ISLAMABAD - Pakistan Institute of Development Economics (PIDE) on Sunday unveiled a comprehensive set of recommendations to electrify the country’s transportation sector, outlining key policy interventions to accelerate the adoption of electric vehicles (EVs) and propel towards a low-carbon future.
‘Technology Transfer, Global Value Chain Integration, Export Oriented Production and Reducing Upfront Cost’ are the priority areas identified by the think-tank in its recommendations for the upcoming Electric Vehicle (EV) Policy. Prime Minister Shehbaz Sharif, in September 2024, directed the government to present a new policy for accelerating EV manufacturing and increasing user adoption across the country. In response to the PM’s call for a robust EV policy, PIDE has presented its set of recommendations titled ‘Future on Wheels’ to support the development of an effective policy framework.
These insights are based on PIDE’s recently published two books on the automobile industry of Pakistan ‘Driving Backwards: What is Wrong with Pakistan’s Automobile Industry?’ and ‘Wheels of Change: Tracing Pakistan’s Automotive Evolution through Political Economy and Technology Acquisition’. PIDE recommended devising a long-term policy for the development of the EV Industry in Pakistan with short-term goals for 2030, medium-term targets till 2035 and long-term targets set to be achieved by 2040.
These include 10 percent of all new 4-wheelers and 25 percent of all new 2/3 wheeler sales to be EVs by 2030 while increasing the shares of the former to 50 percent and the latter to 75 percent by 2040. PIDE also recommended increasing production of EVs in Pakistan to produce 50 percent of all new 4 and 2/3 wheelers in Pakistan as EVs by 2035.
The policy recommendations by PIDE emphasised integrating the country’s automobile industry into the global value chain of automobiles, and EVs in particular. This is possible only when the custom duties on import of EV inputs are lowered, while production of EVs and EV parts and components is increased manifolds to enhance exports, the policy noted. PIDE recommended targeting 10 percent of all EVs and 5 percent of auto parts produced to be exported by 2030, while 50 percent of all EVs and auto parts produced in Pakistan must be exported by 2040. For this purpose, PIDE suggested the government take steps to facilitate joint ventures between existing automotive firms in Pakistan and foreign firms to enhance production of EVs, parts and components through Transfer of Technology and Capital Investment.
“G2G and G2B basis engagement must be carried out for attracting investment and manufacturing in Pakistan,” it has been highlighted. The think-tank also encouraged the State Bank of Pakistan to devise a Green Financing Plan for the provision of financing through commercial banks to support the growth of EVs and EV parts and components manufacturing in Pakistan, with a keen focus on the establishment of new or expansion of existing manufacturing facilities and setting up of charging facilities.
PIDE also stressed the need for conducting Research and Development in EVs and associated areas so that Pakistan could become a global player in the transition towards EVs. Consequently, PIDE recommended establishing a research fund to facilitate targeted research activities with a particular focus on, but not limited to, reducing the cost of production of EVs, reuse of batteries after completion of the initial life cycle and environmentally safe battery waste disposal. The complete policy viewpoint can be accessed through PIDE’s website or by visiting the following web address: https://pide.org.pk/research/future-on-wheels/.