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Future of electric cars in Pakistan

On April 23, 2016, Pakistan signed Paris climate agreement, joining 174 other nations in a commitment to combat climate change. The Paris Agreement is an agreement among 175 countries within the UN Framework Convention on Climate Change (UNFCCC) dealing with CO2 emissions reduction. The agreement went into effect on November 4, 2016. The contribution that each individual country will make to combat climate change should be reported every five years and are to be registered by the UNFCCC Council.

Research and development in e-car business date back to the 19th century. With the first electrically powered car being produced in 1895 by Thomas Parker, these cars have brought a new hope in the already ailing automobile industry. Over the years, through practical research, new technologies have been introduced in the automobile business and old car makers have been replaced by new ones. Tesla being the leader in the e-car business, has set a standard for others to follow. BMW has introduced their top of the line electric cars, the i3 and the i8 in Pakistan. Other than the BMW’s e-car line, Nissan, Hyundai, Audi and Renault are already in talks with the Ministry of Industries & Production for producing locally manufactured electric cars.With this growing interest in EVs, and with an increasing emphasis on fossil fuel reduction and carbon pricing worldwide, automobile manufacturers are swiftly shifting their focus on the research, development, and manufacturing of EVs.

Like most of the developing countries, Pakistan too has a strong market for hybrid vehicles, with Honda Vezel, Honda FIT, Toyota Prius, Toyota Aqua, and other such models having a significant presence on the Pakistani roads. Leading automobile manufacturers, including Super Power Motorcycles, have started introducing EV models with a wide range of prices, targeting customers of diverse income groups. One such model is priced at PKR 600,000, which suggest that Pakistani manufacturers are willing to risk investing in this market segment. Several members of the international automobile industry (South Korea, China, and Japan) also believe that Pakistan is a high potential market for EV technology, and local businesses are collaborating with them to bring EVs in Pakistan.

The 2016 Auto Industry Development Policy (AIDP) and the launch of China-Pakistan Economic Corridor (CPEC) are encouraging foreign investments for the new automobile brands to enter Pakistani market. It will enhance competition in the automobile industry while at the same time provide a wider range of options for consumers. The heightened competition will mean competitively lower price range for customers and influx of more efficient, up-to-date engine and technology. In addition, the constant race between EV/hybrid cars with fuel powered vehicles to establish their market share will create a technology battle in the local industry which will eventually lead to the continuous introduction of not just new but better models by all brands.

On one hand, we have obvious advantages including cost-efficient fuel mileage, less maintenance requirement, reduced oil import, agreeable fuel economy and good riddance from pollution for the entire country. On the other hand, the cons include relatively low-speed limit, short range of travel on a full battery, and lack of options in the newly emerging market. It is also questionable whether Pakistan will be able to support the rising electricity demand that will, without a doubt, accompany this anticipated technology transition.

 

The country has long been battling with energy shortages. With unreliable and expensive energy supply in the country, the auto industry has never been interested in electric car projects. However, the situation seems to be changing now. EVs present two major problems in Pakistan. Firstly, the severe shortfall of electricity and the frequent power cuts due to ‘load shedding’. Secondly, the consumer mindset and their reluctance to invest in EVs as compared to them investing in conventional fuel cars. Electric cars, despite demanding high maintenance once every few years, are extremely fuel efficient and save up significantly on fuel costs. It is high time that people are made aware of the use of electric vehicles in Pakistan, especially in urban areas, to decrease the carbon footprint. Although people have been intrigued by the idea of hybrid cars, they are majorly still reluctant to completely transform their garage into fully electric cars due to long driving hours, even within cities. The technology is neither cheap nor simple to construct.

Working on sustainable charging systems for EVs is one way to limit the increase in electricity demand that EVs will contribute. Research on hybrid and electric car charging systems and renewable-energy based EV charging docks is necessary to eliminate our complete dependency on fossil fuels. The government, through collaboration with universities, should encourage and support research projects related to renewable and alternative sources of energy and introduce technology competitions. Entrepreneurs should also establish innovative businesses that tap into the rising demand for electricity. One such example could be to convert parking spaces and garages into parking plus solar charging stations. In addition, the government needs to introduce tax rebates and custom incentives for people investing in such environment-friendly green stations. But above all, consumers need to be motivated to use renewable charging docks instead of the charge-at-home facility most EV and hybrid car models come with. In addition to awareness programs, governments and businesses will need to come up with financial incentives to attract people to travel the road of sustainability.

EV producers, importers, and investors can explore the possibilities of making ‘charging stations’ in Pakistan, whilst setting up plants that produce auto parts for these EVs. As compared to 43,000 charging stations in the US, Pakistan has just a few, not more than 100. Also, the price is an issue for many consumers. Cheapest electric car available in Pakistan is the Nissan Leaf which stands at roughly Rs2.7 million which is way too much for masses. There is a requirement for locally manufactured electric cars that are cheaper than their imported counterparts. Still there is room for discussion left as the late adopters may prove beneficial since it is a new technology. In this case, time will play a deciding role because there is always a start to a success model.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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