The National Electric Vehicle Policy and the

Dawn of Electric Vehicles in Pakistan

The year 2020 has ushered us into the decade of Sustainable Development Goals (SDG) set out by the
United Nations (UN). The SDGs are set out by the UN as a blueprint of 17 goals to be achieved by the
year 2030 which would ensure peace and prosperity for the planet and its people. Not surprisingly, 7 of the
17 goals pertain to the environment. Climate emergency is the biggest threat that we humans face as a
specie, it is no longer about saving the planet, it is about us, the humans.

Figure 1: Sustainable Development Goals 2030

Our rampant desire for economic growth has led to an exponential demand for energy. With 82% of our
primary energy still coming from fossil fuels, the race against time to find alternate energy resources has
already begun.
The McKinsey Energy Insights on Global Energy Perspective 2019 has set out optimistic forecasts for the
energy outlook, following are the key highlights:

1- Global primary energy demand plateaus after 2035 despite strong population expansion and
economic growth
2- Electricity consumption doubles until 2050, while renewables are projected to make up over 50%
of generation by 2035
3- Gas is the only fossil fuel which has an increasing share of global energy demand and then plateau
after 2035
4- Oil demand growth slows down substantially, with a projected peak in the early 2030s
5- Carbon emissions are projected to decline due to decreasing coal demand

Figure 2: Graphical representation of highlights 1-51

Highlight 2: Electricity consumption doubles until 2050, while renewables are projected to make up over
50% of generation by 2035. This is by far the most critical insight drawn in this report, as it factors in the
many changing trends. Let us break down this insight in two:
1) Electricity consumption double until 2050 – what are the changing consumption trends that would
lead to doubling of our electricity requirements
a. Increasing living standards for an increasing population
b. Electrification across key end uses, particularly in transportation
2) While renewables are projected to make up over 50% of generation by 2035 – Greening of the
primary energy is what would lead to the other trends shown in the graph above. While renewables
are the only way forward, increasing adoption is only made possible due to the following:
a. Renewable energy is cheaper or draws even with the existing coal and gas

1
McKinsey Energy Insights on Global Energy Perspective 2019
 b. Advancement in battery storage technology tackling the intermittency of renewable energy
Analyzing the trends, particularly a slowdown in oil demand despite increasing electricity consumption,
leads us to a single conclusion, the electrification of transportation. At present, only 1% of the vehicles on
the road are electric, however by 2050 this number will jump to 27%.2 While the electric vehicles still cost
more than their fossil fuel counter-parts, cost parity is expected in this decade with the rapid advancements
in battery storage technology.

Figure 3 Timeline of cost parity for each vehicle type

While the transition from fossil fuel vehicles (FFV) to electric vehicles (EV) is certain, countries have
adopted this transition differently. While countries like Norway and Sweden spear-heading their way with
an aggressive approach of banning sales of FFVs beyond 2025 and 2030 respectively, other countries like
China, India, Germany and some US states have announced ambitious plans for EV penetration.
The Ministry of Climate Change Pakistan is to be given credit for devising our own National Electric
Vehicle Policy in 2019 and ensuring that Pakistan stays at-par with the other developing nations. What
follows is a complete rundown of the National Electric Vehicle policy and the targets that Pakistan has set
for itself.
EV PENETRATION TARGETS
MEDIUM TERM (2020 – 2025)

- 100,000 electric cars country wide

- 500,000 two and three-wheeler vehicles
- 1000 buses
- 1000 trucks
LONG TERM (2030)

- 30% of new sales for cars will be EV

- 50% of new sales for two and three-wheeler vehicles will be EV
- 50% of new sales for buses will be EV

2
McKinsey Energy Insights on Global Energy Perspective 2019
 - 30% of new sales for trucks will be EV
ULTIMATE TARGETS (2040)

- 90% of new sales for cars will be EV

- 90% of new sales for two and three-wheeler vehicles will be EV
- 90% of new sales for buses will be EV
- 90% of new sales for trucks will be EV
While the medium-term targets may seem as a humble beginning, it will prove as a very decent case study
which can then be scaled up. Furthermore, the five-year penetration targets are expected to save PKR 110
billion to the national exchequer, mainly due to the saving in oil import bill.
POLICY INCENTIVES FOR ELECTRIC VEHICLES
In order to realize the above penetration targets of EVs and its associated infrastructure, the Government
of Pakistan has incentivized the value-chain.
INCENTIVES FOR NEW CARS
1 Used EVs, of up to 3 years, can be imported at 15% custom duty until 2021 – if you are to compare it
with FFVs, the FFVs custom duty ranges from 75% to 100%
2 EV specific parts, that cannot be manufactured in Pakistan can be imported at 1% custom duty till
2021
3 EVs manufactured in Pakistan to be sold at only 1% General Sales Tax (GST)
4 State Bank to devise policy under its Green Banking Guidelines for lease financing
INCENTIVES FOR TWO AND THREE-WHEELER ELECTRIC VEHICLES
1 All imported and locally manufactured EVs will be sold at 1% GST for the next 5 and 7 years
respectively
2 EV specific parts, that cannot be manufactured in Pakistan can be imported at 1% custom duty till
2021
3 A special provision is being made for import of EVs with swappable battery.
While the above are directly pertaining to EVs, the policy also has several incentives for the entire value
chain wherein it has made it favorable for greenfield projects in manufacturing of EVs and establishment
of charging stations. These favorable conditions are formed by: lowering financing rates, lower land leasing
rates for the first 10 years, individual components to be imported at 1% custom duty and 1% GST.
LOOKING AHEAD
The National Electric Vehicle Policy has also pointed out the need to establish a National Center for
Electric Vehicles which will see through this entire process of implementation. It has been given an agenda
to: evaluate the EVs per Pakistan’s unique environment, which honestly is a better way of referring to our road
infrastructure, jumpstart network of charging infrastructure for EVs, identify local manufacturing capabilities,
work on standardization and training of personnel, and develop further business models.
The Policy, has also involved all relevant departments of the government to prepare themselves for any
impact that adoption of EVs may have.
CHALLENGES OF EVs IN PAKISTAN
There are many known and unknown challenges that adoption of EV poses. This article was dedicated to
inform the masses about Pakistan’s National Electric Vehicle Policy; however, I would like to give some
food for thought on the challenges of EV adoption:
 - Ultimately, these EVs will be charged from the electric grid, the question that we as a country need
to ask is how clean is our electricity?
- Charging an EV is equivalent to load of one household, is our grid infrastructure stable enough?
Do we need to further incentivize the distributed generation policy?
- Range anxiety is a term analogous to EV challenges – How prepared are we to let go FFV’s
convenience
- Charging of EVs is a slow process, what do we do for long haul drives?
- While the EVs are simple to design, the real prosperity competition lies in battery design, hence
every manufacturer designs its own unique battery – this may rule out a possibility of battery
swapping stations
- The most promising battery for EVs are based on Lithium-ion. Lithium in itself is a very scarce
resource, mining of which is extremely resource intensive
- What happens to the batteries after its useful life is finished? Currently there is no profitable process
of recycling Li-ion
- EVs make zero noise, that may want us to reconsider some of the road safety rules
I will write a follow-up article addressing all the above challenges, meanwhile I would like you to share your
opinion on the National Electric Vehicle Policy and the challenges you think EVs may pose on our lives.