Escalating tensions in West Asia have begun reshaping Nepal’s automobile market, pushing consumers towards electric vehicles (EVs) amid fears of fuel shortages and rising prices. With demand surging, dealers say they are in no mood to roll out discounts for the upcoming Nepali New Year, which begins next week.

The conflict involving Iran has severely disrupted oil exports through the strategically vital Strait of Hormuz, which carries about a fifth of the world’s oil and liquefied natural gas. Attacks targeting Iranian oil infrastructure have rattled global energy markets, sending oil and gas prices higher and fuelling inflation concerns worldwide.

EV dealers say the impact is already visible in Nepal. Sales have started to pick up since the Iran war entered its second month, said several dealers interviewed by the Post. With continuing uncertainty, demand is expected to grow further.

Yamuna Shrestha, managing director of Cimex Inc, the authorised distributor of Chinese EV giant BYD, said bookings have surged sharply in recent days. “We recorded 30 to 40 bookings of BYD vehicles in just the past two days,” she said.

However, the surge in demand is being accompanied by rising costs. Distributors say EV prices are increasing due to higher freight charges and the strengthening US dollar.

The Nepal Oil Corporation has raised the prices of petroleum products for the third time in less than a month. On Friday, the state-owned monopoly increased petrol and diesel prices by Rs15 per litre each, taking petrol to Rs202 per litre and diesel to Rs182 per litre in the Kathmandu valley.

Ramesh Danekhu, assistant general manager for marketing at Changan Nepal, the authorised distributor of Deepal EVs, said EVs have once again come into the spotlight since the outbreak of the conflict.

“As people speculate about fuel shortages, inquiries, bookings and purchases have all increased sharply,” he said. “We are now receiving six to seven bookings daily, compared to fewer than two before the Iran conflict began. Around 90 percent of bookings are converted into sales.”

Danekhu added that meeting demand is becoming increasingly difficult. “Our stock is being cleared quickly, and even incoming shipments are already booked,” he said, noting that the company is not planning any New Year promotional offers due to strong demand.

Nepal has drawn global spotlight for its second-fastest rate of EV adoption in the world, with more than 70 percent of new car sales in 2025 being electric, according to data from global energy think tank Ember. Only Norway ranks higher, with a 97 percent EV share. Nepal has surpassed countries such as Denmark, Sweden and Iceland, and is far ahead of major markets including the UK, Germany and the United States.

Despite the usual seasonal slowdown in March, dealers report a significant uptick in activity.

“March is typically an off-season for vehicle sales, but inquiries, bookings and deliveries have increased by 50 to 60 percent,” said Shyam Sapkota, president of the Electric Vehicle Importers and Manufacturers Association of Nepal.

Sapkota, who is also chairman of Henrey Mincar Nepal, said sales of Henrey EVs have exceeded expectations. “We delivered 10 units in the last week of March alone, compared to our monthly average of six to seven,” he said.

Overall EV imports, however, had declined earlier in the fiscal year. Imports fell by 13 percent in the first eight months ended mid-March, largely due to prolonged disruptions and irregular operations along northern trade routes.

According to the Department of Customs, Nepal imported 7,434 EV units—including buses, minibuses, cars, jeeps and vans—worth Rs18.20 billion during the review period from mid-July 2025 to mid-March 2026.

Imports of internal combustion engine vehicles also declined by 13.11 percent, with 3,251 units worth Rs4.77 billion brought into the country.

In total, Nepal imported 16,701 EVs worth Rs41.23 billion, compared to 22,907 fossil fuel-powered vehicles worth Rs50.88 billion.

Dealers say demand has rebounded sharply since late March, but rising costs are beginning to weigh on prices. The Nepal Freight Forwarders Association reports that freight charges have tripled, while the Nepali rupee has weakened to a historic low, with the central bank fixing the exchange rate at Rs150.24 per US dollar last month.

“With rising freight costs, transport charges and a stronger dollar, EV prices are bound to increase,” dealers said.

Industry insiders warn that global crude oil prices could climb as high as $200 per barrel if the Strait of Hormuz remains closed, potentially triggering severe supply disruptions.

Danekhu said prices of Deepal EVs are set to increase by Rs50,000 to Rs100,000 depending on the model. Sapkota added that rising lithium prices in China are also likely to push EV prices higher.

Meanwhile, the government is exploring ways to accelerate the shift to electric mobility. A Cabinet meeting on Sunday decided to introduce legal provisions for EV retrofitting—allowing existing petrol and diesel vehicles to be converted into electric ones.

The process involves replacing the internal combustion engine and related components with an electric powertrain while retaining the vehicle body. Officials say the move will help vehicle owners extend the life of their existing assets while contributing to environmental protection.