Modelling sustainable electric mobility transition in Nepal: Grid seasonality, systemic constraints and endogenous policy feedback within a bifurcated transport fleet

Transport decarbonization in the Global South is often framed as a linear technology substitution, but this framing can fail in Least Developed Countries where grid adequacy, market structure, and public finance interact as binding system constraints. This study examines electric mobility transition viability in Nepal, a hydro-dominant system with strong seasonal variability in run-of-river generation (“Hydropower Paradox”). A multi-sector System Dynamics model with quarterly time steps (2025–2050) is developed to link three coupled domains: (i) a bifurcated vehicle market distinguishing price-constrained mass-market two-wheelers (2 W) from more policy- and tax-responsive four-wheelers (4 W), (ii) seasonal grid adequacy under managed versus unmanaged charging, and (iii) endogenous policy feedback in which fiscal shortfalls increase the risk of regulatory reversal. Under a business-as-usual trajectory, the system converges toward a suboptimal equilibrium: 4 W electrification advances through policy-driven incentives, while 2 W adoption remains stagnant despite being the dominant fleet segment. Unmanaged charging amplifies dry-season adequacy stress and reduces perceived reliability, and erosion of import-related revenues produces a fiscal gap that can approach 40%, reinforcing policy tightening and suppressing mass adoption. An integrated transition pathway is then evaluated that combines targeted 2 W incentives supported by climate finance, charging governance (including grid-interactive battery exchange centres), and a circular-grid strategy that repurposes retired EV batteries as distributed storage. This package improves seasonal reliability during early take-off years and enables sustained 2 W adoption while reducing exposure to fossil-fuel imports. The results provide actionable guidance for hydro-dependent developing economies on incentive design for mass-market electrification, managed charging and storage for dry-season adequacy, and fiscal transition planning to maintain policy credibility and avoid destabilizing reversals. • Nepal's EV transition is constrained by a three-way trilemma: RoR dry-season adequacy, 2 W/4 W market bifurcation, and fiscal fragility. • System Dynamics results show BAU locks in a “divergent transition” (4 W growth, 2 W stagnation), worsening reliability and revenue erosion. • An integrated package (2 W affordability support + managed charging + adequacy-aligned expansion) shifts the system into mass-market take-off. • Battery Exchange Centres operated as VPPs and TOU tariffs flatten peaks, stabilising the grid during early diffusion years. • Early EPR and second-life repurposing convert end-of-life batteries into a strategic storage reserve, supporting energy security, fiscal transition.