Ousting Indian carmakers, China races ahead in Nepal’s EV market, as the country embraces cheap hydropower, slashed duties, and a green transport future.
Nepal has decisively embraced Chinese electric vehicle (EV) manufacturers over Indian brands, marking a shift in the hilly nation’s transport landscape—and a warning sign for India’s auto industry.
Chinese EV makers now command a 52.5% market share in Nepal, as cited by Business Today, overtaking long-dominant Indian brands for the first time in FY2025.
According to a report by the South China Morning Post, this change comes amid Nepal’s strategic drive to reduce reliance on imported fossil fuels, which until recently were sourced entirely from India. With 85% of its electricity generated from clean hydropower, Nepal moved quickly to cut duties on EV imports and incentivise electric mobility.
The results have been striking: three out of every four new cars sold in Nepal last year were electric, and nearly 70% of those vehicles were manufactured in China.
“This should concern Indian automakers,” said industry analyst Jayant Mundhra on LinkedIn. “For years, Tata, Mahindra, and Maruti held sway in Nepal. Now, that grip has vanished, and it wasn’t because the rules changed—it was a level field.”
China’s EV giants, including BYD and MG’s Windsor, have capitalised on their expansive product lines and competitive pricing. Even in India, where high import duties apply, Chinese EVs have begun gaining traction.
“Despite paying steep tariffs, Windsor’s EVs are undercutting Indian models and offering better features,” added Mundhra. “It shows where the real competition lies.”
Nepal’s push toward electrification has been enabled by a surge in hydropower generation over the past decade. The country now sources 99% of its baseload power from hydroelectric projects, with 95% of households connected to the grid. The government’s goal is for 90% of new private vehicle sales to be electric by 2030, aiming to become carbon neutral by 2045.
Yet the rapid shift is not without challenges. Environmental groups have raised concerns over the ecological impact of large-scale dam projects, especially in protected areas. Others warn that Nepal lacks a clear plan to manage future electronic waste, particularly lithium-ion batteries.
Still, Nepal’s EV revolution signals a broader regional reality. In a liberal, price-driven market powered by green energy, Chinese automakers have seized the advantage.
For India’s carmakers, the message is clear: protectionist policies may delay competition at home, but dominance abroad will be difficult to maintain without innovation and global competitiveness, said Mundhra.
