EDITORIAL: Last week cabinet approved the 4 wheelers Electric Vehicle (EV) policy. The prices of EVs passenger cars are at 30-35 percent premium compared to internal combustion vehicles (ICVs) of similar engine capacity. The duty and tax structure for EVs is kept lower to bring the consumer prices at the same levels as those of ICVs. Higher incentives are offered for cars having battery capacity below 50KWH (mainly small cars) to promote assembling of smaller cars. The influx of EVs is desirable for various reasons. The foremost benefit is better environment. Carbon emissions by internal combustion engines are a major reason for higher pollution in big cities. EVs emit none. This will help save the dollars spent on the import of fuel. The electricity cost of running cars on EVs is about one third of that spent on fuel in ICVs. The influx of EVs can consume the surplus electricity in the system. For that, efforts are required to shift the public transport of urban centers to EVs in the first phase.
The question, however, is how quickly the shift to EVs can take place in Pakistan. That in turn depends upon how quickly the charging infrastructure can be developed. At present, there are less than 1000 imported EVs in Pakistan with less than 10 charging spots across the country. The EV users are charging cars at home; they use EVs only for within their city drive. Import duty on EVs had already been reduced to 25 percent for all battery sizes, now the additional duties and taxes have also been abolished to make imported EV cars slightly cheaper. The policy is primarily for domestic assembling. A few companies are seriously thinking on building EV assembly plants in Pakistan. BYD is the biggest EV producer in the world. Its negotiations with a local business group are in an advanced stage. MG (a British brand owned by the biggest Chinese automaker - SIAC) is launching an EV model. Initially, they will sell imported units. Apart from these, many other new entrants in the industry - South Koreans, Chinese and Malaysians - have options of introducing EVs. However, it will take at least 6 to 12 months for anyone to start assembling here. BYD in partnership with Sapphire could be the biggest player in EV in Pakistan. Their plant will only be for EVs. In case of others, they would add EV assembly to their existing plants. The newcomers in ICVs will initially focus on the ICVs models that they have launched and slowly add EVs to their portfolio. None, of the Japanese players in Pakistan has, however, expressed interest in EVs as yet.
Thus, in 2021, at best, a few thousands units would be imported. In 2022, BYD plant will likely be operational and some others may start assembling EVs in Pakistan. But for that to happen, some progress is needed in developing charging infrastructure by the government. Assembling cars is a big commitment and production by each plant should run in thousands, if not in tens of thousands. The question is will the consumer be interested. Right now, EVs in Pakistan are in the possession of elite and who have multiple cars at home. They are happy to use EVs for within city travel. Charge the car at home at night and use it during the day. This math can work perfectly for non-elite city users. The running per charge varies from 200-300km. Dwellers in mega cities like Karachi and Lahore should be the top customers as most people don't leave city often on cars. The second car in any home should be EV, provided it is for inter-city use only.
Ministry of petroleum is tasked to build charging stations alongside the highways and in cities using PSO and other OMC networks. The quicker this development take places, higher would be the EV acceptability amongst the customers. If the government does enough, some private players may also chip in. A word of caution for our policymakers: if the population of charging stations does not match up with the EV population there will be long queues at charging stations and that would be a major setback to the government's effort to promote the use of EVs.
Copyright Business Recorder, 2020
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