Pakistan’s New Energy Vehicle (NEV) policy targets 30% electric vehicle (EV) adoption for new vehicles by the end of 2030 and envisions a gradual transition to a zero-emission road fleet by 2060, positioning itself as an emerging player in the global EV market.  

In January, China’s BYD partnered with Habibullah Khan to enter Pakistan’s market. Khan’s holding company, Mega Conglomerate, owns Hub Power Company, one of the largest independent power producers (IPPs) in the country. The announcement said the BYD vehicles would be imported rather than produced domestically.

An EV boomlet has followed. Pakistan’s Nishat Group announced its automobile division would debut an EV with South Korea’s Hyundai, while another private enterprise issued a statement committing a US$250 million investment in Pakistan’s EV market. 

Chinese state-owned automobile manufacturer Changan and MG announced plans to launch their EVs in the Pakistan market, while Chinese electric two-wheeler brand Aima launched an outlet in October.

Awais Leghari, Pakistan’s federal minister of energy, told Asia Times that his team was preparing a draft for setting up charging stations across the country as part of an initiative to promote electric vehicles, motorcycles and even electric rickshaws.

Yousuf Dewan Companies, notable for representing BMW in Pakistan, recently partnered with Chinese EV charger producer Donar. The joint venture aims to provide the essential infrastructure for EV charging.

Other Chinese companies such as Great Wall Motors, BAIC, Changan, JAC Motors, FAW, and Chery Automobiles are also rapidly expanding their footprints in the country.

Adopting EVs offers Pakistan an opportunity to reduce its reliance on imported fossil fuels, a dependency that not only drains foreign exchange but also exposes the nation to global oil price volatility.

But as Pakistan cranks up infrastructure development and policy support, its success will depend on how global EV makers respond. Despite China’s early dominance, Pakistan’s EV market is still largely untapped by Western automakers, including those from the US and UK. 

In the US, the Biden administration’s Inflation Reduction Act (IRA) has aimed to spur green energy investments, including in EVs, through tax incentives and other measures. It’s not clear, however, the IRA’s EV drive will survive under Trump 2.0.

“To further defeat inflation, my plan will terminate the Green New Deal, which I call the ‘Green New Scam’,” Trump said in a speech to the Economic Club of New York in September. “[We will] rescind all unspent funds under the misnamed IRA,” he added.

“I will end the electric vehicle mandate on day one,” Trump said in August in his address at the Republican National Convention in Milwaukee.

In the UK in January, the Zero Emission Mandate (ZEM) was signed into law to switch entirely to EVs by 2035.

This year, labor leaders said it would reinstate the ZEV mandate’s original goal: 100% zero-emission vehicles by 2030. “This is five years earlier than the original mandate target set by Rishi Sunak’s government – and a demand car makers say they can’t meet,” said the Daily Mail.

This policy has put several automobile companies in the UK in panic mode. These companies face fines if they don’t comply with yearly EV sales targets, so they often offer discounts and promotions, but maintaining demand for EV vehicles has put even the most established companies under stress.

As a result, Vauxhall has announced plans to close down its Luton factory and Ford has announced it will cut 800 jobs in the UK over the next three years because of challenging market conditions.

While US and UK EV makers face increasingly difficult situations in their home countries, local partnerships with Pakistan-based companies could make strategic sense.

“We’re offering a range of incentives, including tax breaks, subsidies, and investment in infrastructure development,” said Minister Leghari.

“We’re also establishing a one-stop shop for investors, providing them with all the necessary information and support to set up their businesses in Pakistan. Our goal is to create a level playing field for all investors, regardless of their country of origin,” he said.

While EV demand is stalling in some Western countries, it’s growing robustly in Pakistan. And Pakistan’s geographic location connects with South Asia, Central Asia and the Middle East, providing a gateway not just to Pakistan but to many other countries just starting to adopt EVs.

“Our goal is to create a competitive and business-friendly environment that encourages global automakers to set up their manufacturing facilities in Pakistan and export to regional markets,” Leghari said.  

To promote EV manufacturing investment, the government is providing NEV-specific technology zones at reduced cost space, leasing options and green loans. Other financial incentives will include a 1% customs duty on NEV parts and 10% on complete NEV imports until 2027, along with sales tax exemptions for locally manufactured components.

Other incentives include a reduced goods and services tax rate of 1% for EVs, low electricity tariffs and an import duty of only 1% for charging equipment.

Leghari says his ministry is exploring more incentives, such as offering lower financing rates from the state bank to attract global automakers facing challenges in their home markets.

While the prospects for Pakistan’s EV market are promising, there are still several challenges and risks. Like elsewhere, one major hurdle is the lack of charging stations, which obviously is crucial for the widespread EV adoption. 

Leghari said the government is promoting public-private partnerships to invest in the development of charging infrastructure. The ministry is also working on standardizing EV charging stations and providing incentives for their installation.

Although the government and private companies are rolling out more charging stations, the pace remains slow. The high upfront costs of EV vehicles can also be a significant barrier for many consumers despite the various measures to reduce costs.

Even so, Pakistan has the potential to become an EV manufacturing and export hub for South Asia, Central Asia and the Middle East. And not just for Chinese EV makers but for Western and other Asian auto producers as well.