PIDE proposes roadmap for Pakistan’s electric vehicle transition

December 16, 2024 (MLN): To accelerate EV adoption and reduce carbon emissions, the proposal suggests that 10% of new 4-wheel passenger cars and 25% of new 2- and 3-wheelers in Pakistan should be electric by 2030.

PIDE has conducted detailed research on Pakistan's automobile industry, focusing on the transition to EVs.

In response to the Prime Minister's call for a strong Electric Vehicle (EV) policy, PIDE has developed a comprehensive framework titled 'Future on Wheels.'

This framework is designed to help shape and support the creation of an effective EV policy in Pakistan.

PIDE's findings on Pakistan's automobile industry are highlighted in two key publications: Driving Backwards: What is Wrong with Pakistan’s Automobile Industry? and Wheels of Change: Tracing Pakistan’s Automotive Evolution through Political Economy and Technology Acquisition.

A major piece of this global commitment is the shift towards Electric Vehicles (EVs) as a more sustainable alternative to conventional transportation.

Road transport, which relies on Internal Combustion Engine Vehicles (ICEVs), is a major source of air pollution and health problems.

In contrast, EVs offer a cleaner solution by reducing harmful emissions and decreasing the demand for petroleum.

A shift towards EVs could reduce this burden, cutting down oil imports and improving the current account balance.

To realize an electric future, Pakistan’s policy framework must address these obstacles effectively and comprehensively.

Although 61% of Pakistani households own a personal vehicle, only 6% have a passenger car.

Motorbikes are far more common, with 57% of households owning only a bike, and about 4.5% owning both a motorcycle and a car.

Additionally, 2.7% of households own rickshaws, primarily for commercial use.

This means that the market for electric vehicles, particularly in the passenger car segment, is limited, and the high upfront cost makes EVs accessible to only a small segment.

PIDE has suggested a comprehensive policy for the growth of the EV industry in Pakistan, outlining clear objectives for the short, medium, and long term.

The short-run target by 2030, new licenses will be issued to auto parts manufacturers, existing facilities will be expanded, and 5% of all auto parts produced will be exported.

The production capacity will be increased through licenses for new manufacturers and expansion of existing facilities, with a focus on EVs, and 10% of all EVs produced will be exported.

By 2035, 100% of all new 4-wheel passenger car units and 50% of all new 2/3-wheeler units produced locally are expected to be EVs.

By 2040, 50% of all auto parts produced will be exported.

Additionally, the targets include a 50% increase in 4-wheeler and 2/3-wheeler capacity, along with a 15% increase in bus and truck capacities.

Moreover, PIDC recommended by 2040, 50% of all new 4-wheel passenger car sales and at least 75% of all new 2/3-wheeler sales are expected to be EVs.

The policy focuses on integrating Pakistan’s automobile industry into the global value chain, especially for EVs, by lowering customs duties on EV inputs and increasing production.

PIDE aims for 10% of all EVs and 5% of auto parts produced in Pakistan to be exported by 2030, with the goal of reaching 50% export by 2040.

To support the transition, the government is encouraged to promote joint ventures between local automotive companies and foreign firms, focusing on technology transfer and capital investment to boost EV production.

Additionally, the government should engage in Government-to-Government (G2G) and Government-to-Business (G2B) partnerships to attract investment and manufacturing opportunities in Pakistan.

The State Bank of Pakistan is urged to create a Green Financing Plan.

This plan would enable commercial banks to provide financial support for the growth of Electric Vehicle (EV) production, as well as the manufacturing and adoption of EV parts and components in the country.

The PIDE plans to use its existing Research for Social Transformation and Advancement (RASTA) forum to conduct focused research on issues related to EVs.

PIDE emphasizes the importance of Research & Development (R&D) in EV technology and related fields to help position Pakistan as a global player in the EV transition.

It recommends creating a research fund to support targeted R&D activities, especially in reducing EV production costs, reusing batteries after their initial lifecycle, and ensuring environmentally safe battery waste disposal.

By following these recommendations, PIDE aims to create a sustainable and competitive Electric Vehicle (EV) industry in Pakistan.

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