- Around 40% of the pollutant emissions in Punjab come from traffic
- Electric vehicle taxes are falling to stimulate demand
- By 2030, Pakistan wants a third of all new cars sold to be electric
ISLAMABAD, Nov. 22 (Thomson Reuters Foundation) – Pakistani businessman Nawabzada Kalam Ullah Khan had been planning to trade his family’s gasoline-powered cars for electric models for years.
But it wasn’t until July, with massive tax cuts, that the 29-year-old ordered two electric cars from the Pakistani capital Islamabad.
“Someone has to take the initiative to switch to these low-cost, environmentally friendly vehicles in the face of increasing pollution in big cities – and we did it,” said Khan.
Register now for FREE unlimited access to reuters.com
to register
His new cars, he said, cost about five times less in daily use than his old ones, a big incentive to make the switch.
Major Pakistani and Indian cities are grappling with dangerous air pollution, with Pakistan’s Lahore named the world’s most polluted city this week.
The heavy use of fossil fuel vehicles for transportation combined with the smoke from seasonal burning of crops makes the problem particularly serious at this time of year.
Pakistan’s electric vehicle push is picking up momentum, however, nearly two years after the country launched its ambitious green policy of nationally shifting 30% electric cars and trucks to 30% electric cars and trucks by 2030 and 90% by 2040.
The key to the postponement is heavy tax exemptions for both electric vehicle imports and import of parts and equipment to build the cars in Pakistan.
That has helped make vehicles more affordable, industry officials said, while Prime Minister Imran Khan’s administration pushes ahead with its plan to reduce CO2 emissions and urban pollution.
FALLING TAXES
General sales tax on locally made electric cars – those with batteries that have less than 50 kilowatt hours (kWh) of electricity – has fallen from 17% to almost zero, said Asim Ayaz, general manager of the government’s Engineering Development Board (EDB). .
At the same time, the tariff on imported electric car parts – such as batteries, controllers and inverters – will drop to 1%.
The import duties for fully built electric cars have also fallen from 25% to 10% for a year, Ayaz told the Thomson Reuters Foundation.
Officials say the tax break is a big step in implementing Pakistan’s National Electric Vehicle Policy, which was originally passed by the cabinet in November 2019.
The aim is to integrate half a million electric motorcycles and rickshaws as well as 100,000 electric cars, vans and small trucks into the transport system by 2025.
“In any case, the tax exemptions make the price (for electric vehicles) competitive,” said Malik Amin Aslam, the prime minister’s special assistant on climate change.
“It makes it extremely attractive for customers to drive electrically.”
Aslam said if around a third of new cars sold were powered by electricity as planned by 2030, Pakistan could see sharp drops in climate-changing emissions and pollution.
Electric vehicles currently produce 65% less planet-warming gases than those powered by fossil fuels, he said.
Pakistan ranks second behind Bangladesh, according to a list of nations with the worst air quality compiled last year by IQAir, a Swiss group that measures the levels of lung-damaging particles in the air known as PM2.5.
In Punjab, Pakistan’s most populous province with Lahore as its capital, traffic accounts for more than 40% of all air polluting emissions, followed by industry and agriculture, according to a study by the United Nations Food and Agriculture Organization in 2019.
OVERCOMING DOUBTS
Shaukat Qureshi, general secretary of the Pakistan Electric Vehicles and Parts Manufacturers and Traders Association, said the new tax cuts mean savings of up to 500,000 rupees ($ 2,900) on imported small electric vehicles.
He said many members of the association took advantage of the incentives to order them for the first time.
There are no reliable figures on how many electric cars local importers have brought into the country since the government announced the exemptions.
But in his other role as chief operating officer of auto company Zia Electromotive, which imports and manufactures electric vehicles, Qureshi said he has ordered 100 small electric cars from China and plans to import 100 more every month thereafter.
Pakistanis – like many other people around the world – have historically been reluctant to switch to electric vehicles for reasons ranging from higher costs, lack of charging infrastructure to “fear of the unknown,” said Ayaz of the EDB.
The tax cuts will help remove the cost barrier, he said – and could help create about 20,000 new jobs in the auto industry when Pakistani auto companies start making electric cars, he predicted.
The topic of charging infrastructure remains, although some companies have already set up charging stations in large cities and on highways.
Climate change and development expert Ali Tauqeer Sheikh said the government should encourage the private sector to install more charging stations near offices, homes and parking lots.
To allay concerns that electric vehicles might have no resale value, automakers and dealers could offer buyback guarantees, he added.
But, Sheikh said selling more electric cars alone is not enough to tackle Pakistan’s emissions and air pollution as the total number of vehicles sold – mostly traditional cars – grows each year.
He said the government must press for a full phase out of fuel and hybrid vehicles by increasing taxes on them and providing affordable bank loans for people who want to buy electric vehicles.
“Poor people who use motorcycles and rickshaws deserve to have more electric vehicles on the streets to reduce air pollution,” he said.
($ 1 = 173.2000 Pakistani rupees)
Register now for FREE unlimited access to reuters.com
to register
Reporting by Imran Mukhtar, editing by Jumana Farouky and Laurie Goering. Please mention the Thomson Reuters Foundation, the non-profit arm of Thomson Reuters that covers the lives of people around the world who are struggling to live freely or justly. visit http://news.trust.org
Our Standards: The Thomson Reuters Trust Principles.
