Stuck in transition: Fuel crisis, Falling resale values, and Nepal’s EV dilemma

Sneha Manandhar

KATHMANDU: Every morning, Rajesh Shrestha, a 42-year-old IT consultant, checks two things: the fuel gauge of his 2018 Hyundai Tucson and the latest headlines on rising petrol prices.

“I want to switch to an EV,” he says. “But I can’t afford to sell my car at this loss.”

His situation is no longer personal—it reflects a broader economic reality shaping Kathmandu’s urban mobility transition.

Fuel Shock Is Driving Interest in EVs

Global oil markets are once again under pressure. Rising geopolitical tensions in the Middle East, including the spillover effects of US–Iran friction, along with post-pandemic demand recovery and supply constraints, have triggered sustained volatility in fuel prices. Strategic chokepoints such as the Strait of Hormuz remain under constant strain.

For Nepal, which relies entirely on imported fuel, the impact is immediate and unavoidable. Petrol prices hovering above NPR 200 per liter have significantly increased the cost of daily commuting.

This has accelerated consumer interest in electric vehicles (EVs), widely seen as a cheaper and more sustainable alternative.

But interest is not translating into actual purchases at scale.

The Real Barrier: Collapsing Resale Values

At first glance, the shift seems obvious: higher fuel costs should push consumers toward EVs.

In reality, a structural bottleneck is slowing the transition—rapid depreciation of petrol vehicles.

Industry estimates, including those from the Nepal Automobile Dealers’ Association (NADA), show that petrol vehicles aged three to five years have lost between 45 and 55 percent of their value since 2022. A car once worth NPR 28 lakh may now fetch barely NPR 14 lakh in the resale market.

At the same time, popular EV models like the BYD Atto 3 and Tata Nexon EV are priced between NPR 40–50 lakh.

The result is a wide financial gap.

“Customers come with intent,” says a vehicle dealer in Naxal. “They want to switch. But once they hear the resale value of their car, the decision stops there.”

This has created what industry insiders describe as a “resale trap”—a condition where consumers are financially locked into petrol vehicles despite wanting to switch.

A Cost Advantage That Still Fails to Convert

From a long-term perspective, EVs offer clear savings.

A typical Kathmandu commuter spends over NPR 25,000 per month on petrol. The same usage in an EV would cost less than NPR 4,000 in electricity. Over five years, this translates into savings of NPR 12–13 lakh.

Yet adoption remains slower than expected.

The reason is simple: short-term loss outweighs long-term gain.

Selling a petrol vehicle today often means accepting a loss of NPR 6–10 lakh. On top of that, buyers must take on additional loans to purchase an EV.

For many households, this combined financial burden outweighs future savings.

The result is a quiet but widespread hesitation across Kathmandu Valley. Consumers are not rejecting EVs—they are postponing the decision.

The Missing Link: No Transition Mechanism

This gap highlights a critical weakness in Nepal’s EV ecosystem: the absence of a structured transition pathway.

There is a large segment of consumers who are ready to switch but cannot absorb the immediate financial shock.

“If banks offered higher financing with longer repayment periods, and if the government introduced scrappage incentives or dealers provided better exchange offers, I would switch immediately,” says a Kathmandu-based car owner. “Right now, I’m just waiting.”

A well-designed petrol-to-EV transition framework could unlock this stalled demand by addressing three key areas:

• Flexible financing from banks to reduce upfront costs
• Government-backed scrappage incentives to offset resale losses
• Dealer-led exchange programs to ease the shift from ICE vehicles to EVs

Even partial intervention in these areas could significantly lower both financial and psychological barriers.

A Market in Waiting

The current fuel crisis has already achieved what years of environmental advocacy could not—it has changed consumer perception. EVs are no longer niche; they are increasingly seen as the practical future of mobility.

Yet Kathmandu remains in a state of transition.

On one side are petrol vehicles—depreciating fast and becoming expensive to run. On the other are EVs—efficient, cost-effective, and aligned with future energy trends.

Between them lies a gap: financial, structural, and psychological.

Closing this gap is not just a policy challenge—it is a market opportunity. With the right mix of financing, incentives, and industry support, Nepal could see a rapid acceleration in EV adoption from a segment that is already convinced, but currently constrained.