This article will explore proposal summaries on how to kickstart Pakistan’s Electric Vehicle (EV) industry by government cooperation with the private sector. The following are three benefits of transitioning to electric vehicles: in the near future EVs will become more economical than conventional vehicles, it will help Pakistan become energy independent by reducing oil imports therefore helping Current Account Deficit and finally it will help with pollution and global warming. The immense benefits warrant huge resource allocation, but we must consider in our policies the pitfalls of rent-seeking which exists in the current vehicle manufacturing industry (and many other industries) of Pakistan.
Proposal One Summary
The first step in transitioning to EVs is by having enough chargers available. I propose the government announce a tender for 200,000 public electric charging points, a large tender which will encourage huge investment. The tender will require expert consultancy and an entire feasibility study for EV infrastructure but must consider the following points:
- Majority of the parts must be manufactured in Pakistan. A huge order means that it should benefit domestic businesses. EV chargers are a relatively new industry in this world therefore it is something in which Pakistan can become competitive globally. It is not something that is technically challenging so this is the reason majority of parts should be manufactured in Pakistan.
- The gov of Pakistan will hold 10% of the consortium and will offer subsidies in exchange.
- High quality requirements. For the products to be competitive globally, they must have high standards of Quality Assurance. Built to European Standards at least so that it can be exported. Anti-theft technology.
- Maximum limit of 49% foreign ownership of the winning consortium. Ethical justification, the amount of taxpayer’s money going to foreign businesses.
- Foreign investors must agree to SPECFIC transfer of skills & technology which will enable over 70% of parts to be produced in Pakistan within 3 years. Mandatory employee training.
- Single payment method. All public chargers can be paid through by card and the same gateway for digital payments through mobile app. We don’t want a scenario like in the UK where you require different cards/apps for the dozens of different public chargers. They must all be compatible through a roaming network.
The proposal will create a monopoly initially which is why the transfer of skills and high standards are important. In the long-term when EV adoption rate is high, many other private investors will enter the market. Tariffs on electric chargers should be reduced slowly as it will take a long-time to produce economies of scale and become globally competitive on price as well as quality. No subsidies other than energy discounts should be given (because achieving lower cost electricity requires energy policy overhaul taking years) and we can’t wait that long and allow the industry (or all manufacturing industries) be at a huge competitive disadvantage to global rival firms. The overall EV strategy must be linked with energy policy as it will require producing cheaper electricity to make the transition viable.
Replace the public sector fleet of cars with electric vehicles manufactured in Pakistan. Set a date (2025) by which all new public sector vehicles (police, government, FWO, Highways maintenance to name a few) will have to be electric vehicles.
A large order of government vehicles from a couple of vendors who agree to not only manufacture in Pakistan but also invest in research & development in the country. This means not just factory jobs but also technology/IT related, product development and other R&D activities. The contract for such an arrangement would be complex but it will upskilling the workforce which has spill over effects.
After election 2023 (for political reasons) slowly reduce subsidies on petrol and add to EVs so uptake is strong. By 2040 end all petrol and diesel vehicle manufacturing.