentivized either, even as there are over 1.2 million motorcycles and scooters in Kathmandu. Just from the sheer size of users, electrification of public transport and even two-wheelers would mean higher consumption of hydroelectricity, less road congestion, and better access to transport for all.

Urban planner and environmentalist Bhushan Tuladhar told Global Voices during an interview in Kathmandu:

Public transport is of utmost importance for the mobility of women, elderly, people with disabilities, and other minorities, and access to the dignified public which means no pollution, no noise, among others that comes with electric buses is a fundamental right.

But in February 2025, the Nepal Rastra Bank, the country’s central bank, revised its “Loan-to-Value (LTV) Ratio” such that electric vehicles now need a down payment of 40 percent, up from 20 percent. However, such a decision undermines the Nepal government’s own transport goal to ensure that 90 percent of all private vehicles and 60 percent of public transport are green by 2030.

Gongabu bus station in Nepal. By Sergey Ashmarin, Wikicommons. License CC BY-SA 3.0,

At present, a quasi-government-owned company, Sajha Yatayat, operates 40 electric buses in Kathmandu Valley, and it plans to expand its fleet with 100 more electric buses under a new government-to-government agreement with China.

Nepal’s public transport is run entirely by the private sector with little to no government investment, it does, however, regulate transport fares, which many have called unfair. There is also a sizeable pollution tax collected over the year that experts say could be used to invest in electric public buses.

Alok Jain, an international Nepali expert on public transport who spearheaded the Kowloon Motor Bus (KMB) initiative in Hong Kong was also at the symposium last month and said that the government could centralise public transport and pay for it, as it is the ultimate benefiter, while also highlighting the significance of electrification of transport. He told the Nepali Times:

The initial cost of electric buses is very high, and not all governments have that kind of money. But those that have done the transition know that the total cost of ownership of EV is actually cheaper, whatever you pay upfront you recover quickly and you make a profit because operating and maintenance costs are much lower.

China’s interests

China’s growing investment in Nepal’s electric public transportation sector, particularly in e-buses and charging infrastructure, is shaped by a combination of geopolitical strategy, industrial policy, and green diplomacy. These motivations reflect not only China’s domestic economic interests but also its broader ambition to reposition itself as a leading development partner for the Global South.

Nepal is sandwiched between regional rivals China and India. Strengthening bilateral ties with Nepal through infrastructure projects — including electric public transit — helps China expand its influence in South Asia and counter India’s traditional dominance in the region. E-buses, as visible public services, are particularly effective soft-power tools, demonstrating China’s commitment to local development and sustainability.

This strategy is closely aligned with China’s “green diplomacy” narrative. As China seeks to rebrand itself as a champion of sustainable development among Global Majority countries, offering low-emission transit solutions to Nepal fits well into its climate diplomacy toolkit. In contrast to Western donors, China’s model emphasises infrastructure without imposing political conditions, making it appealing to resource-constrained governments.

China’s push is also driven by domestic overcapacity in the EV sector. With the production of electric buses and mid-range EVs outpacing domestic demand, companies like BYD, Xpeng, and Zhongtong are actively targeting overseas markets, especially in South and Southeast Asia. These regions offer fast-growing demand, fewer regulatory hurdles, and price-sensitive consumers — conditions under which Chinese EVs thrive.

Additionally, China’s investment goes beyond simply exporting vehicles: it aims to deliver integrated infrastructure solutions. Nepal has abundant hydropower potential but limited energy infrastructure and urban transit. Chinese companies not only sell e-buses but also help build charging networks, design scheduling systems and provide technical training. This “grid-to-bus” approach reflects China’s ability to export a whole green urban ecosystem.

Nepal’s electric mobility shift encapsulates a rare confluence of opportunity to address urgent domestic challenges like air pollution and trade imbalance while engaging with broader regional energy and industrial shifts. Backed by abundant hydropower and rising EV adoption — much of it supported by Chinese investment — Nepal is making tangible progress toward a low-emissions future. Yet this growing reliance also raises concerns around technological dependence and geopolitical influence.

Ensuring the transition aligns with national priorities will require not just foreign partnerships, but strong domestic policy, inclusive planning, and long-term strategic vision.