1. BACKGROUND

The shift to an environmentally friendly energy source has necessitated the need for using electric vehicles for cars to cut on carbon footprint and insistence on fossil fuels. Pakistan is one of the developing economies with over 250 million people and faces major environmental concerns such as severe urban pollution and an acute energy deficit. In response to this, the government has recently launched the National Electric Vehicle Policy (NEVP)[1] which has the vision of changing the entire face of the automotive industry through the promotion of electric mobility. This policy aims to establish a clear vision for charging infrastructure with the goal that 30% of all passenger vehicle sales are electric by 2030[2], which implies that there is support for the shift towards clean energy sources.

BYD, one of the largest electric vehicle manufacturers in China, and was the largest producer of EVs in 2023[3], has more recently started its operation in Pakistan. This particular move makes BYD a significant stakeholder in the yet-emerging market in Pakistan through government support and a growing trend towards electric vehicles. Plans also include setting up an assembly plant within Karachi and partnering with other players in the market such as Mega Conglomerate Pvt. Ltd.[4] to cover up the EV charging network required to popularize electric vehicles within the country.

2. THE ISSUES

It is important for the growth of the local EV market that BYD entered Pakistan, however, they have many challenges in front of them such as inadequate infrastructure, low consumer sensitization, and policy fluctuations.[5] However, although the governments of the world want to work towards a higher density of EVs, Pakistan lacks the proper charging facilities, and the EVs as of now are very costly for the common man.

The core issue for BYD, and all other EV makers, is how to establish themselves in an environment that is still predominantly dependent on ICE vehicles and not equipped with the infrastructure that is required to sustain the infrastructure of EVs.

3. ANALYSIS

Pakistan can be one of the most attractive markets for EV manufacturers due to the size of the automotive market and more so the government’s ambitious plan of having 30% of passenger vehicles to be EV by 2030.[6] Nonetheless, this market is sensitive to the prices and the cost of EVs as compared to conventional vehicles still poses a bottleneck for most consumers.

At present, the Pakistani market is occupied by Japanese automobile companies and is now being conquered by Chinese automobile companies. To some extent, hybrid vehicles have been introduced on the market, while electric cars remain quite exotic.[7] The company’s competitiveness will depend on the main factors such as the company’s ability to set the right price for its products, the types of products that BYD will be manufacturing, and the firm’s capability to build a local network for sourcing most of its raw materials instead of importing them.

The conventional consumer profile of the Pakistani automobile market is mainly focused on affordable prices; they are not well-informed about EV technology. This is due to the fact that barriers such as the high initial purchase cost of EVs, limited driving range, and poor charging infrastructure exist. Although awareness of environmental impacts is gradually rising, the bottom line that will be a major driver for most Pakistanis will be a reduction of costs later.

There has been a government’s commitment to the adoption of EVs, by exercising taxation reliefs, waivers on import duty, and local manufacturing under the NEVPs. Nonetheless, policy fluctuations and regulatory issues that may affect the country’s approval of the local assembly of BYD’s automobiles and the overall expansion of the company’s market share have some downside risks.

4. CHALLENGES

RECOMMENDATIONS

1. • To boost the EV charging infrastructure, BYD needed to bring in strategic partnerships with the oil marketing companies and even the power utilities. The operational costs can also be minimized through Public Private Partnerships, integration of Renewable power sources in charging stations.
   • It has to hasten its strategies for localized production to cut costs. Supplier agreements with local automotive industries for components and assembly shall not only be cheap on costs but also encourage employment and growth of the economy.
   • Conduct awareness-creating drives through media and other modes of communication about the cost-effectiveness and implications of using electric and hybrid vehicles. This will work if EV manufacturers provide test drives to potential buyers as well as provide those who want to be part of the revolution incentives to do so.
   • Collaborate with government entities to make sure that there are sustainable and long-term policies on EVs. It is the policymaker’s responsibility to push for simplification of the rules, long-term tax holidays, and subsidies for the development of required infrastructure.
   • This may be in the form of providing rebates on financing rates for the purchase of BYD’s EVs, electricity tariffs for charging, and waiver of road tax for users of EVs among others.

6. ACTION MATRIX

CONCLUSION

The opportunity for BYD to enter the Pakistani market with electric vehicles is one of the best chances to change the country’s automotive industry. But it will not be simply achieved because of certain barriers including the weak infrastructure, expensive vehicles, and reluctance consumers. For BYD to capture a significant market share in Pakistan’s electric revolution, getting strategic partnerships, educating the consumer, manufacturing locally, and supporting stable policies will go a long way in laying down the foundation.

References:

[1] Ministry of Climate Change, Government of Pakistan. National Electric Vehicle Policy (2019). Islamabad: Ministry of Climate Change, 2019. https://policy.asiapacificenergy.org/node/4501.

[2] “Experts hail Chinese EV giant BYD’s entry to Pakistan market,” Business Recorder, September 6, 2024, https://www.brecorder.com/news/40296229.

[3] “Electric vehicles will account for up to half of auto sales by 2030, BYD Pakistan says,” Profit by Pakistan Today, September 6, 2024, https://profit.pakistantoday.com.pk/2024/09/06/electric-vehicles-will-account-for-up-to-half-of-auto-sales-by-2030-byd-pakistan-says/.

[4] “Electric vehicles will account for up to half of auto sales by 2030, BYD Pakistan says,” Dawn, September 6, 2024, https://www.dawn.com/news/1857321/electric-vehicles-will-account-for-up-to-half-of-auto-sales-by-2030-byd-pakistan-says.

[5] “Chinese electric car giant BYD enters Pakistani market,” ARY News, September 6, 2024, https://arynews.tv/chinese-electric-car-giant-byd-enters-pakistani-market/.

[6] “BYD says half of total vehicles sold in Pakistan will be electric by 2030,” The Current, September 6, 2024, https://thecurrent.pk/byd-electric-cars/.

[7] “Electric vehicles will account for up to half of auto sales by 2030, BYD Pakistan says,” U.S.News & World Report, September 6, 2024,  https://money.usnews.com/investing/news/articles/2024-09-06/electric-vehicles-will-account-for-up-to-half-of-auto-sales-by-2030-byd-pakistan-says.