Pakistan's EV leap

Oct 30, 2020

By: Shahmeer Mohsin and Muhammad Fahad Faizan and in collaboration with The CommUnity Post


The transportation sector contributes heavily to air pollution in South Asian countries. The Pakistani city of Lahore and the Indian city of New Delhi regularly compete for the notorious top spot of the ranking for cities with the worst air pollution. In 2015, around 1.1 million people in India died prematurely from particulate matter air pollution-related diseases, which is 10.6% of the total number of deaths.

Transportation sources account for roughly a third of particulate matter emissions in India and an even greater portion of the nitrogen oxide emissions. In Pakistan, the story isn’t much different, as an estimated 40% of air pollution can be attributed to the transportation sector. Thus, South Asian countries are facing the dire consequences of anthropogenic climate change, and they need serious policy incentives to turn things around.  

Even with a contribution of less than 1% of the world's total global Greenhouse Gas (GHG) emissions, Pakistan remains one of the most climate-disturbed areas on the planet. Being amongst the most vulnerable to climate change, Pakistan also lacks fiscal and technical competencies to mitigate the effects. The transport sector of Pakistan is one of the leading contributors to GHG emissions, which consequently has a notable impact on the air quality index. Moreover, the transport sector in Pakistan is expanding  rapidly  with double-digit growth due to increasing population, urbanization, and expanding motorway network.  The ballooning transport sector will continue to damage the endangered environment, along with adding more burden on the country’s trading books with an increasing appetite for imported oil.

Figure 1. World Map of the Global Climate Risk Index 1998–2017

EV Market in Pakistan 

Considering the share of fossil fuel-powered vehicles, and the air pollution that has gripped Pakistani cities, it makes sense to transition towards an environmentally sustainable transport sector. 

The current EV market of Pakistan is in a state of infancy.  Different estimates suggest that around 250 - 300 plug-in hybrids and full EVs are present in the country. After the introduction of Automotive Development Policy of 2016-2021 in June 2016, foreign investments in automotive manufacturing were induced, which led to market entry for several automotive manufacturers in Pakistan. 

Figure 2. Transport Sector Growth Rate in Pakistan (2018-2025). Data source: LUMS University

Policy Measures  

A subtle analysis of the basic realities of electric vehicle (EV) adoption in Pakistan indicates the country has a long way to go before realizing the transition towards EVs. Compared with neighbouring countries like India, having similar socio-economic circumstances, Pakistan’s EV fleet on the roads right now has unfortunately not reached ideal numbers. Having said that, it looks like the current government, which seems to be on the centrist aisle of the political spectrum has started to acknowledge these shortcomings as it recently adopted unprecedented and radical policies to ramp up the electrification of the motorized vehicle fleet.

Pakistan is a very lucrative market for motorized two-wheeler and three-wheeler manufacturers. The cost-effectiveness of two-wheelers makes them highly suited to the transportation requirements of the working class and middle class. Similarly, a large number of three-wheelers can be seen on the bustling city streets daily, providing taxi services to both regular and irregular commuters. Keeping their benefits in mind, even ride-hailing services like Uber and Careem offer two-wheeler and three-wheeler vehicle rides.  

Thus, it would be highly inappropriate to devise an EV policy without any focus on motorized two-wheelers. Keeping that in mind, the Economic Coordination Committee of Pakistan recently adopted a radical five-year policy for two-wheeler and three-wheeler electrification. According to the policy, incentives on General Sales Tax at the sales stage will be provided for five years (1%) i.e. the policy period, and sales tax at the import stage will be waived off (0%) to avoid refunds. To top that up, EV-specific parts of two-wheelers and three-wheelers will be imported at 1% Customs Duty (CD) for five years, two-wheelers and three-wheelers will be exempted from registration tax, and there will be a reduction of toll tax by 50% for EVs. According to the plan, tax exemptions will be provided to manufacturers of EV equipment and for infrastructure development, spanning a five year period.  

According to the National Electric Vehicle Policy (NEVP), which was approved in November 2019, the intent is to ensure that electric two-wheelers and three-wheelers capture 30% of the new sales by 2030, and 90% of the new sales by 2040. Unlike its neighbouring countries like India and China, the share of electric two-wheelers and three-wheelers in the vehicle fleet of Pakistan is minuscule at the moment, but recent policies will help Pakistan gradually catch up if the status quo doesn’t provide massive hurdles. 

Pakistan has also set targets for the electrification of its truck fleet, but it should be noted that the large-scale electrification of electric trucks sounds too radical right now, even in the developed world. According to the International Energy Agency’s (IEA) Global EV Outlook 2020, electric/fuel-cell trucks and their supporting infrastructures are at very early stages of deployment. The adoption of electric trucks will be highly dependent on policy support, given the greater gap in purchase prices and higher dependence on fast charging, or dynamic changing, compared to light-duty vehicles. Under these circumstances, Pakistan’s NEVP targets of electric trucks to constitute 30% of new truck sales by 2030 and 90% of new truck sales by 2040 will be much harder to achieve than the targets for other modes of transport. Even developed countries are treading safely in setting highly radical targets for the electrification of their truck fleets according to the IEA. Considering that developed countries haven’t set very fancy targets for the electrification of trucks and that truck manufacturing giants like Volvo, Scania and Renault haven’t made a lot of progress in the manufacturing of electric trucks, Pakistan’s targets for the electrification of electric trucks will not be easy to achieve unless there’s substantial progress in other countries, resulting in the import of electric trucks to Pakistan and possible technology exchanges. 

Way Forward 

In summary, it would be fair to say that the basic realities of the EV fleets for various modes of transport aren’t as good as those of neighbouring countries with similar socio-economic situations, but recent electrification targets seem progressive. If the recent electrification policies aren’t subjected to impediments from the fossil fuel industry and various austerity measures from the government, Pakistan might be able to jump on the EV bandwagon.


Published on: 30.10.2020


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