Every morning, in the town of district Swabi, on the road surrounded by lush green outfields, Humza Siddiqui, 22, an engineering student, hurries to his campus building riding his electric bike.

During his undergraduate degree, he developed this bike himself and considers it more fun, economical, and environment-friendly than petroleum-driven bikes. Humza is a final-year Electrical Engineering Student at Ghulam Ishaq Khan Institute of Engineering in Khyber Pakhtunkhwa.

“We are trying to innovate in Pakistan, but the most expensive and crucial parts of an electric vehicle, like lithium-ion batteries, are imported, and this creates an environment of uncertainty. Especially since lead iron-phosphate batteries are more efficient but are not imported,” he says.

Fatiq Bin Khursheed, the CEO of Vlektra, an electric bike company based in Karachi, also shares the concern. “There are multiple issues with the supply of imported parts essential for assembling an electric vehicle (EV),” he says.

Instead of focusing on promoting impractical imports, the government should incentivise local innovation

Although to resolve some issues, the government made policies to smooth imports and incentivise manufacturers, having a fancy written document is not enough.

In 2019, the government announced the National Electric Vehicle Policy, incentivising manufacturing by bringing down the general sales tax to one per cent, lowering electricity tariffs for the users and offering more subsidies to meet a target of selling 30pc EVs by 2030. But pointing towards the trade deficit and import ban, manufacturers and assemblers raise their concerns about the effectiveness of the policy.

“We are grateful for the policy, but if there is a ban on imports overall, we cannot import at any cost, and that makes the EV market unsustainable,” says Mr Khursheed.

Another important step taken by the government this year was in April 2023, when Ishaq Dar announced the Prime Minister’s Youth Business and Agriculture Interest-free Loan Scheme aiming to give loans on two-three-wheeler EVs of up to 0.5 million in three years.

It initially targeted loans for 15,000 bikes and set a target of 60,000 bikes by 2024 and 100,000 bikes by 2025. Even though the loan scheme sounds promising for a cleaner future, its practical implication is much more complicated.

“An average Pakistani cannot afford a loan of up to 0.5m. Bike and rickshaw owners would be reluctant to pay 13,000 a month for three years to the government under this scheme when their fuel cost is less than that,” says Dr Aazir Anwar Khan, director of the Integrated Engineering Centre of Excellence at the University of Lahore.

“Hypothetically, the path is smooth for manufacturers and consumers, but practically there are a lot of issues. For example, a rickshaw of Rs1m was launched last week, which raises the question of whether anyone would buy it. Can even a single rickshaw driver afford it?” he added.

The practical implication of these kinds of policies is ambiguous. It is uncertain whether EVs will become accessible and available for consumers in the near future. There are cheaper options, like retrofitting the older bikes into electric ones, but no clear policy regarding them exists.

“With the current scheme of 15,000 vehicles a year, the question remains whether we have the demand, budget or capacity to import 40-50 bikes a day,” said Dr Khan.

Innovation versus imports

“Importing vehicles alone is not enough. If we want to create a stronger market, we urgently need to innovate, engage engineers and try to build things locally,” says Waqar, a young engineer in mechatronics. Currently working at a lab at the University of Lahore, he has been developing electric vehicles for four to five years.

The transition towards electric vehicles is not about importing vehicles from China and selling them; rather, it gives us a chance to develop the electric auto industry from scratch. “We need a budget for innovation; we need to engage the thousands of unemployed engineers and build our things,” he says.

According to the data from the Engineering Development Board, there are 22-23 EV companies registered in Pakistan, and all of them are importing their vehicles or parts to assemble from China.

“There is a difference between innovation and trading,” adds the chairman of Dice Foundation, Dr Khurshid Qureshi, who built Pakistan’s first indigenous electric vehicle. They launched a prototype in August 2022 called Nur E 75 to bring it to the market in a year or two.

“We have been importing for the last 75 years. Electric vehicles are giving us a chance to innovate and develop locally produced items that are sustainable in the longer run. It is stupidity not to avail this chance of strengthening our domestic industry,” he said. It is high time that the government gives seed money and opportunities to the scientific minds rotting in Pakistan.

Most of the institutions that are innovating EVs remain unnoticed by the media and government because they do not spend millions on marketing.

“Every time the government introduces a new policy, there are suddenly four to five EV startups ready to import vehicles, which is good. But if all of them are focused on importing and selling them at high prices, when will we capitalise on the opportunity for indigenous solutions or innovation,” concluded Dr Khan.

The writer is a freelance journalist from Lahore working primarily on climate and energy

Published in Dawn, The Business and Finance Weekly, May 8th, 2023