ISLAMABAD, DEC 15 /DNA/ – ‘Technology Transfer, Global Value Chain Integration, Export Oriented Production and Reducing Upfront Cost’ – these are the priority areas identified by the Pakistan Institute of Development Economics (PIDE) in its recommendations for the upcoming Electric Vehicle (EV) Policy. The Prime Minister of Pakistan in September 2024 directed the government to present a new policy for accelerating EV manufacturing and increase user adoption across the country. In response to the Prime Minister’s call for a robust EV policy, PIDE has presented its set of recommendations ‘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 recommends devising a long term policy for development of 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% of all new 4-wheelers and 25% of all new 2/3 wheeler sales to be EVs by 2030, while increasing the shares of the former to 50% and latter to 75% by 2040. PIDE also recommends increasing production of EVs in Pakistan to produce 50% of all new 4 and 2/3 wheelers in Pakistan as EVs by 2035.

The policy recommendations by PIDE emphasize 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. PIDE recommends targeting 10% of all EVs and 5% of auto parts produced to be exported by 2030 while 50% of all EVs and auto parts both produced in Pakistan must be exported by 2040.

For this purpose, the government must 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. The State Bank of Pakistan is also encouraged to devise a Green Financing Plan for provision of financing through commercial banks to support the growth of EVs and EV parts and components manufacturing in Pakistan, with keen focus on establishment of new or expansion of existing manufacturing facilities and setting up of charging facilities.

PIDE also stresses on the need for conducting Research & Development in EV and associated areas so Pakistan becomes a global player in the transition towards EVs. Consequently, PIDE recommends establishing a research fund to facilitate targeted research activities with particular focus on but not limited to reducing the cost of production of EVs, reuse of batteries after completion of initial life cycle and environmentally safe battery waste disposal.

Future on Wheels, PIDE’s Policy Viewpoint, emphasizes that the adoption of EVs is not just an environmental imperative but also an economic opportunity. A well rounded and effective policy, building on the lessons learned from previous policies will set the stage for Pakistan to leapfrog into a sustainable future.

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/