Will Pakistan’s New EV Policy Work?

Pakistan appears tobe on its way to aneconomic turnaround.The improvedmacroeconomic numbers seenacross manufacturing, agricultureand current account platformsare leading to concerted effortstowards clean energy.

1. Electric Vehicles (EVs) – NoOther Choice
EVs are critical for a country likePakistan, which faces consistentlyworsening levels of smog yearafter year. So much so that it isnow being referred to as the ‘fifthPakistani season’. In this context,automobiles account for nearly aquarter of the harmful greenhouseemissions, with Punjab alonegarnering 43% of the total airpollution load. Projections suggestthat by 2030, approximately65-70% of the population will beliving in urban areas, leading to afurther increase in transportationrequirements and exacerbatingthe environmental burden.

An emphatic move awayfrom conventional vehicles toEVs would cut down Pakistan’s$1.3 billion import bill onfossil fuels and heavy carbonfootprint, leading to zero directgreenhouse emissions, toeventually becoming a fossilfuel-free society. As a nod tothese pressing environmentaland economic challenges,the Engineering DevelopmentBoard (EDB) has formulatedthe New Energy Vehicle (NEV)Policy 2025-2030, with thesingular objective to transitionthe transportation sector to EVsin order to reduce greenhousegas emissions, lower relianceon fossil fuels and developgreen technology.

2. NEV Policy 2025-2030
The 2019 EV policy hardlyachieved anything. Targets suchas the transformation of 3,000idle CNG stations into electricvehicle charging stations, orsales of 100,000 electric cars,never materialised. What isdifferent in the new policy, andwill it work this time? Key goalsinclude a significant reductionin greenhouse gas emissions,decreased reliance on importedfuel, and the stimulation ofdomestic green technology. TheNEV sets ambitious targets,aiming for 30% of all new vehiclesales to be electric by 2030, withan even more enterprising goalof 90% by 2040 and a longerterm vision of achieving 100% EVadoption by 2060.

The policy charts out a threestage, broad-based plan to guidethe ambitious transition. PhaseI, spanning from 2025 to 2030,will focus on building the EVinfrastructure – a widespreadnetwork of charging stationsand battery swapping facilities,alongside initiatives to create publicawareness about EV positives andpracticality. Phase II, from 2030 to2035, will concentrate on nurturingconsumers further exacerbatingaffordability as risk-aversebanking practices in Pakistanlocal EV manufacturers andexpanding their adoption acrossthe urban and rural breadth of thecountry. Finally, Phase III, from2035 to 2040, will aim for a fullscale transition to affordable EVs,facilitating their mass adoption.AI and machine learning will beemployed to predict and projectEV adoption trends, infrastructureneeds, and the economic aspectsof the transition through deepanalysis of mined, granular data.In terms of financials, the policyrecommends purchase subsidiesto offset the initial high cost of EVs,the reduction of import taxes on EVcomponents and vehicles, and taxexemptions to augment adoption.Apart from achieving the obviousclimatic benefits of moving awayfrom fossil fuels, the policy stressesbattery recycling and disposal toensure environmental protectionand 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 adetailed implementation roadmap,strategy, risk mitigation plan, ordefined timelines to realise thetargets, all of which portendexecution delays and inefficiencies.There is over-reliance on fiscalincentives and no attention is givento how these will integrate andimpact the current energy andtransport policies.

• Economic and FinancialBarriers
Currently, EVsin Pakistan are pricedapproximately 1.6 times higherthan comparable internalcombustion engine (ICE)vehicles. This makes EVsinaccessible to an enormoussegment of the population.With the IMF hawk eyeing ourfinancial system, scowlingat the idea of subsidies andpushing for a tariff rationalisationprogramme for industry, any offerof subsidies or tax relief wouldbe dicey. Additionally, limitedaccess to financing options for consumers further exacerbates affordability as risk-averse banking practices in Pakistan currently restrict the fluid availabilityof consumer financing for EVs.

• Infrastructural Deficiencies
Charging stations are limited andare concentrated in major urbancentres, with an estimated 40% ofthese reported to be non-functional.This sparse network leads toanxieties among potential EVusers, particularly in the absence ofcharging facilities in remote areas,further undermining consumerconfidence. While Pakistan iscurrently in a surplus powergeneration capacity, the distributioncompanies (DISCOs) havecapacity and load managementproblems, while the existing gridwill require substantial upgradesto meet significant increasesin electricity demand from EVcharging – another tall order.

• Consumer Acceptance
There are misconceptions about EVperformance, battery life andmaintenance costs, leadingto deterrence. There is alsoa perceived inadequacy ofcharging infrastructure.

• Local Manufacturing Hurdles
These, as well as the lack of areliable supply chain, are seriousproblems. Can the domesticindustry ramp up EV componentproduction and supply in the nextfive to 10 years? Sadly, at currentresources, no. Imports will onlybleed the national exchequer,leading to higher costs andincreased vulnerability to globalsupply chain disruptions.

• Regulatory Gaps
Federal andprovincial regulations conflict andare confusing for both investorsand implementers. Responsibilitiesfor the control of crucial aspectssuch as battery safety standardsand charging infrastructureregulations remain unclear.Registration processes for EVsare cumbersome, discouragingpotential buyers. This lack of aunified, comprehensive regulatoryframework is likely to createuncertainty and hinder investmentin the EV sector.

These are the reasons whythe last EV policy failed, andthe current one seems similarlyhollow and without substance inthe absence of a solid transitionaland regulatory game plan.

Nevertheless, the NEV representsa basis for EV launch, and thereare some signs the policy maysucceed. At the very least, thepolicy devises a three-phasedapproach that does allowfor a gradual and systematicdevelopment of the foundationsfor EV adoption.

Pakistan’s current surplus energylandscape can spare electricityto power a growing fleet of EVs.The off-grid solar systems boom inPakistan offers growing potential fordecentralised and sustainable EVcharging solutions.

Within the NEV policy, thegovernment can refer to testedglobal practices and strategiesfrom China and Thailand todevelop effective financialincentive mechanisms, includingsubsidies, low-interest financingschemes and tax relief atconsumer and investor levels. TheNEV would do well to proactivelypush for alignment betweenfederal and provincial governmentbodies, investors, manufacturers,energy providers andinfrastructure developers, as wellas consumer groups and publicadvocacy organisations to ensuresynergised policy implementationand regulation. A robust charginginfrastructure is critical andmakes EV ownership practicalfor consumers. The government’splan to establish 3,000 chargingstations by 2030 can only beachieved by deploying publicprivate partnerships.

EV adoption in Pakistan isnegligible, with the two-wheelersegment taking 70% of salesthus far. However, momentum isup with 50,000 such motorcyclesproduced during FY 2023-24,up from 15,000 in FY 2022-23.As of February 2025, the EDBhas granted licenses to over 57manufacturers. Chinese brandssuch as BYD, BAIC, Changan,JAC, Great Wall Motors (GWM),MG, FAW and Chery have enteredthe fray, both as direct imports andjoint venture mechanisms.

Despite this positivity, the NEVpolicy will succeed only if armedwith a definitive, time-boundstrategic plan that addressesinfrastructure, manufacturing andfinancial incentives, streamlinesimplementation and encouragesinvestment. Post the lethargy ofthe last EV policy, it is time tolearn from missed boats and findthe right place for Pakistan in aprospering global EV ecosystem.

Mazhar M. Chinoy has led themarketing services function for aleading multinational automobilecompany and has been a director atLUMS. mazharmchinoy@yahoo.com