PIDE proposes sweeping reforms to turbocharge Pakistan’s EV industry
ISLAMABAD: The Pakistan Institute of Development Economics (PIDE) presented a detailed set of recommendations aimed at electrifying the country’s transportation sector, outlining key policy interventions to speed up the adoption of electric vehicles (EVs) and pave the way for a low-carbon future.
The think-tank’s recommendations for the upcoming Electric Vehicle (EV) Policy focus on four main areas: Technology Transfer, Global Value Chain Integration, Export-Oriented Production, and Reducing Upfront Costs.CISS Seminar on ‘Pakistan’s Energy Crisis: Role of Nuclear Power
In September 2024, Prime Minister Shehbaz Sharif instructed the government to devise a new policy to accelerate EV manufacturing and boost user adoption across the country. In response to the Prime Minister’s call for a comprehensive EV policy, PIDE has presented a set of recommendations titled ‘Future on Wheels’ to help create an effective policy framework.
These recommendations are based on PIDE’s recent publications on Pakistan’s automobile industry, including “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 suggested formulating a long-term policy for the development of the EV industry in Pakistan, with specific targets for short-term (by 2030), medium-term (by 2035), and long-term (by 2040) goals. The policy includes the following targets:
- 10% of all new 4-wheelers and 25% of all new 2/3-wheelers should be EVs by 2030, with these figures increasing to 50% for 4-wheelers and 75% for 2/3-wheelers by 2040.
- By 2035, Pakistan should aim to produce 50% of all new 4-wheelers and 2/3-wheelers as EVs.
PIDE’s recommendations also highlight the importance of integrating Pakistan’s automobile industry into the global value chain for both conventional automobiles and EVs. This integration can be achieved by reducing customs duties on the import of EV inputs and significantly increasing the local production of EVs, parts, and components to boost exports.
The think-tank proposed that by 2030, 10% of all EVs and 5% of auto parts produced in Pakistan should be exported, with these figures rising to 50% of both EVs and auto parts by 2040.
To achieve these goals, PIDE suggested that the government facilitate joint ventures between Pakistani automotive firms and foreign companies to increase EV production and the manufacturing of related parts through technology transfer and capital investment.
PIDE also urged the State Bank of Pakistan to develop a Green Financing Plan to support the growth of EV manufacturing, including EV parts, through financing options from commercial banks, with a particular focus on expanding existing facilities and establishing new ones, as well as setting up EV charging stations.
Additionally, PIDE emphasized the need for research and development (R&D) in the EV sector, to enable Pakistan to become a global leader in the EV transition. To this end, PIDE recommended creating a research fund to support targeted research activities, including efforts to reduce the cost of EV production, reuse batteries after their initial life cycle, and ensure environmentally safe disposal of battery waste.
