Overview:
Pakistan’s electric vehicle (EV) market presents a mix of challenges and opportunities. The country has a massive two-wheeler market with 26 million units on the road, approximately four million four-wheelers, and a quarter of a million buses and trucks. Despite these significant numbers, EVs remain a negligible fraction of the total vehicles. However, the entry of new players, with over 40 companies receiving licenses from the Engineering Development Board (EDB), signals potential for growth.
Economic Potential:
- Market Size: The two- and three-wheeler market consistently sells over 1.5 million units annually and is projected to surpass 2 million units per year.
- The passenger car segment sells between 100,000 and 300,000 units annually. Between 2,500 and 4,000 trucks and buses are sold annually. Tractor sales average between 30,000 and 45,000 annually.
- Growth Opportunity: Electrification of two-wheelers could significantly reduce emissions and lower the total cost of ownership (TCO) for consumers over time.
- Rising fuel prices are also making EV ownership more financially viable.
Why EVs?
- In 2021, Lahore, the second most populous city in Pakistan, was ranked the most polluted metropolis in the world, with 83% of airborne emissions stemming from the road transportation sector.
- Some reports suggest that transport accounts for 48% of total carbon emissions in the country.
- The road transportation sector consumes about 60% of the total petroleum in Pakistan (PFAN).
- A move toward electrification of the mobility sector can significantly reduce Pakistan’s carbon footprint.
Segment updates
- Sarmayacar received USD 15 million in anchor funding from the UN’s Green Climate Fund (GCF), with plans to raise a total of USD 40 million. One focus area for the fund is e-mobility.
- China’s ADM Group will invest $350 million in Pakistan’s EV sector, setting up over 3,000 charging stations nationwide.
- Local assembly of e-bikes, three-wheelers, and four-wheelers across all segments began in 2024.
- Top global EV manufacturer BYD has entered Pakistan’s auto market in partnership with Mega Motor Company (Private) Limited, a subsidiary of The Hub Power Company Limited (HUBCO).
- DFML has commenced local assembly of electric four-wheel vehicles, entering into a toll manufacturing agreement with China’s ECO-Green Motors Limited (EGML) for the production of EGML’s Honri-VE.
Consumer Perspective:
- Affordability: High upfront costs of EVs, driven by imported components and batteries, make them less accessible than traditional internal combustion engine (ICE) two-wheelers.
- Range Anxiety: A lack of charging infrastructure intensifies consumer concerns about the practicality of EVs.
- Brand Trust: As the market matures, consumer awareness and trust in EV brands are expected to grow.
Challenges:
- Supply Chain: Heavy reliance on imported parts and high tariffs hinder production and raise costs.
- Skilled Workforce: A shortage of skilled labor and limited training programs further restricts industry growth.
- Financing Gaps: Limited consumer financing options and risk-averse banks prevent broader EV adoption.
Regional Context:
India’s electric two-wheeler market serves as an aspirational benchmark, with projections that EVs will account for 60-70% of two-wheeler sales by 2030, according to McKinsey & Company. This growth is fueled by consumer adoption and robust government support.
Global overview:
- Global BEV sales are expected to reach 13.3 million units in 2024, making up 16.2% of total passenger vehicle sales.
- China accounts for over 50% of global EV sales, supported by USD 231bn in National Subsidies from 2009 to 2023, and dominance in battery manufacturing with 70% of global lithium-ion battery capacity.
- 90% of new sales in Norway are EVs.
Financing and Infrastructure Development:
- Consumer Financing: Risk-averse banking practices limit financing opportunities, exacerbating affordability challenges. Multilateral donor funding and government incentives could bridge this gap.
- Charging Infrastructure: Battery swapping and charging stations are crucial for EV adoption. Commoditizing batteries and leveraging surplus grid capacity could provide dual benefits: addressing range anxiety and reducing national electricity tariffs.
Future Outlook:
The EV market in Pakistan has immense potential, but it requires strategic interventions in financing, supply chain localization, and infrastructure development. Smart policies and collaborative efforts among stakeholders can help Pakistan electrify its fleet as per government plans—30% by 2030 and complete phasing out of fossil fuel vehicles by 2060. The entry of Chinese EV giant BYD, which sells the highest number of EVs in the world, is a major boost to the mobility segment. Ride-hailing companies such as inDrive are also experimenting with EVs in their fleets. Increased solar installations, though not without challenges amid Pakistan’s energy sector woes, are expected to positively impact the electrification of the mobility sector.