The global automobile industry is undergoing a revolution, with governments and corporations’ alike investing massive sums of money to transition from traditional combustion engines powered by fossil fuels to electricity-powered engines. The transition to electric vehicles (EVs) is more important now than ever in our collective effort to combat climate change and, hopefully, avert a crisis.
As a result of the ongoing uptick in greenhouse gas emissions, 2021 was the fifth hottest year on record, with Europe having its hottest summer on record. Temperatures are continuing to rise around the world as more heat is trapped in the atmosphere as a result of emissions from the use of fossil fuels. If we continue on our current path, we may face recurring and severe droughts, heat waves, glacial retreats, and rising sea levels. These changes will most likely be detrimental to communities, particularly those near coastal areas, and may result in a refugee crisis as these communities relocate to other areas in search of a safe haven. To avoid such a situation, countries are working tirelessly to introduce and adopt EVs over the next ten years.
Over the last few years, there has been a rapid rise in interest in the EV sector, with the world’s largest economies enacting accommodative policies to raise consumer awareness and attract companies to this sector. The Biden administration has set a goal of reaching 50 percent electric vehicle use by 2030. Similarly, the European Union is implementing the “Fit for 55” plan, which aims to reduce greenhouse gas emissions by 55 percent by 2030 by aligning climate targets with energy, transportation, climate, and land use. Similarly, despite fewer government incentives, consumers in the world’s second largest economy, China, are showing a strong interest in EVs.
In addition to nations adopting supportive regulatory practices to boost the growth of EVs, large corporations are also pouring massive amounts of capital into the sector. Over the last ten years, the EV sector has attracted $400 billion in investment, with nearly $100 billion coming in since the beginning of 2020. All of this money will be used to drive technological innovation in the sector and make EVs a viable and affordable alternative to traditional cars powered by combustion engines.
Pakistan, like other countries, launched an EV policy in 2020, with the goal of having 30 percent of vehicles be EVs by 2030 and 90 percent of vehicles be EVs by 2040. The government introduced various incentives, such as lower sales tax and custom duties under this policy to encourage the adoption of EVs.
However, Pakistan remains far behind in terms of creating a welcoming environment that will make it easier for companies to launch and consumers to begin using EVs in the near future. The main challenges the sector faces are establishing a comprehensive charging network within Pakistan and, more importantly, supplying continuous power to these centres. The Pakistani government will need to upgrade its national distribution network to accomplish this.
Furthermore, Pakistan is notorious for having an inconsistent automobile policy, as evidenced by the government changing its duties and taxes on the sector seven times in just three years. The lack of policy foresight and consistency makes it difficult for foreign and domestic firms to make bold decisions, chart long-term investment plans, and bring innovative products to Pakistani citizens. Under these conditions, a rapid transition to EVs is likely to be a difficult task for Pakistan.
On the other hand, if the Pakistani government is somehow able to develop and implement a long-term policy, the automobile sector could thrive because Pakistan has a large market to offer. Companies such as Tesla, the forerunner of EV manufacturers, may establish operations in Pakistan, assisting in technology transfer while also providing valuable employment opportunities to the country.
Overall, government officials and leaders in Pakistan should understand that the EV sector is gaining momentum around the world, with nations enacting enticing policies to support companies’ efforts to make EVs easily accessible to consumers over the next ten years. As a result, now is the time for Pakistan to also develop a comprehensive plan that will enable automobile companies to work toward laying a solid foundation for the EV sector in the coming years.