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Pakistan’s federal government has launched the National Electric Vehicle (NEV) Policy 2025-30, setting a somewhat unrealistic target of achieving 30% electric vehicle (EV) penetration in new vehicle sales by 2030. This target rises to 90% by 2040.
By achieving this goal, the government projects significant benefits, including annual fuel savings of 2.07 billion litres, amounting to nearly $1 billion in foreign exchange savings. Reduction of carbon emissions by 4.5 million tons annually. And savings of $405 million per year in health-related costs due to improved air quality. It’ll also utilize Pakistan’s surplus electricity generation capacity, which is likely to increase with CPEC completion.
It’ll create new economic opportunities and job creation in the EV sector. To drive adoption, the policy includes:
- An initial subsidy of Rs 9 billion for fiscal year 2025-26, facilitating the sale of 116,053 electric bikes and 3,171 electric rickshaws.
- A 25% quota is reserved for women to promote inclusive mobility.
- Subsidies of Rs 50,000 for electric motorcycles and Rs 200,000 for three-wheelers.
- Exemptions on customs duties and sales tax on EV parts to support the local industry.
- Reduced electricity rates for EV charging stations.
- A fully digital platform for transparent subsidy application and disbursement.
- Credit Loss Guarantee is managed by the Finance Division to ease consumer financing.
Infrastructure Development:
The policy outlines plans for the installation of 40 new EV charging stations on motorways, with an average distance of 105 kilometers between them. The government’s Target is to install 3,000 charging stations by 2030. Introduction of battery swapping systems and vehicle-to-grid (V2G) schemes is also under consideration
The government aims to promote local EV manufacturing through tariff protections and incentives, targeting 90% localization in two- and three-wheelers by 2026.
Automakers, particularly those with established internal combustion engine (ICE) vehicle manufacturing, are raising significant doubts about the feasibility of the 30% EV target by 2030. Their concerns stem from several critical challenges.
Core Issues
Industry veterans point out that global EV adoption has been heavily reliant on substantial government subsidies. Given Pakistan’s economic challenges and limited fiscal space, they question how the government can sustain the necessary level of incentives for broad-based EV adoption. Removing subsidies often leads to sharp drops in EV demand.
India, despite massive financial interventions (FAME I and II schemes, PM-EDRIVE initiative) over the past decade, has significantly lower EV penetration (e.g., 3.7% for electric two-wheelers and 1.5% for electric cars as of October 2024). This comparison makes Pakistan’s 30% target seem unrealistic without a massive and sustained financial commitment.
EVs, even Chinese models, which are generally more affordable, remain expensive for the average Pakistani consumer. Without significant and consistent financial support, widespread adoption among middle and lower-income buyers is unlikely.
The industry fears that the policy might end up benefiting only a small, affluent segment of society, at the expense of public funds, without significantly impacting environmental outcomes on a larger scale.
Despite government plans for new charging stations, Pakistan’s EV charging infrastructure is still in its nascent stages. The lack of a robust and widespread charging network, particularly in rural or remote areas, is a major deterrent for potential buyers due to “range anxiety.”
Concerns about the reliability of the power grid, with common brownouts and blackouts, also raise questions about the consistent availability of electricity for charging.
Unlike ICE vehicles, which have high localization levels (over 95% for two-wheelers and 65% for four-wheelers), New Energy Vehicles (NEVs) currently rely heavily on imported Completely Knocked Down (CKD) kits for assembly. This dependence on imports makes them unaffordable for the average consumer and limits genuine local industrial growth.
Automakers warn that reduced duties on Completely Built Units (CBUs) could flood the market with imported EVs, undermining local manufacturing efforts and threatening the market share of Original Equipment Manufacturers (OEMs).
Many potential buyers lack sufficient knowledge about EVs, including their performance, battery life, maintenance costs, and long-term savings. After-sales service for EVs is also at a nascent stage, which further erodes consumer confidence.
There are concerns about policy continuity and consistency, especially given past instances of policy changes. The IMF’s reported reservations about tax relief and its recommendation for tariff rationalization have created uncertainty within the auto sector.
The exclusion of Hybrid Electric Vehicles (HEVs) from the main policy focus is also seen as a missed opportunity, as HEVs could offer an immediate reduction in fuel consumption and a more gradual transition towards pure EVs.
