Pakistan is committed to a greener future and is taking steps to accelerate sustainable mobility. The country aims to significantly increase the adoption of New Energy Vehicles (NEVs) in the coming years. The government has outlined a phased approach: by 2030, 30% of new vehicle sales will be NEVs; by 2040, this figure will rise to 90%; and finally, by 2050, all new vehicle sales will be electric. Ultimately, Pakistan aspires to achieve a 100% zero-emission vehicle fleet by 2060.

The Policy’s Key Points:

Substantial Subsidies: The government has introduced significant subsidies for electric motorcycles (Rs. 50,000) and three-wheelers (Rs. 200,000), with a total allocation of Rs4 billion. These subsidies will be distributed through auctions.

Reduced Financing Costs: The policy rate has been reduced from 22% to 15%, and financing is available at a 3% Kibor (Karachi Interbank Offered Rate), with the government covering the financial cost. This allows consumers to pay monthly installments of around Rs 9,000 over two years, which is lower than their projected fuel savings.

Infrastructure Development: The government plans to establish a New Energy Fund and a New Energy Vehicle Centre to support the transition to electric vehicles.

Global Partnerships: Major global players like BYD Group of China have obtained manufacturing licenses in Pakistan, and other companies like Dewan Motors are set to launch their EVs under the completely knocked down (CKD) license.

Environmental Impact: The policy is expected to significantly reduce air pollution and greenhouse gas emissions, as well as lessen Pakistan’s dependence on costly imported petroleum products.

Incentives For CKD 2&3-Wheelers  

The New Energy Vehicle Policy proposes tariff-based incentives for each category of NEVs. For NEV 2- and 3-wheelers, EV-specific parts will attract a 1% CD for the entire policy period. Non-localized parts will be subject to a 15% CD for conventional-shaped 2- and 3-wheelers.

For new-shaped 2&3-wheelers (scooty, scooter, e-bicycle, tricycle, etc.), the CD for non-localized parts will be 5% in the first year, 10% in the second year, and 15% in the third year. Localized parts will be subject to a 46% CD for conventional-shaped 2&3-wheelers. For new-shaped 2&3-wheelers, the CD for localized parts will be 15% in the first year, 30% in the second year, and 46% in the third year.

Incentives For CKD 4-Wheelers 

The New Energy Vehicle Policy also proposes incentives for NEV 4-wheelers (cars, SUVs, vans, LCVs). For NEV 4-wheelers, EV-specific parts will attract a 1% CD, while non-localized parts will be subject to a 5% CD in the first year and a 10% CD in the second year. Localized parts will be subject to a 15% CD in the first year and a 25% CD in the second year.

What For NEV Heavy Commercial Vehicles?

The New Energy Vehicle Policy also provides incentives for NEV heavy commercial vehicles. The entire CKD kit for these vehicles is allowed at a 1% CD. Additionally, there are common incentives for all NEVs, including a 0% sales tax on the import of NEV-specific parts in CKD, a 1% sales tax on the supply/sale of locally manufactured NEVs, and a 0% ACD and RD on CKD kits of NEVs.

Incentives For Storage Solutions

Objectives:

  1. Contribute to the country’s Nationally Determined Contributions (NDCs) and climate goals by reducing carbon emissions.
  2. Promote the development of the New
  3.  Promote the development of the New Energy Vehicle (NEV) industry in Pakistan, including assembly, manufacturing, and the production of parts and components.
  4.  Offer economically viable, clean, and green mobility options for the people.
  5. Create a clear roadmap for Public-Private Partnerships (PPPs) and encourage investors to engage in sustainable technologies.
  6.  Utilize the already installed extra capacity of electricity in Pakistan.
  7. Reduce the country’s long-term import bill.
  8. Foster innovation through public investments, financing, and collaborations with research bodies and startups.
  9.  Create a skilled workforce to support the expansion of the EV ecosystem and engage youth productively.

Industry Concerns

The Pakistan Automotive Manufacturers Association (PAMA) has expressed several concerns about the potential impact of the NEV policy on the local auto industry. Key concerns include:

Impact on Local Manufacturing: PAMA fears that increased imports of completely built units (CBUs) at reduced-duty structures could harm local manufacturing.

The association advocates for a minimum level of local manufacturing facilities for CBU importers to avoid creating a junkyard and ensuring adequate after-sales support.

Policy Consistency: PAMA recommends maintaining the current policy for hybrid electric vehicles (HEVs) and plug-in hybrid vehicles (PHEVs) until 2030. If further incentives are granted to PHEVs, the association suggests extending the same benefits to HEVs.

Duty Structure and Incentives: PAMA also suggests aligning duties and incentives for NEVs with those for other vehicles starting from the third year. The association also suggests phasing out incentives for NEVs by 2030 and including renewable energy vehicles, such as biogas-fueled cars, in the NEV policy.

While the NEV policy is a bold step towards a sustainable future, it is crucial to balance the need for environmental protection with the economic interests of the local auto industry. The government will need to address the concerns raised by PAMA and other stakeholders to ensure a smooth transition to electric vehicles.