Aurora Magazine

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Charging Up the EV Opportunity

Published in Jan-Feb 2021

Producing ‘Made in Pakistan’ batteries for electric cars may well represent a huge economic opportunity for the country.

The Global Climate Risk Index, in their Annual Report 2020, have placed Pakistan fifth on the list of countries most vulnerable to climate change, because of its location which is prone to extreme weather events, particularly heavy rainfall during the monsoon season and flooding. Moreover, air pollution in Pakistan’s major cities remains poor throughout the year, especially in winter when it is aggravated by smog (now considered as a fifth season in Pakistan).

In a bid to curtail this pollution, the government has taken several measures, including their Clean Green Initiative (building on its global success of planting a billion trees, the target has now been set at 10 billion) along with the recent first Electric Vehicle (EV) Policy that aims to bring half a million electric motorcycles and rickshaws, along with over 100,000 electric cars, buses and trucks into the transportation system in the next five years. Since the transport sector is the biggest contributor to air pollution (43%), the goal is to have at least 30% of all vehicles running on electricity by 2030 and bring the oil import bill down by two million dollars annually.

Since the announcement of the EV policy, several new investors have been granted ‘Greenfield status’ and a total of $476 million will be invested by new entrants who will be given incentives to import and assemble CKD kits of EVs.

Sabztek Inc. (a Canadian electric mobility company) is now set to enter Pakistan with a promise to bring six billion dollars in FDI. However, unlike EV assemblers, Sabztek Inc. plan to produce lithium-ion cells and assemble them into battery packs (the battery is the single most expensive part of an EV, constituting 50% of the total cost) with the help of local partners. The company’s objectives are to effect a rapid transition to environmentally friendly mobility solutions in countries vulnerable to global warming.

With a seed investment of five million dollars from expats and Pakistani investors, Sabztek Inc. are currently procuring five acres of land, where by the second half of 2021 (with a further investment of about $250 million), the company will build a facility with approximately 2GWh/year production capacity, equivalent to 1.67 million 12V 100 Ah batteries per year, which will expand to 50+ GWh in the next few years. The company will manufacture EV battery packs with built-in management systems as well as batteries for electronic devices, storage batteries for renewable energy plants along with battery chargers and inverters.

According to Naveed Nazir, Pakistani-Canadian Founder and CEO, Sabztek Inc., “Lithium-ion cells are our primary product and they can be assembled in configurations suitable to any market. We will enter Pakistan through the established solar, wind and renewable energy storage market and as the EV market emerges, we will begin manufacturing batteries for them.” Nazir, whose educational background includes physics and electrical engineering, is also a serial entrepreneur and has worked for and established several start-ups; he also has experience working in management roles at 3Com and Intel Corporation, US.

As of now, the EV battery manufacturing space is dominated by Asia, where China’s Contemporary Amperex Technology (CATL), Japan’s Panasonic Corp and South Korea’s LG Chem are the leaders. Three Korean companies (LG, Samsung and SK) together control half the share of the EV battery manufacturing market in the world.

Pakistan presently imports lithium-ion batteries (LIBs) for indigenous manufacturing from China to fulfil its domestic renewable energy needs and does not produce them locally, because according to Nazir, the production of a lithium-ion cell is very capital intensive and requires proficiency in battery chemistries.

Although the demand for LIBs is low, Nazir believes this will increase in the coming years not just locally but internationally as well. “LIBs are expected to be the tightest in supply in the future, as the global numbers of on-road EVs ramps up from 25 million to 250 million units by 2050. Therefore, there is huge market potential to manufacture batteries locally and also participate in the global EV supply chain.”

LIBs have unique advantages for both mobility and storage. They offer an optimal storage solution because of their superior volumetric and gravimetric energy densities and longevity and are five times lighter and six times smaller than lead acid batteries. Although they are more expensive than lead acid batteries, the lifespan of a properly managed LIB exceeds 10 to 15 years. “We are planning to introduce our LIBs at competitive prices, with sealed lead gel (VRL) batteries and with quality and performance at par with international brands.”

With regard to the driving range of a LIB, Nazir says it depends on the size and type of battery used. This is a design choice for EV manufacturers, based on the motor power and battery size. “Tesla Motors offer a 500 miles range in the US on a single charge in their extended range models. For light vehicles designed for daily commute, I expect a range of 100 to 150 kilometres per charge.”

Despite the fact that the raw materials used in LIBs are available in Pakistan, they are not mined or locally refined and Sabztek Inc. are planning to work with the government to develop a local mining and refining industry. Nazir believes setting up a local supply chain for battery materials will eliminate dependence on imports, ensure long-term foreign exchange savings and provide opportunities to enter the global material’s supply chain. “This is an opportunity to create an entirely new industry in Pakistan, supported by a vibrant ecosystem of players in mining, mineral refining and material processing and thereby provide thousands of jobs for a significant segment of the population.”

He is confident that Sabztek Inc. will win major local EV OEMs and renewable energy dealers in Pakistan and will capture the expanding export market and going forward, Sabztek Inc. want to develop an R&D infrastructure in local universities in partnership with the government, as a sustainable LIB and EV R&D ecosystem will facilitate employment and provide high-quality manpower for Sabztek Inc. “R&D will help us identify emerging high-performance LIB variants, and enhance a battery’s capacity and life-cycle. Acquiring the technical expertise on the LIB recovery and recycling will further provide an edge for Pakistan.”

In Nazir’s opinion, the government should extend the relief provided to EV assemblers in the policy to local manufacturers of key components for EVs including batteries. “Assembling a car just requires ‘screwdrivers’ and the ability to follow well laid-out instructions. There are no incentives for local manufacturing from scratch. They have to pay regular import duties and taxes.” In this regard, he suggests that the government set up one-window operations such as service desks of major corporations as these portals can inform investors about services available from each ministry and become a single point to track progress. “A lack of such portals makes it very frustrating for a foreign company to get anything done,” he concludes.