The agreement follows talks between the Prime Minister of Bhutan Tshering Tobgay and Nissan CEO Carlos Ghosn in Thimphu last year. Ghosn returned to the capital of Bhutan to make the announcement alongside the Prime Minister.

Bhutan’s government is targeting EVs as a key strategy to achieve its goal of becoming a zero emissions nation. It envisages Thimphu as a “clean-electric” city in which transportation for its more than 100,000 citizens is powered by clean energy.

Bhutan (population 725,296 as of a 2013 estimate) generates sufficient hydro-electricity that clean energy is the country’s major export, but it must import fossil fuels to run its current vehicle fleet. According to the US Energy Information Administration (EIA), Bhutan imports about 1.74 thousand barrels of petroleum products per day.Bhutan is seeking to reduce its oil imports significantly.

As a first step in the cooperation, Nissan will deliver Nissan LEAFs for use in the government fleet, and as taxis, as well as demonstration units for the national rollout of EVs. Quick chargers will also be supplied to implement the government’s plan for infrastructure covering the entire Himalayan nation. Feasibility studies for further technical cooperation are included in the details of the agreements.

The Royal Government of Bhutan will study implementation of an exemption from the green tax, sales tax and custom duty for EVs as well as a carbon credit scheme where the sale of EVs will earn credits that can be traded for tax exemptions for imported internal combustion engine-powered (ICE) vehicles.