PAKISTAN ON THE PATH OF V2G REVOLUTION

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By Huma Arshad

Pakistan ranks second, behind Bangladesh, according to a list of nations with the worst air quality in the world. The transport sector is a major source of environmental pollution in the country. Introducing a modern and environmentally-friendly transport system through electric vehicles (EVs) in the country is very important in the path of reducing Pakistan’s air pollution and making cities clean and green. The fact that air pollution takes away nearly 135,000 lives in Pakistan in a year and costs around 5-6% of the GDP validates the idea further. However, the execution of the strategy is no walk in the park. The journey is full of unidentified challenges and may demand a more exhaustive effort than what one may expect.

V2G  the “vehicle to grid technology enables energy to be pushed back to the power grid from the battery of an electric car. The world is moving away from fossil fuels. For example, Amsterdam is banning all diesel vehicles by 2030. Similarly, twenty-three other European cities will ban all diesel vehicles by 2030. This ban will be further extended to completely banning fossil fuel for vehicles in countries like the Netherlands by 2040. The implications of the world moving beyond fossil fuels are great not only for automobile manufactures and petroleum-producing states but countries like Pakistan as well.

Introducing EVs in the country’s ailing transport system is pivotal for modernizing it and reducing the carbon emissions that contribute to climate change and smog, improving public health, and reducing ecological damage. EVs registration-related issues that automobile and vehicle battery manufacturing companies and end-users are grappled with myriad issues from the excise and taxation departments in registering EVs, as there are many stakeholders involved in the registration process and that registration of EVs is still done based on the equivalent ‘cc’ in Internal Combustion Engine-based vehicles, which incurs high registration cost. This discourages prospective buyers from owning an EV. Also, the relaxation in the registration cost and token tax offered by the NEVP has not been implemented by many provinces, they added. NEVP  authorizes the import of EV-specific parts and components at 1% custom duty and their sale at 1% GST. However, companies are experiencing challenges in the interpretation of rules and regulations by FBR’s Customs and Inland Revenue Department dictating import of EV specific parts and components.

Pakistan already has a significant market for hybrid vehicles with Honda’s VezelToyota’s Prius and Aqua, and other models seen on the roads. The Automotive Development Policy (2016–2021) and the launch of the China-Pakistan Economic Corridor (CPEC) are encouraging foreign investments for the new automobile brands to enter the Pakistani market, while the leading manufacturers in the automobile industry in Pakistan are interested in introducing EV models with a wide range of prices which target consumers of diverse income groups. Several members of the international automobile industry including South KoreaChina, and Japan also believe that Pakistan has a high potential market for EV technology, and local businesses are collaborating with them to bring EVs to Pakistan.

Pakistan has recently come out with an ambitious National Electric Vehicles Policy which is in line with many European targets. However, Pakistan, unlike Europe, is not gradually raising emission standards for the vehicle. The Euro emission standards have been stricter for diesel vehicles in Europe and have led to a reduction in demand for diesel vehicles. There are already news reports that the lobbyists in Pakistan are attempting to derail the implementation of the NEVP. In addition, in Pakistan, major auto manufacturers do not report the vehicles’ emission standards on their websites. Moreover from the consumer’s perspective, are the prices attractive for purchasing a new hybrid or electric vehicle? Currently, they are not. For example, the price of an 1800 CC Prius S is around 9.2 million rupees. Compare this price with a Toyota Corolla Altis 1800 CC for about 3.9 million rupees. The government should raise the prices of existing non-electric and non – hybrid vehicles so that they lose their pricing advantage over hybrid/electric vehicles. Any vehicle customer should be given two alternatives between hydrocarbon and hybrid/electric vehicles at similar price levels should choose hybrid/electric because of the operational cost advantages like better fuel consumption for hybrids and electricity being cheaper than hydrocarbons for electric vehicles. Another alternative could be to introduce steeper annual taxation on new non-hybrid and non –electric vehicles purchased thus driving up the cost of ownership of such vehicles.

Pakistan’s electric vehicle push is picking up speed; nearly two years after the country launched its ambitious green policy, which envisions a shift to 30% electric cars and trucks nationwide by 2030, and 90% by 2040. Key to the shift is hefty tax exemptions for both electric vehicles imports and imports of parts and equipment to build the cars in Pakistan. To overcome worries that electric vehicles may have no resale value, car manufacturers and dealers could offer buy-back guarantees, he added. The government needs to push to completely phase out fuel-run and hybrid vehicles by increasing taxes on them and providing affordable bank loans for people looking to buy electricity. Last but not least those people who use motorbikes and rickshaws deserve to have more electric vehicles on the roads to cut air pollution.