Pakistan’s National Electric Vehicle Policy:

Charging towards the future

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Posted Friday, 10 January 2020, 10:20

Moaz Uddin

Pakistan approved an ambitious National Electric Vehicles Policy  (NEVP) in November,

with targets and incentives aimed at seeing electric vehicles capture 30% of all the
passenger vehicle and heavy-duty truck sales by 2030, and 90% by 2040. It sets even more
ambitious goals for two- and three-wheelers and buses; 50% of new sales by 2030 and 90%
by 2040.

You might well wonder why the Government of Pakistan would propose an electric vehicle
policy at a moment when the inflation rate has just reached 12.7% , the rupee is down almost
50% against the dollar , and the government is scrambling to cover a balance-of-payments
deficit. This doesn’t seem like the best time to be importing Teslas! 

The answer might be that the government is betting that an EV policy could not only further
its climate goals and help with the dangerous air pollution problem in the cities, but also has
the potential to breathe new life into Pakistan's economy. 

Pakistan already has an infant electric vehicle industry. The five domestic electric vehicle
manufacturers recently banded together as the Pakistan Electric Vehicles Manufacturing
Association (PEVMA) and have been making significant investments in the sector, often
partnering with established international automobile companies. The NEVP incorporates
new foreign direct investment incentives to stimulate investment in EVs. Manufacturers,
assemblers, and suppliers in the EV and related infrastructure industries will benefit from
lower taxes – 1% GST for EVs as opposed to 17% for regular vehicles. The import duty for
charging equipment is also being slashed to 1%.  Additionally, the government will lower
the unit rate of electricity for charging station operators to encourage private investments in
charging stations. The government will also install at least one DC fast-charging station
every 10 square kilometers in all major cities (targeting the more than 3,000 defunct CNG
stations as locations) and every 15–30 kilometers on all motorways.

The NEVP also represents a step towards realizing Pakistan’s goals for climate action and
improvement of air quality as those are outlined by the Climate Change Act of
2016 and Pakistan Environmental Protection Act 1997 . Transportation is, of course, a
significant contributor to climate change, responsible for 24% of direct CO2 emissions from
fuel combustion  globally. Pakistan ranks 8th  on Germanwatch’s Long-Term Climate Risk
Index, which tracks the extent to which countries have been affected by the impacts of
weather-related loss events. Experts suggest that rising temperatures and erratic rainfall
could threaten the country’s ability to sustain agricultural and livestock production at
current levels, increase vulnerability of energy production from hydropower plants, and
affect the availability of fresh drinking water to major urban areas. 

The NEVP comes at a time when Lahore’s worsening air quality has caused it to overtake
New Delhi as the most polluted city  in the world on some days. The city’s thick autumn
smog is a significant health threat, one which prompted schools to be shut down three times
in November 2019 alone. Nor are these trends confined to Lahore. Karachi, Faisalabad, and
Peshawar regularly stand alongside major Chinese and Indian cities atop the list of the
world's most polluted urban areas. Ambient air pollution is responsible for 135,000
deaths  per year and costs the economy 5.88% of GDP or $47.8 billion. Vehicle emissions
make up a significant portion of air pollution throughout the region, contributing more than
70% of the fine particulate matter (PM2.5) and PM10 emissions in large urban centers . 

It's also noteworthy that India and China have both adopted national EV plans and made
significant investments in the sector as part of their efforts to improve air quality, reduce
climate impact, and capture a share in the emerging EV market. Pakistan's NEVP is not
occurring in a vacuum.

The energy-efficiency and emissions benefits of EVs are well known. They are compatible
with renewable energy sources, produce no emissions at the vehicle tailpipe and have lower
lifecycle (“well to wheel”) emissions, and can dramatically reduce or eliminate oil imports
(a significant burden on Pakistan's economy at $13 billion annually ). The Government of
Pakistan seems also to be betting that they will spur economic development and help it keep
pace with its neighbors and competitors, as the country switches from importing fossil fuels
and vehicles to domestically produced electric vehicles fueled by domestically produced
electricity. 

The NEVP is a welcome first step, but that welcome must come with the important caveat
that effective implementation is vital. The ICCT’s work shows that nearly all the world’s 7
million EV sales through late 2019 relied on regulations to make EV models widely
available, incentives to increase EV affordability, charging infrastructure to ensure EVs are
convenient, and EV awareness programs to increase consumer understanding. The success
of Pakistan’s EV goals will depend on coordination between the applicable ministries on the
incentive program, and also whether Pakistan can overcome the other barriers on model
availability, infrastructure, and consumer understanding. And a reliable power supply is
crucial. Pakistan’s electric power sector is notoriously volatile; brownouts and blackouts are
common occurrences. The government has various power projects in the pipeline and
forecasts surplus generation capacity in the next decade. A growing EV industry and market
could utilize that surplus.

The EV industry has the potential to contribute significantly to the economy by saving
precious foreign exchange, creating thousands of jobs, and enabling related to industries to
grow as technology transfers occur. EVs can also help improve urban air quality, reduce
noise pollution, and significantly reduce the health costs associated with pollution in urban
areas. However, consistent policy support and a reliable grid are prerequisites for this
transformation.
 Pakistan's National Electric Vehicle Policy
Goals

Passenger Vehicles: EV sales to constitute 30% of new sales by 2030 and 90% of new sales by
2040

2 & 3 wheelers: EV sales to constitute 50% of new sales by 2030 and 90% of new sales by
2040

Buses: EV sales to constitute 50% of new sales by 2030 and 90% of new sales by 2040

Trucks: EV sales to constitute 30% of new sales by 2030 and 90% of new sales by 2040
1% GST for EVs (down from 17%)

1% Import Duty on charging equipment

Tax Incentives Lower electricity tariffs for EV charging stations

All greenfield investments apply to EV manufacturers and those converting

their existing facilities to manufacture EVs
 
One fast DC charging station per 3km by 3km area in all major cities
Public
DC charging stations on all motorways every 15-30 KM
Investments
Ensure uninterrupted power on feeders for charging stations
Other
State Bank to offer lower rate financing to EV manufacturers
Incentives
 Pakistan’s Electric Vehicle
Policy: Opportunities and
Challenges
 December 24, 2019

 
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 by Afsana Afsar

I ma g e C re d i t : C S C R

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Pakistan at the moment is hit by worst ever smog. The country is the fifth most vulnerable to
climate change in the world. Meanwhile, in November 2019, Pakistan government approved
country’s first electric vehicle policy. Over 3,000 CNG stations are to be transformed into
electric vehicle charging stations. Also 100,000 cars and 500,000 bikes and rickshaws are also to
be converted to electric vehicles. The electric vehicles are estimated to bring down the country’s
annual oil import bill by $2m. According to an estimate, Pakistan’s 30% vehicles will
go electric by 2030.

This happens at a time when according to Sectoral Emission Inventory for Punjab, transport
sector is responsible for 43% share in the air pollution emissions. Industry and agriculture remain
second and third, respectively. Smog, in Pakistan, is being termed as the fifth season. Air quality
in Pakistan is also becoming increasingly unhealthy. This happens not just in Lahore but also
Islamabad, the federal capital of Pakistan, surrounded by natural greenery. This means that we
need to review our performance. Something is certainly wrong somewhere. This crisis has just
not emerged abruptly. It was coming for a long time.

Certainly, the transition toward electric vehicles is a huge opportunity but a few challenges are
also part of the package. While, if successfully implemented, pollution in the country will be
reduced, fuel cost will be saved by 70%, and the import bill will be cut down tremendously. In
fact, it will be a step towards fossil fuel-free society. On the other hand, the transition will
require quite a lot of money and at the same time worries regarding the entrenched lobbies are
also there. One of the challenges is setting up a whole new set-up for electric vehicles. Others
include electricity shortfall, costly and long battery charging, driving range per charge,
inconsistent government policies etc.

The electric vehicles are estimated to bring down the country’s annual oil
import bill by $2m. According to an estimate, Pakistan’s 30% vehicles will
go electric by 2030.
A 2019 report states that by 2025, an excess of 15,000 MW peak generation capacity will be
available in the system to spare for electric vehicles and claims that “almost 500,000 electric
vehicles can be fully charged daily with a supply of just under 1000 MWs.”
Soon after the announcement of the electric vehicle policy, country’s auto-sector hit out at the
government initiative. In fact, they called it an adhoc decision. They complained of not being
taken into the loop and that the electric cars were being introduced in the country at the cost of
domestic industry.

Another hurdle, perhaps the biggest challenge in making the move a success is public mind set.
Awareness needs to be created among the masses about the advantages of electric vehicles over
combustion engine vehicles. An expert suggests, “The catchphrase to attract people should be
‘save money,’ rather than ‘save the environment’ because, let’s be honest, for most people,
climate change is not a strong enough motivation to switch to electric vehicles. High speed,
enhanced range, acceleration and comfort are the things the electric vehicle companies need to
market to general public.”

While the fuel combustion has largely polluted the environment and the prices of fuel are sky
rocketing, it is a great idea to shift to eco-friendly electric vehicles. Perhaps, this is the best way
of improving the air quality at the moment.

A 2019 report states that by 2025, an excess of 15,000 MW peak generation capacity

will be available in the system to spare for electric vehicles and claims that “almost
500,000 electric vehicles can be fully charged daily with a supply of just under 1000
MWs.”
However, one aspect to deliberate upon is that whether the transition to electric vehicles in the
country can happen soon. The goal is certainly ambitious and may take a couple of decades
before its complete execution. This is what has happened with one of the most advanced
countries of the world. And that is how they have set their deadlines. Norway, for instance, plans
to sell all electric vehicles by 2025, Netherlands 2030, the UK and France target a 2040 deadline
for all electric vehicle sales. Even our neighbouring India targets selling 30% of all electric cars
by 2030. Other countries such as China, Germany, Sweden and many US states have also
announced ambitious plans for electric vehicle penetration.

Anyhow, the argument is that introduction of electric vehicles in Pakistan can solve the present
and impending problems of not just the economy but various sectors, which include
transportation, environment, and power among others. Needless to say, the transition of transport
sector towards electrification is need of the hour. However, what needs to be taken care of during
the execution phase is that it is carefully planned and executed taking into account the
challenges, opportunities, strengths, and weaknesses. The concerned quarters need to ensure that
it is not just a knee jerk reaction creating other challenges and problems. If the electric vehicle
policy creates a scenario similar to the compressed natural gas like fiasco, then it would not be of
much use. Certainly, for this initiative to be a success, a large and a considerably well spread out
charging infrastructure is required. But one of the problems is that the electric vehicles and the
charging infrastructure are largely dependent on each other. Charging infrastructure only makes
commercial sense if enough electric vehicles are on roads while these vehicles require charging
infrastructure to get rid of the so called range anxiety. This requires sufficient penetration of
charging infrastructure. However, this problem can be worked out with cautious planning and
strategic intervention. A very careful policy assessment is needed to study the prospective direct
and indirect and long-term and short-term impacts on the stakeholders.

Afsana Afsar
Afsana Afsar is an Associate Editor at the Centre for Strategic and Contemporary Research. She also serves as
an editor at The Nation.