The remote Himalayan kingdom of Bhutan signed a deal with Japanese auto giant Nissan Friday to become the ultimate showcase for electric cars, taking advantage of its abundance of hydropower.

The announcement was made during a visit by Nissan chief executive Carlos Ghosn to Thimphu, the picturesque capital of Bhutan.

Prime Minister Tshering Tobgay said electric vehicles would help meet a target of zero emissions.

"An important part of that plan will be sustainable and environmentally-friendly zero emission transport," he added at a joint press conference with Ghosn.

"We don't want to rely on and we don't want to buy fossil fuel," he added.

To mark the announcement which came on the birthday of Bhutan's revered king, Nissan said it was donating two of its Leaf electric vehicles to the government.

It will also supply Bhutan's pool of government cars and fleet of taxis with the same model for an undisclosed price.

Nissan plans to set up a network of charging stations across Thimphu, which industry experts see as vital in persuading motorists to shell out for an electric vehicle.

Wedged between India and China, the 'Land of the Thunder Dragon' is famed for its Gross National Happiness development model that specifically takes into account the environment as well as psychological well-being.

Landlocked and mountainous, Bhutan is teeming with rivers and waterfalls that enable it to operate four hydroelectric plants with a combined capacity of 1,400 megawatts -- equivalent to a powerful nuclear reactor.

Most of the electricity is sold on to India but Bhutan also has to import traditional fossil fuels to meet the needs of its motorists.

"(Electric vehicles) will help Bhutan to reduce the use of fossile fuels and the need to import foreign oil," said Ghosn in the press conference.

Ghosn said the deal would make Bhutan an environmental role model, predicting that the government investment would encourage consumers.

"What we are talking about is the very initial step. Because of this vision that we see for Bhutan, you can expect hundreds or hopefully thousands of Leafs (to be) sold in Bhutan," added Ghosn.

- Self-sufficiency -

Tobgay, who came to power after winning Bhutan's second ever elections last July, sees electric cars as a way of becoming more self-sufficient and of demonstrating the rapid development of a nation that only introduced television in 1999.

The prime minister acknowledged that the high price -- the Leaf costs around $20,000 in the United States -- could scare off motorists but said he was hoping for outside help.

"If we can get international agencies and individuals to support us to subsidize one third of that price, it becomes very affordable," he said.

While other capitals in South Asia are often cloaked in pollution, the residents of Thimpu enjoy a largely pristine climate.

As all vehicles have to be imported and are heavily taxed, car ownership is relatively small and taxis are widely used.

Nissan has emerged as the world leader in the electric car market having invested four billion euros with its French partner Renault, which owns more than 40 percent of the Japanese company.

Launched in 2010, the Nissan Leaf is now the best-selling electric car in history after becoming the first model to pass the 100,000 mark for worldwide sales at the end of last year.

One of the Leaf's chief attractions is its special fast charger which can be fired up in just half an hour, a vast improvement on the eight hours that it takes to recharge batteries linked up to the mains electricity.

It can reach speeds of up to 150 kilometres (93 miles) per hour and has a range of 200 kilometres.

The limited range of most green cars and their relatively high prices have proved major hurdles to a growth in sales.

But while the market remains tiny, industry experts expect demand to grow sharply in the next few years as emissions standards across the world are toughened.