Experts call for review of EV policy

KARACHI:

Automotive experts believe that electric cars could become much more affordable for customers if the government addressed key policy issues. They call for a review of policy classifications, offering incentives to all electric vehicles (EVs), removing barriers to financing EVs and reducing heavy taxes, which currently make up more than 50% of car prices, making them unaffordable for end users .

Experts urged the government to standardize policy classifications and apply incentives to all EVs. They emphasized the need to remove barriers to car finance for EVs and make the EV charging business attractive to investors. In addition, they criticized high taxation on cars, which makes them unaffordable for end users, while used cars, which often fail roadworthiness tests in Japan, are allowed to be imported under baggage systems without warranty or liability for product failures. Currently, eight automobile companies in Pakistan are using only 22% of their production capacity. Allowing imports could undermine the successful 2016-21 auto policy, which created employment for more than 2.5 million families, they pointed out.

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

Usman pointed out that range anxiety and weak charging infrastructure are hindering EV adoption in the country. However, Chinese automakers are now launching vehicles with a range of up to 800 km, which will soon ease range anxiety. He called the government’s attention to policy and incentives for charging infrastructure development, suggesting that a significant influx of electric vehicles would attract private investment in this sector.

“Yes, we are planning to start local assembly soon and we are further planning to localize parts to bring down the price of the car to benefit the customer and the country. We have further planned to launch electric hatchbacks, SUVs and sedans in the near future,” added Usman.

Master Changan Motors Limited Sales and Marketing Manager Syed Shabbir Uddin criticized the policy’s classification of electric vehicles by battery capacity, which currently only incentivizes those with a capacity of less than 50 kWh. He argued that this is akin to classifying petrol cars based on fuel tank capacity rather than engine size or vehicle type. The EV charger business is also currently not feasible due to the low number of electric vehicles on the road and regulated selling prices, resulting in low gross margins and difficult investment in charging infrastructure.

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

He said that their brand, which falls in the $40,000 price bracket in other markets, is being rigorously tested in Pakistan for launch. The brand is a joint venture of three EV giants: CATL, the world’s largest and most advanced EV battery company; Huawei, which has developed a special operating system for car driving mechanisms. and Changan, which has integrated these technologies with a futuristic car design.

Usman Suhail, who is based in Lahore, noted that the range of electric vehicles in the country is gradually expanding, driven by government initiatives, environmental concerns, market potential, local manufacturing and cost savings. However, challenges hindering the growth of EVs include poor road infrastructure, electricity deficit, devalued rupiah, limited charging infrastructure and lack of consumer awareness and confidence.

Published in The Express Tribune, June 1^St2024.

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