December 04, 2019
“We are pained and disappointed to see that electric cars have been excluded from the five-year electric vehicle policy,” said Shaukat Qureshi, general secretary at the Pakistan Electric Vehicles & Parts Manufacturers and Traders Association (PEVPMTA).
Earlier this month, the Pakistani government regulator the Economic Coordination Committee (ECC) approved the much-anticipated EV policy which allowed the manufacture of two- and three-wheel vehicles in Pakistan but left out four-wheelers – which Qureshi said was the “backbone of the EV policy”.
“We were the ones who carried out all the analysis and research and provided them with country-wide data which helped them give a direction to their policy. We were included in all the stakeholder meetings and consultations, and today we have been left high and dry,” he said.
PEVPMTA is not alone in feeling let down. Malik Amin Aslam, advisor to the prime minister on climate change and the man behind the EV policy, told The Third Pole that the inclusion of four-wheelers hit a snag.
“The Ministry of Climate Change (MoCC) in its earlier policy document gave a clear target and policy recommendation for four-wheelers also, which was passed by cabinet, but has been delayed in an ECC sub-committee,” Aslam said.
Pakistan’s minister for industries and production, Hammad Azhar, who announced the ECC’s decision on Twitter said “the policy for four-wheelers is being deliberated and will be finalised shortly” but was unavailable for a comment to explain the reasons behind the delay.
PEVPMTA has accused the multi-billion-dollar automobile industry lobby of obstructing the policy approval. With a decrease in demand for fossil fuel-powered cars, the sector is already feeling the pinch.
“The car lobby is terrified. It doesn’t take much to assemble an EV; it has far fewer moving parts than a combustion engine car and EV plants will employ far fewer people,” said Rafay Alam, an environmental lawyer and member of the Pakistan Climate Change Council. “The dinosaurs are fearing extinction!”
He added, “The EV policy has been stalled because of this ludicrous infighting between the MoCC and the car lobby.”
Ejaz Hussain, honorary secretary of PEVPMTA told The Third Pole, “[The big car companies exercise] immense power within the ECC. These giants are trying their best to delay the EV policy from being approved.”
Hussain added that many manufacturers are yet to produce their own EVs and will not let in newer entrants until they get things in order. He said Toyota was carrying out a joint venture with a Chinese EV company and it may not bring in its own EV until 2024. “Until then [Toyota] will try to delay this policy for us,” he said.
Salim Godil, chief executive of Toyota Central Motors, the largest dealership in Pakistan, confirmed that “Toyota is working with BYD [the Chinese electric car manufacturer] for a joint venture on EVs, but to bring these vehicles to Pakistan may take years.”
Aslam, the climate change advisor, agreed with Hussain. He said, “There is no doubt that there exists a strong anti-EV lobby with narrow vested interests which is deeply embedded in the system and has been blocking and delaying the process.” He described the delay as “criminal” as it clearly is against “national interest”.
Abdul Waheed Khan, director-general of Pakistan Automobile Manufacturing Association (PAMA), said the claims were an “absolute fabrication”. He said it was unfair for car manufacturers to be blamed for issues between the ministries of industry and climate change. He said, “The approval of the policy for two-wheeler EVs will also affect us as bikes are a common man’s means of transport and nearly 20,000,000 of them are produced annually in Pakistan. Did we stop the government from approving it?”
Khan said that his association had participated in all stakeholder meetings that took place with the government and had agreed to all kinds of vehicles. However, he said, “It is not easy to bring about EVs on the roads; it’s an expensive transition and technology is changing fast,” adding, “These machines come with their own set of issues that even countries like India and China are grappling with.”
In 2017 India declared it would manufacture only electric vehicles by 2030. That goal has now been revised downward to 30%.
Aslam said he was concerned the delay may close the window of opportunity for Pakistan to become a manufacturing hub for EV vehicles, spare parts and components. “Right now, with fewer players, we have a golden opportunity to jump in,” he said.
Environmental lawyer Alam said he was unsure whether the local car lobby would allow Pakistan to become an EV manufacturing hub, or if the present government would be able to overcome political difficulties. “Remember the policy was approved by cabinet in December 2019 but somehow the Ministry of Industries and Production managed to convince cabinet to review it,” he said.
“To become a hub means being part of the global supply chain and having exclusive rights… that happens when you have surpassed other competitors technologically,” said Khan of PAMA. “We are still very new in the game.”
Can a hybrid be an EV?
To buy more time, the automobile lobby is pushing to include hybrid cars as EVs and for them to be given the same status and advantages in the policy.
“Nowhere in the world has a hybrid been recognised as an EV,” said Hussain.
PEVPMTA told The Third Pole that because the auto industry does not have EVs available worldwide, it is trying to capitalise in the Pakistan market through hybrids. The association is fighting against the acceptance of hybrids as EVs.
Despite the setback, the MoCC’s Aslam said his ministry would keep pushing for the inclusion of four-wheel vehicles inclusion into the policy so that Pakistan can benefit from the very “obvious environmental and economic benefits of a total EV shift” as well as position itself to become a manufacturing and exporting hub for right-hand drive EVs.
With 43% of the country’s emissions coming from the transport sector, the minister said transitioning to EVs provided a “huge opportunity” for Pakistan.
If he has his way, there will be 100,000 electric cars, 500,000 two and three-wheelers, and 1,000 buses and trucks on the roads in the next five years. According to him this would reduce exhaust emissions by 65%. “And the consumer running cost will be reduced by 70%,” said Aslam.
In addition, he said, this would bring annual savings of almost USD 2 billion on imported fuel. Meanwhile, Pakistan will be able to use 3,000 to 4,000 megawatts of excess electricity presently in the system.
The Economic Survey 2018-19 stated that there were there are three million private cars and 20 million motorcycles and motorised rickshaws on Pakistani roads, so it is unclear how this number of EVs would have such a large impact.
Investors in the doldrums
Many companies have invested billions in anticipation of the EV policy and even built infrastructure in preparation.
In addition to his role at PEVPMTA, Hussain works in the marketing department of the EV auto division at S Zia ul Haq & Sons, an engineering and technology company. Hussain said that in the past three years, the company had “invested heavily” in research and development, visited China 15 times and bought 11 electric cars and 10 bikes to test in Pakistan.
“We are all set to manufacture 10,000 cars every year,” he said.
“Our unit is almost ready with the civil work completed. The paperwork was carried out even before that,” said Hussain. His company has invested over PKR 500 million (about USD 3 million), which includes the cost of 25 acres of land, civil infrastructure and keeping an office in China.
Hussain said he felt Pakistan is already two years too late and further delay may scare away the investors.
While many who have invested in the four-wheel sector feel short-changed, there is much to celebrate for manufacturers of two and three-wheel vehicles.
Muhammad Ayaz, the director of Green Wheels Private Ltd, which makes hybrid rickshaws and motorbikes, has been working in EV for over six years. He called the passage of the policy a “revolution”.
With 17.5 million motorcycles registered in Pakistan, motorcycle ownership has increased from 41% in 2015 to 53% in 2018. Pakistan is the fifth-biggest motorcycle market in the world after China, India, Indonesia and Vietnam.
Little wonder then that Ayaz sees huge potential for two-wheel EVs across the country. “Not only can we cater to the local market, we can start exporting them by the end of this year,” he said.
With nearly two-dozen companies raring to get started, he said, “There is much expertise and investment potential in this sector.”
Islamabad-based Murtaza Zaidi and Haider Zaidi lead a two-year-old EV startup, Iner-Z Automotive. After the sky cleared a few weeks into the coronavirus-induced lockdown, Murtaza said he became more certain that bringing EVs onto the roads is a move in the right direction. “With 4,000 bikes being sold daily in Pakistan imagine what fossil fuel-run bikes will do to our health?” he said.While he said he was “thrilled” the EV policy has been approved he said that “innovation may take a backseat” if the government gives more duty-free exemptions to traders to buy parts for EVs. “The government should give the industry a couple of years and then stop this completely so a local market based on research and development and innovation can grow.”
The ECC has approved a number of incentives for EVs, including a five-year fixed sales tax and five-year fixed import customs duty. If EV manufacturers can get these written into the country’s budget, which the MoCC has strongly recommended, then the manufacture of two and three-wheelers can begin as soon as “within this month” according to minister Aslam.
At the same time, Alam pointed out that the government needs to “robustly promote” systems that make an EV policy possible, such as recharging stations and pricing structures for EV recharging.