The federal government has prepared the first draft of the New Energy Vehicle (NEV) Policy for 2025-2030, with the goal of accelerating the adoption of electric vehicles (EVs) in Pakistan.

The draft has been developed through comprehensive consultations with stakeholders, including EV manufacturers and provincial representatives.

Objectives of the NEV policy

The policy aims to reduce greenhouse gas emissions and improve air quality, aligning with Pakistan's environmental goals and global climate commitments. It seeks to encourage the transition from conventional fuel vehicles to NEVs, thereby contributing to the development of a cleaner and greener transportation system.

Additionally, the policy aims to support local NEV manufacturing, create jobs, reduce reliance on imported fuels, and strengthen energy security, which will provide economic benefits.

Policy highlights and incentives

An allocation of PKR 4 billion (US$ 14.3 million) has been made in the Federal Budget 2024-25 to fund the demand incentivisation scheme for electric two- and three-wheelers. The financing scheme offers subsidies of PKR 50,000 for two-wheelers and PKR 200,000 for three-wheelers to reduce upfront costs for consumers.

The scheme will be launched with a 3% Karachi Interbank Offered Rate (KIBOR), which will be borne by the government.

As a result, consumers will only need to pay monthly instalments of approximately PKR 9,000 over two years, a cost lower than the savings from reduced fuel consumption. The Credit Loss Guarantee will be managed by the Finance Division, not the ministry or the consumer.

To further support the shift to EVs, the government will encourage banks to incentivise and facilitate consumer financing, leveraging a reduction in the policy rate to 15%.

The government also plans to support the establishment of EV infrastructure to address consumer concerns. In the first phase, plans are in place to install EV stations along motorways from Peshawar to Karachi, with 40 sites already identified and finalised, spaced approximately 120 km apart.

To further promote EV adoption, 120 high-achieving students will be awarded free bikes or scooters through a competitive bidding process.

The Ministry of Industries and Production, in collaboration with CPPA and the Ministry of Power, is working on developing special power rates. The government aims for EV infrastructure investments to yield a 22% return on investment within three years, while also benefiting consumers who transition to EVs. The government plans to set a minimum rate of PKR 39.77 per unit for EV charging stations.

In addition, reduced taxes and duties on EV components and imports will help make EVs more affordable and encourage local assembly and manufacturing.

Other initiatives include the establishment of a New Energy Fund and a New Energy Vehicle Centre, along with a phased rollout of EV charging stations across major highways, starting with 40 stations to ensure availability and convenience for EV users.

NEVs offer lower fuel and maintenance costs, making them an affordable option in the long term, while also improving air quality and reducing noise pollution in urban areas due to fewer emissions.

The policy also presents new opportunities in NEV manufacturing, infrastructure development, and maintenance services.

It aims to tailor the policy to meet the specific needs of Pakistan's infrastructure and energy capabilities, reducing the country's dependency on imported fuel and decreasing carbon emissions by promoting cleaner technologies.

The draft policy is currently open for feedback from all stakeholders to ensure inclusivity and effectiveness. The goal is to increase the EV market share for two-, three-, and four-wheelers to 30% and establish 3,000 EV charging stations by 2030.