ISLAMABAD: Pakistan Institute of Development Economics (Pide), a state-run think tank, while highlighting challenges to electrical vehicles (EVs) transition and adaptation at home has asked the government to focus on export opportunities to draw maximum economic benefits from global revolutionary transformation in the field.

In a policy advice, Pide suggested the government and the automobile industry to target 10pc of all EVs and 5pc of auto parts produced are exported by 2030, and 50pc of all EVs and auto parts produced in Pakistan are exported by 2040.

This comes following the Prime Minister’s recent directives for a robust EV policy.

“A shift towards EVs could reduce this burden, cutting down oil imports and improving the current account balance,” it said, adding that the adoption of EVs offered the country with a dual opportunity: environmental protection through reduced emissions and economic resilience by curbing import costs. Embracing this shift will support Pakistan’s climate goals and bolster its economic stability.

Govt think tank calls for policy framework that addresses all obstacles effectively

However, achieving this vision faced significant hurdles. From two- and three-wheelers to larger commercial vehicles, the shift to EVs encounters complex challenges across all categories of transport, Pide noted, and called for policy framework that addressed these obstacles effectively and comprehensively. It noted a series of challenges to this shift including high upfront costs, low vehicle ownership, range anxiety, limited charging facilities, low production volumes and limited manufacturing capacity and disintegration from global value chain. It said the technology to assemble or manufacture EVs in the country was in a nascent stage, thus the cost of EV production remains high. Also, the vehicle cost of production was very high due to significant import dependence, lack of allied industries and high import tariffs.

But more importantly, low vehicle ownership was also a problem. Although 61pc of Pakistani households own a personal vehicle, only 6pc have a passenger car. Motorbikes are far more common, with 57pc of households owning only a bike, and about 4.5pc owning both a motorcycle and a car. Additionally, 2.7pc of households own rickshaws, primarily for commercial use.

This means the market for EVs, particularly in the passenger car segment, is limited, and the high upfront cost makes EVs accessible to only a small segment. Although more than half of households own two-wheelers, their high initial cost renders electric options financially impractical for the middle- and low-income groups who largely rely on them.

On top of that, adopting electric vehicles demands a behavioural shift, as recharging takes considerably more time than refuelling conventional vehicles. Also, international auto parts and automobile manufacturing had shifted to a global value chain, while Pakistan continued to focus on localising all production processes. As a result, not only have Pakistan-based OEMs and auto parts manufacturers failed to build high-quality production capacity but also become isolated from the global automobile industry.

Based on these challenges, Pide called for a long-term EVs development policy with short-term goals for 2030, medium-term targets till 2035 and long-term targets set to be achieved by 2040. These include 10pc of all new four-wheelers and 25pc of all new two- to three-wheeler sales to be EVs by 2030, while increasing the shares of all new four-wheelers to 50pc and all new two- to three-wheeler to 75pc by 2040.

Published in Dawn, December 16th, 2024