Pakistan appears to be on its way to an economic turnaround. The improved macroeconomic numbers seen across manufacturing, agriculture and current account platforms are leading to concerted efforts towards clean energy.

1. Electric Vehicles (EVs) – No Other Choice
EVs are critical for a country like Pakistan, which faces consistently worsening levels of smog year after year. So much so that it is now being referred to as the ‘fifth Pakistani season’. In this context, automobiles account for nearly a quarter of the harmful greenhouse emissions, with Punjab alone garnering 43% of the total air pollution load. Projections suggest that by 2030, approximately 65-70% of the population will be living in urban areas, leading to a further increase in transportation requirements and exacerbating the environmental burden.

An emphatic move away from conventional vehicles to EVs would cut down Pakistan’s $1.3 billion import bill on fossil fuels and heavy carbon footprint, leading to zero direct greenhouse emissions, to eventually becoming a fossil fuel-free society. As a nod to these pressing environmental and economic challenges, the Engineering Development Board (EDB) has formulated the New Energy Vehicle (NEV) Policy 2025-2030, with the singular objective to transition the transportation sector to EVs in order to reduce greenhouse gas emissions, lower reliance on fossil fuels and develop green technology.

2. NEV Policy 2025-2030
The 2019 EV policy hardly achieved anything. Targets such as the transformation of 3,000 idle CNG stations into electric vehicle charging stations, or sales of 100,000 electric cars, never materialised. What is different in the new policy, and will it work this time? Key goals include a significant reduction in greenhouse gas emissions, decreased reliance on imported fuel, and the stimulation of domestic green technology. The NEV sets ambitious targets, aiming for 30% of all new vehicle sales to be electric by 2030, with an even more enterprising goal of 90% by 2040 and a longer term vision of achieving 100% EV adoption by 2060.

The policy charts out a three stage, broad-based plan to guide the ambitious transition. Phase I, spanning from 2025 to 2030, will focus on building the EV infrastructure – a widespread network of charging stations and battery swapping facilities, alongside initiatives to create public awareness about EV positives and practicality. Phase II, from 2030 to 2035, will concentrate on nurturing consumers further exacerbating affordability as risk-averse banking practices in Pakistan local EV manufacturers and expanding their adoption across the urban and rural breadth of the country. Finally, Phase III, from 2035 to 2040, will aim for a full scale transition to affordable EVs, facilitating their mass adoption. AI and machine learning will be employed to predict and project EV adoption trends, infrastructure needs, and the economic aspects of the transition through deep analysis of mined, granular data. In terms of financials, the policy recommends purchase subsidies to offset the initial high cost of EVs, the reduction of import taxes on EV components and vehicles, and tax exemptions to augment adoption. Apart from achieving the obvious climatic benefits of moving away from fossil fuels, the policy stresses battery recycling and disposal to ensure environmental protection and promote a circular economy.

3. Will the NEV Policy 2025 Work?

• No Detailed Implementation Roadmap
Analysts assess that the policy is ‘all talk, little action’ and lacks a detailed implementation roadmap, strategy, risk mitigation plan, or defined timelines to realise the targets, all of which portend execution delays and inefficiencies. There is over-reliance on fiscal incentives and no attention is given to how these will integrate and impact the current energy and transport policies.

• Economic and Financial Barriers
Currently, EVs in Pakistan are priced approximately 1.6 times higher than comparable internal combustion engine (ICE) vehicles. This makes EVs inaccessible to an enormous segment of the population. With the IMF hawk eyeing our financial system, scowling at the idea of subsidies and pushing for a tariff rationalisation programme for industry, any offer of subsidies or tax relief would be dicey. Additionally, limited access to financing options for consumers further exacerbates affordability as risk-averse banking practices in Pakistan currently restrict the fluid availability of consumer financing for EVs.

• Infrastructural Deficiencies
Charging stations are limited and are concentrated in major urban centres, with an estimated 40% of these reported to be non-functional. This sparse network leads to anxieties among potential EV users, particularly in the absence of charging facilities in remote areas, further undermining consumer confidence. While Pakistan is currently in a surplus power generation capacity, the distribution companies (DISCOs) have capacity and load management problems, while the existing grid will require substantial upgrades to meet significant increases in electricity demand from EV charging – another tall order.

• Consumer Acceptance
There are misconceptions about EV performance, battery life and maintenance costs, leading to deterrence. There is also a perceived inadequacy of charging infrastructure.

• Local Manufacturing Hurdles
These, as well as the lack of a reliable supply chain, are serious problems. Can the domestic industry ramp up EV component production and supply in the next five to 10 years? Sadly, at current resources, no. Imports will only bleed the national exchequer, leading to higher costs and increased vulnerability to global supply chain disruptions.

• Regulatory Gaps
Federal and provincial regulations conflict and are confusing for both investors and implementers. Responsibilities for the control of crucial aspects such as battery safety standards and charging infrastructure regulations remain unclear. Registration processes for EVs are cumbersome, discouraging potential buyers. This lack of a unified, comprehensive regulatory framework is likely to create uncertainty and hinder investment in the EV sector.

These are the reasons why the last EV policy failed, and the current one seems similarly hollow and without substance in the absence of a solid transitional and regulatory game plan.

Nevertheless, the NEV represents a basis for EV launch, and there are some signs the policy may succeed. At the very least, the policy devises a three-phased approach that does allow for a gradual and systematic development of the foundations for EV adoption.

Pakistan’s current surplus energy landscape can spare electricity to power a growing fleet of EVs. The off-grid solar systems boom in Pakistan offers growing potential for decentralised and sustainable EV charging solutions.

Within the NEV policy, the government can refer to tested global practices and strategies from China and Thailand to develop effective financial incentive mechanisms, including subsidies, low-interest financing schemes and tax relief at consumer and investor levels. The NEV would do well to proactively push for alignment between federal and provincial government bodies, investors, manufacturers, energy providers and infrastructure developers, as well as consumer groups and public advocacy organisations to ensure synergised policy implementation and regulation. A robust charging infrastructure is critical and makes EV ownership practical for consumers. The government’s plan to establish 3,000 charging stations by 2030 can only be achieved by deploying public private partnerships.

EV adoption in Pakistan is negligible, with the two-wheeler segment taking 70% of sales thus far. However, momentum is up with 50,000 such motorcycles produced during FY 2023-24, up from 15,000 in FY 2022-23. As of February 2025, the EDB has granted licenses to over 57 manufacturers. Chinese brands such as BYD, BAIC, Changan, JAC, Great Wall Motors (GWM), MG, FAW and Chery have entered the fray, both as direct imports and joint venture mechanisms.

Despite this positivity, the NEV policy will succeed only if armed with a definitive, time-bound strategic plan that addresses infrastructure, manufacturing and financial incentives, streamlines implementation and encourages investment. Post the lethargy of the last EV policy, it is time to learn from missed boats and find the right place for Pakistan in a prospering global EV ecosystem.

Mazhar M. Chinoy has led the marketing services function for a leading multinational automobile company and has been a director at LUMS. mazharmchinoy@yahoo.com