SBP warns NEV policy faces funding, infrastructure challenges

August 19, 2026 (MLN): SBP has highlighted key funding, infrastructure and implementation challenges facing Pakistan’s New Energy Vehicles (NEV) Policy 2025–30, warning that the success of the country’s electric vehicle (EV) transition will depend on a sustainable financing model and coordinated policy execution, according to State Bank of Pakistan's (SBP) Half Year Economic Report. 

Driven by the critical imperatives of reducing greenhouse gas emissions with the transport sector accounting for nearly 10% of national carbon output and managing a staggering average annual oil import bill of $15.8bn, the policy represents a vital structural transition.

Against the backdrop of ongoing Middle East volatility, SBP emphasize that accelerating EV adoption is a crucial buffer to cushion the national economy against future oil import shocks.

The current framework builds directly on stakeholder consultations and the painful lessons of the 2019 EV policy, which faced severe implementation bottlenecks amid COVID-19 disruptions.

Already, localized assembly of eco-friendly vehicles is gaining traction, with electric car production rising to 137 units in H1-FY26.

To sustain this momentum, the new strategy coordinates interventions across four key pillars: pricing affordability, charging grid deployment, consumer demand-side incentives, and institutional alignment.

However, SBP’s half-yearly report highlights significant structural risks to this transition. The policy's Rs 122bn feebate funding mechanism relies entirely on conventional auto demand, funded via 1% to 3% levies applied on the invoice price of conventional internal combustion engine (ICE) vehicles.

Any structural shortfall in conventional vehicle sales could immediately jeopardize the continuity of EV subsidies and infrastructure funding. International peer models, such as India’s 20% to 40% upfront ex-factory price subsidies or Malaysia’s RM 2,400 individual tax rebates, offer far more stable funding avenues than relying on restrictive domestic levies.

Charging infrastructure also faces an uphill battle. Low initial EV adoption rates are depressing projected commercial returns, which in turn discourages private investment in charging grids.

SBP recommends adopting state-led charger deployments in targeted urban centers, mirroring successful initiatives in Indonesia and Brazil, to build private sector confidence.

Furthermore, while Pakistan's manufacturing localization currently favors two- and three-wheelers, China's experience suggests that the country must phase in coverage of heavy vehicles for a substantial environmental impact.

Coordinated through the newly proposed National Energy Vehicles Centre (NEVC), streamlining regulatory overlaps and enhancing technical capacity will determine the policy's ultimate success in boosting industrial competitiveness

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