Electric Vehicle Policy
Electric vehicle (EV) policies, simply put, encourage the use of electric vehicles in combating climate change. These policies include incentives, regulations, directing climate finance to EV projects, and infrastructure development. Pakistan adopted its National EV Policy in 2020.
Summary of Pakistan’s Electric Vehicle Policy 2020
- Charging Infrastructure: The Pakistani government plans to develop charging infrastructure in major cities, and along motorways and highways. Initially, at least one DC fast charger will be installed in every 3×3 or 4×4 km grid. In addition, the government will install fast chargers along M1, M2, M3, M4, M5, M9 motorways and N5 highway. The government aims to encourage existing CNG and fuel stations to establish charging infrastructure, leveraging their existing facilities.
- Financial Incentives:
- GST Rate Reduction: The GST rate for EVs, including 2-3 wheelers and heavy vehicles, will be reduced to 1% of the prevailing rate.
- Sales Tax Exemption: Completely Knocked Down (CKD) are sales tax exempt at import stage.
- Income Tax Exemption: Auto part manufacturers establishing greenfield independent manufacturing facilities for EV-related equipment and infrastructure development will receive a five-year income tax exemption.
- Duty and Tax Exemption: All inputs for manufacturing EV-related parts by Original Equipment Manufacturers (OEMs) and vendors will be exempted from duties and taxes for five years from the start of manufacturing.
- Low-Interest Loans: Green banking policies will give loans are 5% interest to registered manufacturers of EV-specific parts and infrastructure equipment.
These proposed plans need to be put into action, in a swift manner such that Pakistan can fulfill its Nationally Determined Commitment (NDC) to have 30% of all new vehicles sold in the country by 2030 to be electric vehicles.
EV Policies Work Around The World!
Electric cars are not a luxury for high-income countries; they are also a necessity for low-income countries. Switching to renewable-energy charged vehicles reduces dependence on imported fossil fuels and improves air quality. For example, Rwanda is a low income country. Its GDP per capita is 822 USD (2021) while Pakistan’s GDP per capita is 1505 USD (2021). Despite this, Rwanda swiftly executed its EV policy with the goal of 30% of all vehicles sold by 2030 to be completely electric.
To facilitate this, the Rwandan government cut all VAT, excise and import duties for vehicle parts and charging station equipment. It also empowered a strong private sector to create market demand and supply of EVs. On the micromobility side, GURARIDE is a green e-mobility public bike share (PBS) transport system which combines electric bikes and scooters usage in a single app for consumer convenience. This service is currently scaling up all over Rwanda.
On the EV manufacturing side, SAFI – a green transport company – is assembling electric bikes and scooters in Rwanda, employing hundreds across its supply chain. In addition, SAFI has launched their electric vehicle charging infrastructure called EV Plugin. The network boasts hundreds of stations around the country. Moreover, these stations are government facilitated through subsidized electricity. In addition, SAFI aims for 60% of its fleet to be women, thus lessening the gender gap in climate projects. Pakistan has much to learn from the Rwandan government pro-activeness in incentivizing electric vehicles.