Electric Mobility Could Save Billions in Fuel Costs, But Structural Limits Remain, Study Suggests

Kathmandu — A recent presentation by the Nepal Electricity Authority has projected significant economic and environmental benefits if Nepal accelerates the shift from fossil fuel-powered transport to electric vehicles (EVs), highlighting potential savings in fuel imports, foreign exchange, and carbon emissions. However, experts caution that several structural barriers may limit the scale and speed of such a transition.

According to data presented by NEA Director Sagar Mani Gyawali, Nepal currently consumes an average of 2.22 billion litres of petrol and diesel annually. Of this, around 80 percent is used in the transport sector, making mobility the dominant driver of fossil fuel demand in the country.

The presentation estimates that if 30 percent of Nepal’s transport fleet — from motorcycles to heavy trucks — is replaced by electric vehicles, the country could save around 1.4 million litres of fuel per day. On an annual basis, this translates to approximately 511.7 million litres of fuel savings.

Financially, the shift is projected to reduce fuel expenditure by around Rs 1.4 billion per day, or approximately Rs 53.66 billion annually. In addition to fuel savings, the presentation claims that carbon emissions could be reduced by about 3,575 tonnes per day, or 1.3 million tonnes per year.

Based on current carbon market assumptions cited in the presentation, this reduction could potentially generate around Rs 88 crore annually through carbon trading mechanisms.

The study also highlights that Nepal already has a small but growing EV base. Around 45,000 electric vehicles are currently in operation, accounting for roughly 2 percent of the total vehicle fleet. These vehicles are estimated to consume about 500,000 kWh of electricity per day, replacing approximately 165,000 litres of fossil fuel daily.

This existing EV usage is already saving an estimated Rs 173 million per day in fuel imports, amounting to about Rs 6.32 billion annually in foreign currency savings, according to the presentation. Additionally, current EV adoption is linked to an estimated Rs 10.14 crore in annual carbon credit earnings.

Despite these optimistic projections, transportation and energy experts have raised concerns about the assumptions behind the analysis. Critics argue that the model may not fully reflect the operational realities of Nepal’s transport system, particularly in heavy-duty logistics.

They note that large freight trucks, which consume a significant share of diesel, are the most difficult segment to electrify due to limitations in load capacity, battery range, and performance in steep terrain. At present, electric alternatives for heavy trucks are not widely available or commercially viable in Nepal’s operating conditions.

Experts further point out that while two-wheelers represent a large portion of fuel consumption and are technically easier to electrify, EV penetration in this segment remains low relative to total imports. Electric two-wheelers account for only about 5 percent of total vehicle imports, limiting their current macroeconomic impact.

Among Nepal’s estimated vehicle stock, around 45,000 units are electric, with most concentrated in passenger cars, jeeps, and vans — categories that comparatively consume less fuel than heavy freight transport. This raises questions about how much real-world fuel displacement current EV adoption is achieving.

The debate highlights a broader policy challenge: while Nepal’s EV transition shows strong theoretical economic and environmental benefits, the actual impact depends heavily on infrastructure readiness, vehicle mix, grid capacity, and commercial feasibility of electrifying high-consumption transport segments.

Analysts say that without parallel investment in charging infrastructure, electric freight technology, and targeted incentives for high-fuel-use vehicles, the projected savings may remain only partially achievable.

Still, policymakers view electric mobility as a key long-term strategy for reducing Nepal’s dependency on imported fossil fuels, improving energy security, and meeting climate commitments. The current discussion underscores both the scale of opportunity and the complexity of implementation.