The global shift towards cleaner, more sustainable energy has intensified the demand for New Energy Vehicles (NEVs). In Pakistan, the move towards NEVs is gaining momentum as local companies like Sazgar Engineering Works Ltd (SEWL), Dewan Farooque Motors Ltd (DFML), and global players such as China’s BYD and Master Changan Motors Ltd enter the market. NEVs have the potential to offer significant economic benefits, reduce Pakistan’s reliance on costly fuel imports, and address the country’s growing environmental challenges.
New Energy Vehicles (NEVs) refer to vehicles powered by alternative energy sources, including electric, hydrogen, and plug-in hybrid technologies. They are seen as the future of transportation, particularly in nations like Pakistan, which struggles with air pollution, high fuel costs, and dependency on imported fossil fuels. NEVs offer a cleaner, more sustainable alternative to traditional internal combustion engine (ICE) vehicles by reducing greenhouse gas emissions and reliance on gasoline and diesel.
Pakistan’s reliance on fossil fuel imports has long been a burden on the economy. The country imports a significant portion of its energy needs, including diesel and gasoline. According to official sources, Pakistan spends, approximately $21.43 billion annually on fuel imports, which is about 66% of its total foreign exchange reserves. This heavy import bill contributes to the country’s growing trade deficit, putting pressure on the national currency and inflating consumer costs.
Electric vehicles (EVs) can play a pivotal role in reducing Pakistan’s fossil fuel dependency. By transitioning to NEVs, the country could reduce its fuel import bill, thereby alleviating economic pressure and making room for investments in more critical areas like infrastructure, education, and healthcare. With NEVs, particularly electric vehicles, energy needs would shift towards electricity, which can increasingly be generated domestically through renewable sources like solar and wind, sectors that are already growing in Pakistan.
Pakistan is ranked among the most polluted countries in the world. According to the World Air Quality Report 2022, The report revealed that Pakistan ranks as the world’s second most polluted country on the basis of the Air Quality Index (AQI)., behind only Bangladesh and Chad. The annual PM2.5 concentration levels in major cities such as Lahore, Karachi, and Faisalabad frequently exceed the safe limits set by the World Health Organization (WHO). Vehicular emissions are a significant contributor to air pollution, accounting for a large portion of particulate matter and greenhouse gases.
Transitioning to NEVs offers an opportunity to significantly reduce Pakistan’s vehicular emissions. According to the Pakistan Environment Protection Agency (Pak-EPA), road transport contributes around 40% of the country’s total emissions, making it one of the biggest sources of air pollution. By promoting NEVs, Pakistan can mitigate its environmental damage while also improving public health outcomes by reducing respiratory illnesses caused by air pollution.
Pakistan’s automotive industry has traditionally relied on the assembly of ICE vehicles, with the majority of components being imported. In 2023, Pakistan produced around 186,000 vehicles, a decrease from earlier years due to economic challenges and reduced consumer demand. Despite this, the country imported vehicles worth approximately $2 billion in 2023, indicating the high consumer demand for imported cars.
In terms of electric vehicle production, the landscape is just beginning to take shape. Companies like Sazgar Engineering Works Ltd (SEWL), Dewan Farooque Motors Ltd (DFML), and Master Changan Motors Ltd are spearheading efforts to introduce NEVs into the Pakistani market. SEWL, for instance, has plans to introduce completely knocked-down (CKD) models for NEVs before December 31, 2025, with a significant expansion cost of Rs4.5 billion.
Moreover, Chinese automakers, such as BYD, one of the world’s largest electric vehicle manufacturers, are exploring Pakistan’s market potential, with plans to introduce electric vehicles in the near future. Master Changan Motors Ltd has already launched its electric sedans and SUVs, with vehicles available at 18 dealerships across 12 cities, signaling growing consumer interest in electric vehicles.
One of the most significant benefits of NEVs is the long-term fuel cost savings. Pakistan’s current fuel prices are highly volatile, driven by international oil market fluctuations. By shifting to electric vehicles, consumers could cut down on fuel costs as electricity is generally cheaper than gasoline or diesel. For instance, the cost of charging an EV in Pakistan is estimated to be up to 50% cheaper than fueling a conventional gasoline-powered vehicle. These savings could translate to billions of rupees saved annually on fuel expenses, benefitting both consumers and businesses.
In addition to reducing fuel costs, the adoption of NEVs could stimulate economic growth by creating new jobs in sectors such as manufacturing, research and development, and infrastructure development. As local companies like SEWL and DFML ramp up production of NEVs, there will be increased demand for skilled workers in electric vehicle manufacturing, assembly, and maintenance. According to industry estimates, the transition to NEVs could create tens of thousands of jobs over the next decade, helping to alleviate Pakistan’s high unemployment rate.
Challenges and Opportunities
Despite the potential benefits, several challenges remain. One of the key obstacles to widespread NEV adoption in Pakistan is the lack of charging infrastructure. While some companies have started investing in public charging stations, a national network of fast-charging stations is still needed to support the growth of electric vehicles. This lack of infrastructure creates “range anxiety” among consumers, discouraging them from purchasing electric vehicles.
Another challenge is the high upfront cost of NEVs, which are generally more expensive than traditional gasoline-powered vehicles. Although NEVs offer long-term savings on fuel and maintenance, the initial investment may deter many consumers, particularly in a price-sensitive market like Pakistan. To address this, the government could offer incentives such as tax breaks, rebates, and subsidies to make NEVs more affordable for the general public. In some countries, similar incentives have proven to be effective in accelerating the adoption of electric vehicles.
On the flip side, there are immense opportunities for Pakistan’s NEV market. The government’s Electric Vehicle Policy 2020 aims to promote the development of NEVs by offering incentives to manufacturers and consumers alike. This includes reducing customs duties on the import of electric vehicle components and providing tax exemptions for NEV manufacturers. By implementing supportive policies, Pakistan can create a conducive environment for NEV growth and attract investment from international automakers.
Moreover, as Pakistan continues to expand its renewable energy sector, there is potential for synergies between NEVs and clean energy. The government’s commitment to adding 20% renewable energy to the national grid by 2025 aligns with the goal of promoting electric vehicles. By integrating NEVs with solar and wind energy, Pakistan can reduce its reliance on fossil fuels and move towards a greener, more sustainable future.
The rise of New Energy Vehicles (NEVs) in Pakistan presents a unique opportunity to address multiple challenges, from reducing the country’s dependency on costly fossil fuel imports to tackling its alarming pollution levels. With companies like SEWL, DFML, and Master Changan Motors leading the way, and international players like BYD eyeing the market, Pakistan is well-positioned to become a key player in the NEV revolution. However, to fully capitalize on this opportunity, Pakistan will need to invest in charging infrastructure, offer consumer incentives, and develop a comprehensive policy framework that encourages NEV adoption. If successful, Pakistan’s transition to NEVs could pave the way for a cleaner, more prosperous future.
The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance
