Experts call for a change in electric vehicle policy

KARACHI:

Automotive experts believe electric cars could become much more accessible to customers if the government addressed key policy issues. They call for a review of the policy classification to include incentives for all electric vehicles (EVs), the removal of obstacles to financing EVs and a reduction in the high taxes that currently account for more than 50% of car prices, putting them out of reach for end users.

Experts have called on the government to standardize policy classifications and apply incentives to all electric vehicles. They stressed the need to remove obstacles to financing electric vehicles and make the electric vehicle charging business attractive to investors. They further criticized the high taxation of cars, which makes them inaccessible to end users, while used cars, which often do not pass roadworthiness tests in Japan, can be imported under baggage programs without warranty or liability for product defects. Currently, eight car companies in Pakistan are only using 22% of their production capacity. Allowing imports may undermine the effective car policy of 2016-2021, which provided employment to over 2.5 million families, they stressed.

Seres Pakistan Managing Director Muhammad Adeel Usman highlighted the high fuel prices in Pakistan, which has prompted customers to look for fuel-efficient vehicles such as hybrid and electric vehicles. He noted that electric vehicles offer a better driving experience compared to hybrids, costing Rs 8.5 per kilometer at current electricity tariffs, compared to Rs 19 per kilometer for hybrids and Rs 26 per kilometer for internal combustion engines. Electric vehicles also have lower maintenance costs because they do not require engine oil, oil filters and air filters, making them more economical.

Usman pointed out that range concerns and poor charging infrastructure are hampering the adoption of electric vehicles in the country. However, Chinese automakers are now launching vehicles with a range of up to 800 km, which will soon alleviate range concerns. He called on the government to focus on policy and encourage the development of charging infrastructure, suggesting that a significant influx of electric vehicles would attract private investment in the area.

“Yes, we plan to start local assembly soon and are further planning to localize parts to reduce the price of the car so that it benefits the customer and the country. We also plan to launch electric hatchbacks, SUVs and sedans in the near future,” Usman added.

Master Changan Motors Limited sales and marketing director Syed Shabbir Uddin has criticized the auto policy’s classification of electric vehicles by battery capacity, which currently only encourages vehicles with a capacity of less than 50 kWh. He argued that it was like classifying gasoline cars by fuel tank capacity rather than engine size or vehicle type. The EV charger business is also currently unfeasible due to the low number of EVs on the road and regulated selling prices, resulting in low gross margins and difficult investment in charging infrastructure.

Uddin also highlighted the misconception among policymakers that gasoline cars with small lithium batteries deserve the same incentives as fully electric vehicles. He emphasized that electric vehicles are foreign exchange friendly and Pakistan generates over 41% of its electricity from non-fossil sources such as hydro, nuclear and wind energy. Most electric vehicles will also be charged at home using solar energy, saving a significant amount of currency compared to gasoline-powered vehicles.

He mentioned that their brand, which is in the $40,000 price category in other markets, is rigorously tested in Pakistan before being launched in the market. The brand is a joint venture of three electric vehicle giants: CATL, the world’s largest and most advanced manufacturer of electric vehicle batteries; Huawei, which has developed a special operating system for car drive mechanisms; and Changan, which integrated these technologies into a futuristic car design.

Lahore-based auto sector analyst Usman Suhail noted that the scope of electric vehicles in the country is gradually expanding, driven by government initiatives, environmental issues, market potential, local manufacturing and cost savings. However, challenges hindering the development of electric vehicles include poor road infrastructure, electricity shortages, rupee depreciation, limited charging infrastructure and lack of consumer awareness and confidence.

Published in The Express Tribune, June 1^street2024.

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