Brief Overview of Pakistan's Electric Vehicle Policy

[Riaz Haq]

Pakistan has a low level of motorization with just 9% of the households owning a car. Nearly half of all households own a motorcycle. Motorization rates in the country have tripled over the last decade and a half, resulting in nearly 40% of all emissions coming from vehicles. Concerns about climate change and environmental pollution have forced the government to to take a number of actions ranging from adoption of Euro6 emission standards for new vehicles with internal combustion engines (ICE) since 2015 and announcement of a national electric vehicle (EV) policy this year.

Vehicle Ownership in Pakistan. Source: PBS

EV Policy:

Pakistan electric vehicle policy 2019 sets EV adoption targets and includes incentives for buyers and manufacturers. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles. Here are some of the salient points of the policy:

 Policy Targets: 

1. Goal for cars: 30% of new sales by 2030 and 90% of new sales by 2040

2. Goal for 2 and 3 wheelers: 50% of new sales by 2030 and 90% of new sales by 2040

3. Goal for buses: 50% of new sales by 2030 and 90% of new sales by 2040

4. Goal for trucks: 30% of new sales by 2030 and 90% of new sales by 2040

Buyer Incentives: 

1. 1% GST for EVs vs 17% for regular vehicles

2. Lower electricity tariffs for EVs

Charging Infrastructure: 

1. Only 1% import duty on charging equipment.

2. Lower power tariffs for charging stations.

3. One fast DC charging station per 3km by 3km area in all major cities

4. DC fast chargers on all motorways every 15-30 km.

5. Ensure uninterrupted power on feeders for charging stations.

Manufacturer Incentives: 

1. All greenfield investments apply to EV manufacturers and those converting their existing facilities to manufacture EVs.

2. State Bank to offer lower rate financing for EV manufacturing.

Summary:

Announcement of National Electric Vehicle (EV) Policy 2019 by Pakistan government is a step in the right direction. It is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles.  Meanwhile it's crucial that Euro6 emission standards be seriously enforced with proper inspections to limit emissions from internal combustion engine (ICE) vehicles being sold now.

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[Riaz Haq]

EVs’ manufacturing licenses: two, three wheelers take front seat in Pakistan - Technology - Business Recorder


https://www.brecorder.com/news/40273844

In Pakistan, 32 companies have so far received manufacturing licenses under the Electric Vehicles (EVs) Policy 2020–2025 and all of them are two and three wheeler manufacturers, a govt official told Business Recorder on Friday.

No four wheel manufacturer has approached the government till date for the license under EVs policy, said Asim Ayaz, General Manager Policy, Engineering Development Board (EDB).

“One or two companies are working on EV four wheelers. However, no formal request has been received so far for the licenses,” he said. “We believe that EV penetration will be more in 2-3 wheelers, which shows the interest of manufacturers. And it will happen at a fast rate.”

The electrification of 2-3 wheelers would be followed by cars, but at a slower rate, he added. “Electrification of cars will be followed by buses on fixed routes.”

According to the Ministry of Climate Change, the transport sector is the leading factor in the deterioration of environmental conditions with a share of 43% in Pakistan’s current environmental woes. Pakistan is one of the most affected countries due to climate change.



To put things in perspective, there are 26,884,786 registered motorcycles (two-wheels) in Pakistan; 1,001,860 three-wheelers; 4,499,423 four-wheel vehicles, according to Pakistan Economic Survey 2022-23. The total registered vehicles including two-, three-, four-wheels, buses and trucks on Pakistan roads are 34,907,449. The number includes all vehicles registered till September 2022.

The government of Pakistan approved an ambitious National Electric Vehicles Policy (NEVP) in 2019 that aimed at seeing electric vehicles take 30% share of all the passenger vehicle and heavy-duty truck sales by 2030, and 90% by 2040. Meanwhile, a more ambitious goal was set for two- and three-wheelers and buses at 50% of new sales by 2030 and 90% by 2040.

“There’s slow progress in that direction. At the present pace, the targets set for 2030 will be missed by a big margin,” said Dr Aazir Anwar Khan, Founder and Director Integrated Engineering Centre of Excellence (IECE), University of Lahore.

However, an official of the Ministry of Climate Change disagreed and said the electrification of automobiles was gradually gathering pace.

“You’ll see electric buses in Karachi and now electric bikes and EVs are not rare sights anymore,” said the official, on condition of anonymity.

What’s happening on the ground?

Electric bikes and cars are now making it to showrooms in Pakistan. One can now see an electric bike, e-tron – a high-end electric car or an electric bus every now and then. It’s not a rarity anymore.

At Karachi’s main two-wheel – motorcycle market Akbar Road, Sabir Sheikh, who owns half a dozen shops, is already seeing behavioral change of buyers.

“Motorcycle buyers have started to inquire about electric bikes, scooty, and scooters options. I believe many have postponed buying a normal two-wheeler with expectations that an electric two-wheel model may soon enter the market that is closer to their need,” said Sheikh, who is also the Chairman, Association of Pakistan Motorcycle Assemblers (APMA).

Sheikh said he also plans to start his own company to manufacture two-wheel EVs, assembler them, and also sell the electric bikes. He has run a motorcycle manufacturing company with the name Sitara in the past.

Sheikh is already selling electric scooters at his shops.

Transitioning to electric bikes

Sources privy to the matter said the ministry of climate change is the secretariat of electric vehicles policy, which can incentivise the sector for faster adoption.

Meanwhile, Aazir Khan has been an advocate for widespread EV adaption and removal of fiscal barriers on its offering to the public through scoping and advocacy studies under the Pakistan EV oversight committee.

[Riaz Haq]

Planned assembly plant in the country would mark carmaker’s first venture into south Asia as it expands globally

https://www.ft.com/content/bf1e6817-5313-4b6e-8e47-9e2960d30ecc

Chinese electric-car maker BYD’s expected expansion into Pakistan has raised hopes in the country that the Warren Buffett-backed company can help jump-start exports in the automotive manufacturing sector. Pakistan’s biggest private electricity producer Hub Power (Hubco) said last month that its subsidiary Mega Motor was entering a partnership with the Tesla rival to set up the country’s first electric vehicle assembly plant by 2026. BYD’s Pakistan plan would mark the company’s first venture into south Asia after being blocked in India by Prime Minister Narendra Modi’s government, which has restricted Chinese investment. Hubco’s chief executive Kamran Kamal said in an interview with the Financial Times that the ultimate goal was for Pakistan to start exporting vehicles from the plant near Karachi’s Port Qasim. “We have big ambitions to be the leading carmaker in this country by the end of the decade,” said Kamal. “For any industry in Pakistan to be competitive, they should be focused on the export market.” Pakistan’s finance minister Muhammad Aurangzeb said the government was encouraging BYD to export to markets in Africa and south Asia, including Bangladesh and Sri Lanka. Trade between India and Pakistan has been reduced since 2019 after a security crisis between the two countries. “We want that Pakistan becomes an export hub, period,” Aurangzeb said in a separate interview with the FT. “Korean brands are here, the Japanese brands have been here . . . but the reality is we haven’t been exporting.” BYD said details of its Pakistan plans had yet to be formally announced and declined to comment further. The company’s expansion into south Asia comes as it is also establishing factories in Turkey, Hungary, Thailand and Brazil. BYD has also been scouting locations for a new factory in Mexico. The carmaker is expanding its manufacturing footprint beyond China as countries impose increasing tariffs on Chinese exports, including on EVs, solar panels and wind turbines. Tu Le, founder of consultancy Sino Auto Insights, said the aggressive international expansion plans would help BYD export to fast-growing markets despite tariffs in the US and Europe. But he warned that BYD should not expect the same “unfettered growth” the company has enjoyed in China as it learns to manage factories in different countries. “Chinese companies are used to having a lot of control. What they are going to find is that due to labour laws, different work ethics, different cultures, they’re going to have a lot less control than they normally would,” he said. Recommended The Big Read The ambitions of China’s BYD stretch well beyond electric vehicles Hubco is a joint venture partner for a number of Chinese power projects established under the China-Pakistan Economic Corridor, a $60bn infrastructure network that is part of Beijing’s Belt and Road Initiative. The company has no prior experience manufacturing vehicles but it aims to use its extensive power generation network to set up EV charging infrastructure throughout the country of 240mn people, Kamal said. The exact size of the investment and the types of models that will be assembled in the Karachi plant “are being discussed”, he said. Hubco said it expected to sell 100,000 BYD plug-in hybrid and fully electric cars in Pakistan a year by 2030, representing about a quarter of total cars sold in Pakistan, according to the company’s estimates.

[Riaz Haq]

Competition for producing new energy vehicles (NEVs) has intensified as Sazgar Engineering Works Ltd (SEWL) plans to introduce the completely knocked down (CKD) model before Dec 31, 2025.

https://www.dawn.com/news/1860776

In a stock filing on Monday, SEWL said the board of directors had approved the plan, which includes the expansion of the existing paint shop, construction of new warehousing facilities, installation of a solar system of 4-megawatt and construction, erection, installation of new manufacturing facilities for the local assembly of NEVs subject to the approval of relevant government regulatory authorities.

The board also approved an estimated expansion cost of Rs4.5 billion, excluding land, which will be financed from the internal cash resources.

SEWL’s profit swelled by 697pc to Rs7.94bn in FY24 from Rs995m in FY23. Net sales rose to Rs57.6bn from Rs18bn.

The board also recommended a final cash dividend of Rs12 per share in addition to the interim already paid at Rs8 per share.

Besides Sazgar, Dewan Farooque Motors Ltd (DFML) last week said it had started production of EVs at its assembly plant after receiving approval from the Engineering Development Board (EDB).

China’s electric vehicle leader, BYD, has also announced plans to test the potential of EVs in Pakistan. Master Changan Motors Ltd has also launched its EV vehicles — Deepal L07 sedan and Deepal S07 SUV in Karachi — now available at the company’s 18 dealership network across 12 cities.

[Riaz Haq]

Pakistan Aims to Slash Power Prices for EV Charging Stations

https://finance.yahoo.com/news/pakistan-aims-slash-power-prices-110...

(Bloomberg) -- Pakistan is looking to stimulate demand for electric vehicles by reducing power prices at charging stations, as the country attempts to kickstart the decarbonization of its transport sector.

The South Asian nation will create demand “by bringing down drastically the prices for new sectors including EVs,” Power Minister Awais Leghari said in an interview. The government is discussing a pricing structure and the incentive would apply to all charging and battery swapping stations for small cars, two-wheelers and three-wheelers, he added.



More than half a dozen auto companies, led by Chinese brands, have launched EV models in Pakistan this year. Chinese EV maker BYD’s local partner Hub signed an agreement with the country’s largest fuel retailer, Pakistan State Oil, this month to jointly establish an EV charging network across the nation.

Meanwhile, the country has seen a drop in electricity demand while prices have soared and the government has had to secure loans from the International Monetary Fund.

As part of the $7 billion loan requirements, the government is working on a flurry of reforms to restore the energy sector’s viability. The nation is in talks to revise purchase contracts with local power companies and reprofiling debt with Chinese lenders.

Prime Minister Shehbaz Sharif’s administration also wants to move away from the existing model of the government being the sole buyer of electricity, and create a wider market, Leghari said.



The independent market operator system will be functional by March and broader trade is expected to pick up within a year, he said.

[Riaz Haq]

Pakistan rolling out a green carpet for global EV makers - Asia Times

https://asiatimes.com/2024/12/pakistan-rolling-out-a-green-carpet-f...

Pakistan’s New Energy Vehicle (NEV) policy targets 30% electric vehicle (EV) adoption for new vehicles by the end of 2030 and envisions a gradual transition to a zero-emission road fleet by 2060, positioning itself as an emerging player in the global EV market.
In January, China’s BYD partnered with Habibullah Khan to enter Pakistan’s market. Khan’s holding company, Mega Conglomerate, owns Hub Power Company, one of the largest independent power producers (IPPs) in the country. The announcement said the BYD vehicles would be imported rather than produced domestically.

An EV boomlet has followed. Pakistan’s Nishat Group announced its automobile division would debut an EV with South Korea’s Hyundai, while another private enterprise issued a statement committing a US$250 million investment in Pakistan’s EV market.

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While US and UK EV makers face increasingly difficult situations in their home countries, local partnerships with Pakistan-based companies could make strategic sense.

“We’re offering a range of incentives, including tax breaks, subsidies, and investment in infrastructure development,” said Minister Leghari.

“We’re also establishing a one-stop shop for investors, providing them with all the necessary information and support to set up their businesses in Pakistan. Our goal is to create a level playing field for all investors, regardless of their country of origin,” he said.

While EV demand is stalling in some Western countries, it’s growing robustly in Pakistan. And Pakistan’s geographic location connects with South Asia, Central Asia and the Middle East, providing a gateway not just to Pakistan but to many other countries just starting to adopt EVs.

“Our goal is to create a competitive and business-friendly environment that encourages global automakers to set up their manufacturing facilities in Pakistan and export to regional markets,” Leghari said.

To promote EV manufacturing investment, the government is providing NEV-specific technology zones at reduced cost space, leasing options and green loans. Other financial incentives will include a 1% customs duty on NEV parts and 10% on complete NEV imports until 2027, along with sales tax exemptions for locally manufactured components.

Other incentives include a reduced goods and services tax rate of 1% for EVs, low electricity tariffs and an import duty of only 1% for charging equipment.

Leghari says his ministry is exploring more incentives, such as offering lower financing rates from the state bank to attract global automakers facing challenges in their home markets.

While the prospects for Pakistan’s EV market are promising, there are still several challenges and risks. Like elsewhere, one major hurdle is the lack of charging stations, which obviously is crucial for the widespread EV adoption.

Leghari said the government is promoting public-private partnerships to invest in the development of charging infrastructure. The ministry is also working on standardizing EV charging stations and providing incentives for their installation.