Two cheers for Pakistan’s electric vehicle policy

The new policy is ambitious, but will need lots of money, and there are worries about entrenched lobbyists
<p>Pakistan&#8217;s electric vehicle policy comes at an opportune time [image by: Zofeen T. Ebrahim]</p>

Pakistan’s electric vehicle policy comes at an opportune time [image by: Zofeen T. Ebrahim]

When you think of electric vehicles, you think of Elon Musk, a noiseless Tesla and luxury more than zero emissions. But today, Pakistan government’s wants to use the same technology for the common man — to run bikes, rickshaws and even buses, jeeps and trucks. Will this transition from fossil fuel vehicles to electric vehicles happen anytime soon?

Pakistan’s cities witnessing the worst ever smog, this was followed by a climate march with youth demanding climate justice. Thus the Pakistan Tehreek-e-Insaf government could not have chosen a better time than when UN climate summit COP 25 is taking place to make a strong case against tailpipe emissions from urban transportation, a major contributor to air pollution and climate change. Little wonder then they quickly got the nod of approval by the cabinet for the first National Electric Vehicle (EV) Policy.

With 43% of the airborne emissions in the country from the transport sector, Malik Amin Aslam, the federal minister for climate change told that transitioning to EV provided a “huge opportunity” for Pakistan.

“These will have many advantages for Pakistan – it will reduce pollution, will cut the cost of fuel by 70% thereby [leading to] huge saving for FFV (fossil fuel vehicle) owners, and will cut the country’s import bill tremendously,” said Aslam, also the prime minister’s adviser on climate change.

Despite increased taxes, there are three million private cars and 20 million motorcycles and motorised rickshaws plying on the roads of Pakistan according to the Pakistan Bureau of Statistics, as cited in the Economic Survey 2018-19. The absence of a good public transport system is one of the main reasons.

Riaz Haq, who worked in various tech firms for 35 years in the Silicon Valley and is an EV enthusiast, said with 32 million households and 17.5 million motorcycles registered in Pakistan, the motorcycle ownership has increased from 41% in 2015 to 53% in 2018. Pakistan is the fifth biggest motorcycle market in the world after China, India, Indonesia and Vietnam.

The biggest challenge for Pakistan is its number of motorcycles and three wheelers [image by: Zofeen T. Ebrahim]
The biggest challenge for Pakistan is its number of motorcycles and three wheelers [image by: Zofeen T. Ebrahim]
The new policy envisions using electricity to get 100,000 cars, 500,000 two- and three-wheelers, 1,000 buses and trucks to ply on the roads in the next five years. By 2030 it sees 30% of all new cars, big and small trucks, vans, and jeeps and 50% of all two, three and four wheelers to be electric vehicles reducing tailpipe emissions by 65%. By 2040, if all goes well, 90% of all vehicles on the roads will be EVs.

“The PM wants all new buses coming on the road to be electric hybrid – run both on electricity and CNG (compressed natural gas),” said Aslam. Additionally, his ministry was in talks with educational institutions to find if two and three wheel vehicles can be converted to EVs.

For once, most experts are lauding the policy as a step in right direction.

“It is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership,” Haq wrote in his blog. He has recently bought a Chevy Bolt EV Premier “because of its 238 mile range on a single charge at a price 30% lower than Tesla 3”, after having test driven Tesla Models S, X and 3 and Chevy Bolt EV and Nissan Leaf and Leaf Plus.

Another proponent for EVs, Islamabad-based energy expert Vaqar Zakaria, says, “Surplus power generation capacity, building off peak demand for better utilisation of generation capacity which also brings down generation costs, poor urban air quality, high levels of noise from traffic, and safer cars,” are some of the reasons to make the move.

Zakaria foresees “plenty of business making EVs if it morphs” in Pakistan.

“They [vehicle makers] have a huge competitive advantage in this as they already have the infrastructure ready for the chassis and just need to shift the fuel engine with battery EV system,” added minister Aslam. “To my mind, they should be leading this positive change.”

Who has the money?

The automobile industry remains sceptical.

“I would love to see EV launched in Pakistan but it means developing a huge setup anew,” says Juzer Amreliwala, the chief executive officer of a Honda partner in Karachi.

“On the face of it, it looks great but establishing proper after-sales setup requires both capital and human investment. Although most dealerships have come quite far in technology development, much training is still needed.” Amreliwala added, “A Honda E-car in Europe was being sold for USD 32,000 without rebate. That is not exactly a mid-income level car [for Pakistan].” Pakistan’s per capita GDP is less than USD 1,400 per year.

Aware of the infrastructure that will be needed for EVs, Aslam sees it as an opportunity with a whole new service industry and numerous livelihood options opening up. “Pakistan is thirsting for new business opportunities and markets. Globally, China is leading the EV industry, like in the manufacture of batteries. If we build our capacity technologically, Pakistan can become a hub for exporting EVs – specially two and three wheelers. We have the appetite to lead and come up with innovative ideas like charging stations that run on solar.”

All this will be possible, says Haq, because EVs are a lot simpler, “Easier to manufacture, have fewer parts and require fewer people on the assembly line saving labour costs.”

For the buyer, EVs are easier to maintain and cheaper over the life of the vehicle with “no gasoline and no oil changes required.”

Where’s the power?

Does Pakistan have enough electricity to power so many EVs?

“Yes, we do,” says Zakaria. “A number of power projects are on hold, and who is stopping anyone from installing solar panels at home or at office to charge EVs? You can do it in day time at a lower cost.”

The policy gives mouth-watering incentives to buyers. Compare 1% general sales tax for EV over 17% levied on FFVs. “By slashing the duties and the GST, we want to bring the prices at par with the FFVs for people to be able to afford them,” says Aslam.

For those putting up charging stations or investing in such equipment the import duty will be 1%. They have been promised lower power tariffs and uninterrupted power.

The initial focus will be within cities. “We are targeting cities first where pollution levels are already very high. Also, it will be much easier to manage the setup, including adequate number of charging stations – one every three kilometres – and which run on uninterrupted power supply,” explains Aslam.

Environment lawyer Ahmad Rafay Alam, who has worked closely on air quality issues, says a “good economic analysis” is needed to set the system and level of incentives, both for EVs and supporting infrastructure.

Zakaria says Pakistan should not be afraid of taking the technology leap. “Countries from Sweden to India are seriously adding capacity, so why should we not leapfrog when the opportunity is there? Did we not leapfrog on cell phones, colour television, CNG? Technologies are developed for a reason, to lower costs and to improve services and productivity. We should shift to new technologies wisely, not be afraid of them. Technology is not alien, it is created by people like us.”

Too many cooks

A potential problem with the policy is the plethora of government supervisors – nine ministries, the higher education commission, the State Bank of Pakistan and the various authorities in energy sectors.

“This industry transcends so many domains that all these stakeholders had to be included,” explains Aslam. “Interaction and cooperation between stakeholders is the mark of good governance.”

Blaming the energy ministry “for much of the mess we are in now”, Zakaria hopes the climate change ministry will take the lead to bring EVs on the roads.

The spoilers

Zakaria warns of the “vested interests” who may not like the transition. “Those that sell low quality fuel and cheat on quantity sold will not like it, the refiners will not like it, the car traders will not like it as the EVs will last longer, the industry as it presently is will not like it, the FBR may say the government will lose taxes on imported fuel which are huge at the moment and a significant source of revenue for the government. But as a consumer I will be delighted… If they only let me import EVs and E-bikes at reasonable cost.”

Alam remains wary and hopes for backing from the ministry of industries as well as from business lobbies. “If we don’t see evidence of such interest, I’m afraid the policy will have to be sent back to the drawing board.”

Amreliwala voices another worry. “What will happen if the government changes and all these projects are shelved?” For his part, he said, Honda will go for EVs only if the “environment for investment is sound and consistent”.