INDIGENIZATION OF

EV VALUE CHAIN
IN PAKISTAN
FOR TWO-AND-THREE
WHEELERS
INDIGENIZATION OF
EV VALUE CHAIN
IN PAKISTAN
FOR TWO-AND-THREE
WHEELERS

Prepared By:
Naveed Arshad
Mohammad Abubakr Javed
Malik Muhammad Arslan

LUMS Energy Institute, Syed Babar Ali School of Science and Engineering,
Lahore University of Management Sciences, Sector-U, Phase-2, DHA, Lahore, 54792.
E-mail: [email protected] | Website: https://lei.lums.edu.pk/

Suggested Citation
Arshad, N., Javed, M.A. and Arslan, M.M. (2024) Indigenization of EV Value Chain in Pakistan
for Two- and Three-wheelers. rep. Private Financing Advisory Network.

Disclaimer
While this report has been complied with utmost accuracy, unbiasedness, and precaution, Lahore University
of Management Sciences, Private Financing Advisory Network, or any other affiliated entity/individual do not
hold any responsibility with regards to the data, calculations, simulations, and evaluations put forward. This
report does not intend to harm any individual, company, organization, or entity. The content of this report
is based upon information, observation, and evaluation of the authors and do not necessarily represent
the view/stance of Lahore University of Management Sciences, Private Financing Advisory Network, or any
other affiliated entity. We do not guarantee accuracy, reliability, and completeness of the work presented in
this document. Therefore, by any means we will not be responsible or legally bound for any sort of loss or
unwanted consequences resulting from this report.
 ACKNOWLEDGMENTS

The authors of this report are thankful to the Private Financing Advisory Network (PFAN), particularly
Muhammad Hammad Bashir Saeed and Ahmed Ammar Yasser, for supporting this work and
providing valuable feedback.

Many insights, observations, and recommendations presented in this report have been gathered
through one-to-one interaction with almost 20 relevant industrial representatives/companies.
We would like to thank all these personnel/companies for their noteworthy contributions.
Furthermore, we would like to thank Prof. Nauman Ahmad Zaffar and Muhammad Huzaifa Qasmi
for providing valuable insights and supporting this work respectively.
 SUMMARY
Pakistan is a developing economy with per capita income of USD 1,568. Almost 37 percent of the
population in the country lives below the national poverty line (USD 3.65 /day 2017ppp). There are
twenty-six million two-wheelers and one-million registered three-wheelers on roads in the country,
collectively constituting 86 percent of the total vehicular fleet in Pakistan. Most of the population
thus relies on two-wheelers and three-wheelers for commute.

Pakistan is facing a severe economic crisis with dwindling foreign exchange reserves, notable
trade deficit, and rising current account deficit. Import of petroleum accounts for 30 percent of the
total national import bill. The road-transportation sector is responsible for about 60% of the total
petroleum consumption in the country. The two- and the three-wheeler segments are responsible
for almost 37 percent of the total petroleum (gasoline) consumption in the country. Furthermore,
Pakistan is ranked globally amongst countries with worst air quality. Vehicular tail-pipe emissions
are the leading cause of air pollution in the country and the two- and the three-wheeler segments
are estimated to be responsible for 41 percent of the emissions from the road-transportation sector.

The government of Pakistan in 2020 announced the Electric Vehicle Policy to encourage EV adoption in
the country, limit rising air-borne pollution, and reduce burden on the national economy through
limiting import bill. The policy offers a range of supply- and demand-side incentives to catalyze
country-wide EV adoption. However, despite implementation of the policy verticals, the adoption
of electric two- and three-wheelers in the country remains negligible. Many reasons are attributed
to the very low uptake of EVs. The foremost of these reasons is inability of the indigenous electric
two- and three-wheeler industry to satisfy technological and commercial requirements of the
indigenous market. Most the EV manufacturers in Pakistan are newly established ventures with
limited financial resources and lack of sophisticated development and production facilities. Another
key reason for sluggish EV uptake is the high upfront purchase of electric two- and three-wheelers.
The upfront price of these vehicles is two-four times the price of their ICE-equivalents. This is due
to the excessive reliance of the current EV industry on the import of EV-specific components of
the drivetrain. With absence of reasonable financing options, the purchase price of EVs is beyond
affordable limits for most of the prospective buyers. Furthermore, the scanty of intra- and inter-
city charging facilities instills ‘range-anxiety’ amongst EV users.

Rising gasoline prices accompanied by global trends in EV adoption are projected to catalyze
Pakistan’s transition towards electrified transportation. The large potential market size for
EVs in the country provides valuable business and commercial opportunities for automotive
manufacturers, parts manufacturers, and charging services providers. In the short-term, i.e., over
the next five years, the electric two- and three-wheeler manufacturers can leverage the existing
automotive parts industry for ICE-based vehicles for the provisioning of non-EV-specific parts.
There are many non-EV specific automotive parts used in the ICE-based vehicular segment
that can be leveraged for the development of EVs. This approach allows leveraging existing well-
established supply chain of parts from the ICE-based vehicular industry for the development of
EVs. Opportunities for the manufacturers exist in their ability to address market barriers impeding
EV adoption.
The two- and three-wheeler manufacturers can address the barrier of high upfront purchase price
of EVs through offering retrofit services. An old ICE-based two-wheeler can be retrofitted with
electric drivetrain to convert it into an all-electric vehicle. The cost of a retrofit kit for two-wheeler
is almost USD 250-350 and provides an alternative to incurring high upfront purchase price new
e-vehicles. Furthermore, there are opportunities in the development of swappable battery-based
three-wheelers. These vehicles address challenges associated with fixed battery-based electric
three-wheelers such as longer charging time and higher upfront purchase price.

Utilization of opportunities in the short-term by the electric two- and three-wheeler segments will
in turn thrive the associated support industry that provides key automotive parts and components.
The batteries in electric two- and three-wheelers constitute more than half of the total price of
the vehicle. In the short-term, lithium-ion battery pack manufacturers can utilize imported cells
to locally assemble battery packs. This approach of locally manufacturing battery packs using
imported cells can potentially reduce the price of the battery by almost 20 percent and ensure
prompt repair and aftersales services. The electric motor industry has the potential to capture a
sizeable market share through achieving required capacities to meet the demand of the indigenous
EV industry. Through technology partnerships with globally well-established companies in electric
motor manufacturing, the indigenous industry can save time and resources needed to in-house
design and develop motors with required characteristics. The uptake of EVs in the short-term will
require establishment of charging infrastructure. While intra-city demand for vehicular charging
can be catered at large through home-based charging, there is a need to provide fast charging
facilities across motorways and highways to enable inter-city travel. Establishing of fast charging
facilities at strategic locations across key motorways and highways in the country can provide
valuable commercial opportunities for the charging services providers.

The medium-term refers to the time from next five years up until ten years. During this time, it
is anticipated that indigenous industry has sufficiently matured and there is need for higher
degree of indigenous research and development to better serve unique local needs and establish
secure supply chain of raw materials. In the medium-term, electric two-wheeler manufacturers
can avail the opportunity to extend the battery swapping regime to the two-wheeler segment.
The two-wheelers utilized for commercial purposes are suitable candidate for transition battery
swapping regime. Furthermore, as the demand for e-mobility gains momentum, the battery
pack manufacturers can establish partnerships under various modes with global battery cell
manufacturers. Through these collaborations, the indigenous battery pack manufacturing sector
can gain access to high quality cells. Similar collaboration can be established with renowned
international motor manufacturer to leverage their design and expertise for development high-
efficiency motors that are suited to serve EV applications.

The long-term provides an opportunity to the automotive and parts manufactures to venture into
areas that are totally unfamiliar with presently. These areas can include EV design and software
industry. The EVs require distinct design due to their unique technical and mechanical parameters
such as distribution of the center of mass and weight of the vehicle. This requires redesigning
the vehicle. Furthermore, the software in an EV act as a brain of the vehicle controlling most of
its functions. The software for EVs are more complex than their equivalent ICE-based vehicles.
Pakistan has a reasonably established IT industry that can be leveraged for the development of EV
software industry.
CONTENTS
LIST OF FIGURES
Figure 1: The projected new annual two-wheeler sales and total number of registered

two-wheelers on roads…………………..…………………………………………………...........................................12

Figure 2: The projected new annual three-wheeler sales and total number of registered

three-wheelers on roads.…………………………………………………………………………………………....................13

Figure 3: The projected reduction in fuel import bill due to EV adoption as per GoP Targets..............14

Figure 4: The projected reduction in fuel import bill due to EV adoption as per GoP Targets………......15

Figure 5 : Schematic illustration of the distinct electric vs. ICE-based drivetrain……………………........19

Figure 6: Illustration of selected electric two-wheeler models developed in Pakistan………………......24

Figure 7: Illustration of selected electric three-wheeler models developed in Pakistan……………......26

LIST OF TABLES
Table 1: EV sales targets of the GoP……………………………………………………………………...........................15

Table 2: Direct incentives for the electric two & three-wheeler segments offered by the

AIDEP 21-26……………………………………………………………………………………………………..….........................17

Table 3: Characteristics of typical electric two-wheeler variants developed in Pakistan………………..23

Table 4: Characteristics of typical electric three-wheeler variants developed in Pakistan……………..25

ACRONYMS
01INTRODUCTION
1.1 THE NEED FOR E-MOBILITY IN PAKISTAN
Pakistan is the 5th most populous country in the world having a road-transportation sector
that includes almost twenty-six million two-wheelers, one million three-wheelers, four million
four-wheelers and quarter of a million buses and trucks each.13 The road-transportation sector
is responsible for about 60% of the total petroleum consumption in the country. In the FY 23
(July to March) Pakistan’s petroleum imports stood at USD 13 billion which accounted for 30%
of the total national import bill in the respective period. During this time, Pakistan experienced
a trade deficit of USD 23.7 billion and a current account deficit of USD 3.3 billion14. With
dwindling foreign exchange reserves, the dependence on imported petroleum is a substantial
burden on the economy of Pakistan.

The internal combustion engine (ICE)-dominated road-transportation sector is responsible for

almost 23% of the total greenhouse gas (GHG) emissions in the country15. According to the
IQAir, Pakistan ranks third globally amongst the countries with highest concentration of air-
borne pollutants16. In 2021, Lahore, the second most populous city in Pakistan, was ranked as
the most polluted metropolis in the world where 83% of airborne emissions stemmed from the
road-transportation sector.

The Government of Pakistan (GoP) announced the Electric Vehicle Policy (EVP) in 2020 to
encourage adoption of electric means of transportation and thus limit rising vehicular air-
borne pollution, reduce the petroleum import bill, and develop an indigenous industry to serve
local needs and offer potential for exports. The EVP offers a range of supply- and demand-side
incentives to encourage a paradigm shift in the road-transportation sector. However, since
the approval of the policy, the adoption of electric vehicles (EVs) in Pakistan has remained
negligible.

13 (2023) Transport and Communications. rep. Ministry of Finance, Government of Pakistan. Available at: https://www.
finance.gov.pk/survey/chapters_23/13_Transport.pdf (Accessed: 01 September 2023).

14 Highlights Pakistan Economic Survey. rep. Finance Division, Government of Pakistan. Available at: https://www.finance.
gov.pk/survey/chapters_23/Highlights.pdf (Accessed: 02 October 2023).

15 Mir, K.A., Purohit, P. and Mehmood, S., 2017. Sectoral assessment of greenhouse gas emissions in Pakistan. Environ-
mental Science and pollution research, 24, pp.27345-27355.

16 Air quality in Pakistan, World’s most polluted countries & regions. Available at: https://www.iqair.com/world-most-pol-
luted-countries (Accessed: 31 August 2023).

10
1.2 THE SIGNIFICANCE OF TWO- AND THREE-WHEELERS IN PAKISTAN
The two-wheelers and the three-wheelers account for 83% and 3% of the total registered
vehicles in Pakistan respectively. While the number of registered three-wheelers in the country
is close to one million, many believe that the total number of three-wheeled vehicles in Pakistan
is almost two million since some prevalent types of three-wheelers, like the commonly known
loaders and Qingqi, are ineligible for registration. It is estimated that the registered two- and
three-wheeler segments are responsible for 35% and 6% of the total emissions respectively
from the road-transportation sector.
While the three-wheelers constitute about 3% of the
overall vehicular fleet, their contribution towards
release of GHG emissions is 6%. This is because most
of these vehicles are utilized for commercial purposes
and thus on average traverse more distance daily.
Furthermore, it is estimated that the two- and three-
wheelers in Pakistan account for 32% and 5% of the
gasoline consumption from the transportation segment
respectively.

The inflation rate in Pakistan was recorded at 29.2%

during the FY 22-2313. During this year the Pakistani
rupee depreciated by almost 40% in contrast to the
United States dollar (USD). The devaluation of rupee
accompanied by global trends in gasoline prices resulted
in increase in the price of gasoline (petrol) by almost
45% in the respective FY. The two- and three-wheeler
users typically belong to the low-income segment of
the population that has been disproportionately impacted
by the increase in gasoline prices. Many two-wheeler
users have responded to the increase in gasoline prices
by opting other more affordable means of commute
such as mass transit systems. However, such public
transport systems in Pakistan offer a very limited
spatial coverage. Similarly, the increase in ride fare by
the three-wheeler drivers to compensate the increase
in gasoline prices has resulted in passengers opting
for other modes of transportation. This has resulted
in decrease in disposable income of almost a million
three-wheeler drivers/owners.

13 (2023) Highlights - Pakistan Economic Survey. rep. Finance Division

- Government of Pakistan, pp. 16–16. Available at: https://www.finance.
gov.pk/survey/chapters_23/Highlights.pdf.

11
1.3 PROJECTED EV ADOPTION IN PAKISTAN
The annex 1A lists the year-wise data from the Pakistan Economic Survey 2022-23 of the total
(cumulative) number of registered two- and three-wheelers in the country (column B and E)13.
Based upon this data, we have calculated the year-wise (non-cumulative) vehicle registration
count which corresponds to the annual sale of automobiles in the respective vehicular segments
(column C and F). From the annual vehicle sales numbers, year-by-year percentage increase/
decrease in annual vehicle sales compared to the preceding year has been computed (column
D and G). These computations illustrate that the two- and the three-wheeler segments have
witnessed an averaged increase in annual vehicle sales by 5.2% and 1% respectively during
the described timeframe14.

In order to project electric two-wheeler adoption in Pakistan by 2030 and 2040, we have assumed
that new annual sales in the two-wheeler segment (EVs and ICE-based vehicles combined)
will observe a 5.2% year-by-year increase. Annex 1B shows the projected new annual sales
in the two-wheeler segment up till 2040 (column B). Using these projected new annual sales
numbers, we have computed total registered two-wheelers in Pakistan up until 2040 (column
C). The GoP’s mandatory EV sales targets, as mentioned in table 1, require the share of electric
two-wheelers to reach 50% and 90% in new annual sales by 2030 and 2040 respectively. Based
upon the current share of electric two-wheelers in new annual sales in the respective vehicular
segment, we assume that the share of EVs increases linearly reaching 50% of annual sales by
2030 and 90% by 2040 (column D). Keeping in view the assumed percentage share of electric
two-wheelers in annual sales in the respective vehicular segment, we have calculated the
number of electric two-wheelers sold/registered annually in Pakistan (column E) and the total
number of electric two-wheelers in the country (column F). The same approach has been used
to project electric three-wheeler adoption in Pakistan. Annex 1C shows the projected electric
three-wheeler adoption in the country through 2040. The key results of these projections are
presented in figure 1 and 2 for the two- and three-wheeler segments respectively.

13 Government of Pakistan (2023) Pakistan Economic Survey. Ministry of Finance. Available at: https://www.finance.gov.
pk/survey/chapters_23/Economic_Survey_2022_23.pdf (Accessed: 28 February 2024).

14 It is important to note that we have not included the annual sales numbers (and annual percentage change in sales
numbers) for the year 2020 while calculating the averaged increase in annual vehicle sales in the temporal window. This is
because during this year the automotive sector experienced severe market disruption due to the impact of the Covid-19.

Figure 1: The projected new annual two-wheeler sales and total number of registered two-wheelers on roads.
12
Figure 2: The projected new annual three-wheeler sales and total number of registered three-wheelers on roads.

1.4 GREENHOUSE GAS MITIGATION POTENTIAL AND MACROECONOMIC

IMPACT DUE TO PROJECTED EV ADOPTION
The adoption of electric two- and three-wheelers in Pakistan is expected influence the country’s
macroeconomic outlook. Large-scale uptake of EVs is anticipated to result in decrease in
petroleum import bill which in turn will help mitigate the trade deficit of the cash-strapped
economy of Pakistan. This section attempts to quantify the reduction in petroleum import bill
and GHG emissions through achievement of the GoP’s EV adoption targets.

The fuel demand is determined by averaging the annual distances traveled by two- and three-
wheelers in Pakistan. This involves dividing the total yearly distance traveled by each vehicle
category by its fuel consumption to derive the fuel consumption per vehicle annually. This value
is then multiplied by the number of vehicles in each category to ascertain the total fuel usage
for the year, measured in barrels.

With the international price of one barrel of crude oil set at USD 78.52, this calculation provides
the fuel consumption in USD for each vehicle category annually. When transitioning to electric
vehicles, if approved policy targeted percentage of vehicles are converted each year, the fuel
requirement for those vehicles is subtracted from the overall segment, resulting in a reduction
in total fuel demand for that year. The figure 1 and annex E show the fuel requirement with
scenario-A and scenario-B.

13
Figure 3: The projected reduction in fuel import bill due to EV adoption as per GoP Targets.

LUMS has carried out extensive onfield surveys of the market to understand the various
parameters involved in the operations of two- & three-wheelers. The assumptions for this CO2
estimation and fuel requirement include:

• The average daily operational distance of two-wheelers and three-wheelers is 40 km and

144 km respectively.
• Average operational days for two-wheelers are 300 and three-wheelers are 312 in a year.
• Fuel consumption of two-wheelers and three-wheelers is around 40 km/liter and 25 km/
liter respectively.

Calculation of Emission Reduction:

The emissions are calculated from UNFCCC-approved small-scale CDM methodology “AMS-iii.
C: Emission reduction by electric and hybrid vehicles.” In the calculations for GHG mitigation
potential, default values for different types of fuels as provided by the IPCC have been used
as Pakistan country-specific figures are not available. However, the power sector emission
factor has been taken from the Indicative Generation Capacity Expansion Plan developed by
the National Transmission & Despatch Company of Pakistan. The methodology for estimating
CO2 emissions avoidance involves the following process:

1. Baseline Emissions: Determine average CO2 emissions from operations or exhaust of ICE
two-& three-wheelers over a specified period, including fuel consumption, and maintenance.
2. E3W Emissions: Estimate emissions from the operation of electric two-& three-wheelers,
which should be substantially lower, especially when considering that charging is powered
by solar energy.
3. Usage Patterns: Calculate the average distance traveled by both ICE-based two- &
three-wheelers and electric two-&three-wheelers annually in major cities of Pakistan to
understand the total potential for emissions reduction.
4. Energy Source: Factor in the emissions from electricity generation in Pakistan for any
supplemental charging needs beyond solar power, using the national grid’s average
emissions intensity.
5. Emission Factors: Use standard CO2 emission factors for gasoline and electricity to
calculate the emission factor (gCO2/km) as well as total annual emissions for ICE-based
two&three-wheelers and electric two&three wheelers (tCO2/year) respectively.
6. CO2 Reduction: The difference in total CO2 emissions between the two scenarios gives the
CO2 avoidance, which is then extrapolated based on the number of electric vehicles forecasted.
14
 Figure 4: The projected reduction in fuel import bill due to EV adoption as per GoP Targets.

This methodology estimates the broad future impacts of electric two-& three-wheelers by
comparing the emissions from traditional ICE two & three-wheelers to the much-reduced emissions
expected from the electric vehicles and the solar-powered infrastructure supporting them.

The figure 4 and annex E show the estimated emission saved from the two & three-wheeler
segment if EV adoption is as per the government policy target.

1.5 OVERVIEW OF THE ELECTRIC VEHICLE POLICY IN PAKISTAN

1.5.1 EV ADOPTION
TARGETS OF THE
GOVERNMENT OF
PAKISTAN

The GoP initiated its efforts

towards reducing vehicular
air-borne pollution through
revealing countrywide EV
sales targets. The Prime Min-
ister’s Committee on Climate
Change, during its meeting
on May 17, 2019, approved
the mandatory countrywide
EV sales targets as a per-
centage of overall annual
new vehicle sales (by vehi-
cle category) in the country.
Table 1 shows these targets,
along with their stipulated
timeframes.

The Prime Minister’s Committee on Climate Change further directed the Ministry of Climate
Change and Environmental Coordination to develop a policy framework to achieve these targets.

15
1.5.2 THE NATIONAL ELECTRIC VEHICLE POLICY,THE ELECTRIC VEHICLE POLICY,
AND THE AUTOMOTIVE INDUSTRY DEVELOPMENT AND EXPORT POLICY

National Electric Vehicle Policy: Automotive Industry Development and

Export Policy 2021-2026:
The Ministry of Climate Change and Environ-
mental Coordination developed the National
The conventional ICE-based automotive
Electric Vehicle Policy (NEVP)13 as country’s first
industry has been governed by the Automotive
policy framework for developing an EV ecosys-
Development Policy (ADP) 2016-21. At the
tem in the country. The NEVP provided a range of
expiration of the ADP, the Automotive Industry
supply- and demand-side incentives and direc-
Development and Export Policy (AIDEP), 2021-
tives to help expedite the adoption of EVs across
2026 was approved by the GoP in June 2021. The
all vehicle segments/categories and overcome
AIDEP has a much broad scope, covering vehicles
barriers in transitioning towards e-vehicles. As
of almost all powertrains including EVs, hybrid
the first policy draft, NEVP received diverse re-
EVs, plug-in hybrid EVs and ICE-based vehicles.
sponse from the relevant local industry and oth-
Many, but not all, incentives for the e-mobility
er stakeholders.
sector from the EVP have been carried forward
into the AIDEP 21-26. While there is still confusion
13 https://mocc.gov.pk/SiteImage/Policy/EV%20Policy%20 amongst the automotive community about the
Final.pdf status of the previous two policy drafts, many
believe that AIDEP is final policy framework.
Electric Vehicle Policy 2020-2025:
To address the concerns in the policy draft
and overcome shortcomings as highlighted
by the stakeholders, the Cabinet Division of
the GoP directed the Ministry of Industries
and Production to address gaps in the current
policy. In consultation with the concerned public
and private sector stakeholders, the ministry
introduced the Electric Vehicle Policy (EVP) 2020-
2025. The EVP 2020-2025 provided an incentive
and regulatory package for the electric two-
wheelers, three-wheelers, and heavy transport
vehicles (HTVs)13 , which was subsequently
approved by the Economic Coordination
Committee (ECC) of the federal cabinet in June
2020. The package for electric four-wheelers
under the respective policy framework was
approved in December 202014.

13 http://engineeringpakistan.com/wp-content/up-
loads/2021/01/EV-POLICY-APPROVED-RECOMMENDA-
TIONS-converted.pdf

14 http://engineeringpakistan.com/wp-content/up-
loads/2021/01/approvedrec-4-wheelers-converted.pdf

16
1.5.3 INCENTIVES FOR THE ELECTRIC TWO AND THREE-WHEELERS IN AIDEP 21-26
The direct incentives for the electric two and three-wheeler segments, as offered by the AIDEP
21-26, are presented in table 2, while indirect incentives for the respective vehicular segments
are appended in annex 1E.

Since the approval of the AIDEP 21-26, very few further incentives/regulations have been
introduced by the GoP for the EV sector in the country. While there is a policy and regulatory
framework in Pakistan governing the e-mobility sector, almost negligible on-road presence of EVs
has been witnessed since then. Many attribute this low EV adoption with gaps and shortcomings
the policy i.e., AIDEP 21-26. Therefore, it is crucial to first identify these gaps and shortcomings,
explore challenges in the implementation, and finally enact effective policy recommendations
that address barriers for EV uptake in the country. The subsequent sections of this report will
explore gaps and inconsistencies in the current policy framework that have been identified
during our interaction with EV industrial stakeholders for the purpose of this study.

17
1.6 ELECTRIC VS INTERNAL COMBUSTION ENGINE DRIVETRAIN
The EVs and their ICE-equivalents differ significantly in terms of drivetrain and components due
to their distinct propulsion systems. In contrast to the ICE-based vehicles, EVs offer relatively
silent operation, efficient energy usage, lower operating expense, and thus reduced total cost of
ownership (TCO).

Distinct EV Drivetrain and Components:

The EV drivetrain is composed of the following, but not limited to, key components, each playing
a vital role in the vehicle’s operation:

• Battery Pack: • Power Electronics:

A battery pack stores electric energy which The power electronics system is crucial for
is then converted to mechanical energy by managing the flow of electrical energy through
the motor to propel the vehicle. It consists of DC-AC inverters and DC-DC converters. The DC-
individual lithium-ion battery cells arranged in AC inverter converts the DC power stored in the
modules or packs. A battery management system battery into AC which is required to drive the
(BMS) is also integrated with battery cells/pack, induction motor. The invertor also controls the
which ensures optimal performance, safety, and frequency, voltage, and amplitude of AC output
longevity by monitoring and controlling each to regulate the speed and torque of the motor.
cell/pack. The DC-DC converter regulates the high-level
voltage of the battery to a lower level such as 12
• Electric Motor: Volt or 6 Volt for auxiliary functions e.g., lighting,
instrumentation, etc.
The primary propulsion source in an EV is the
electric motor which converts electrical energy • Charging System:
from the battery into mechanical energy to drive
the vehicle. Various types of electric motors, Charging an EV is facilitated by the onboard
including AC induction motors and permanent charging system, which converts AC power
magnet motors, are used for e-mobility from external source, such as charging station
purposes depending on the vehicle’s design or home outlet, into DC power to recharge the
and performance requirements. In Pakistan, battery. Some EVs may also feature fast charging
currently, the permanent magnet DC motors, capability at compatible charging stations, but
ranging from 1kW-1.5KW, are being used for this feature is not commonly available in most
electric two-wheelers, while AC induction electric two-and three-wheeler variants in Pakistan.
motors, ranging from 3kW-5kW, are being used
for electric three-wheelers.

18
• Thermal Management System:
To maintain optimal operating conditions, EVs are equipped with a
thermal management system. This system controls the temperature
of the battery pack, electric motor, and power electronics through
active and/or passive cooling systems.

• Software:
The distinct software in EVs performs several crucial roles that
fundamentally include monitoring and optimization of charging/
discharging, state of health (SoH) estimation, and management
of energy flow to optimize efficiency. It also oversees energy
distribution amongst the battery, motor, and auxiliary systems, and
maintains optimal thermal conditions. The software governs the
onboard charging system, including charging rates, and protocols,
and ensures compatibility and safety. Moreover, it facilitates driver
assistance and infotainment features like navigation, and system

• Braking System/Regenerative Braking:

Hydraulic or mechanical brakes are commonly used for e-mobility
applications. Additionally, EVs often incorporate regenerative braking
systems that capture kinetic energy during braking process and
convert it into electrical energy for reuse in the battery.

Figure 5: Schematic illustration of the distinct electric vs. ICE-based drivetrain.

19
Distinct ICE-based Drivetrain and Components:
The ICE-based drivetrain typically consists, but not limited to, of the following key components:

• Engine • Electrical System

ICE-based vehicles are powered by internal The electrical system is not directly related to the
combustion engines fueled by gasoline or diesel. combustion process, but is crucial for starting
They are responsible for converting chemical the engine, powering accessories, and managing
energy stored in fossil fuels to mechanical energy various other vehicle functions.
that propels the vehicle. The engine consists
of numerous components such as cylinders, • Ignition System
pistons, crankshafts, and camshafts.
The ignition system is responsible for igniting the
• Fuel System fuel-air mixture in the cylinders of the engine.
It includes components such as spark plugs,
The vehicles are equipped with a fuel tank/ ignition coils, distributor, and ignition control
reservoir that is typically positioned towards
the rear or underside of the vehicle. The system • Braking System
comprises elements such as the fuel tank, fuel
pump, and fuel injectors. The hydraulic and mechanical brakes are
installed to control the vehicle’s speed and
• Transmission ensure safe stopping distance.

The transmission system transfers power from

the engine to the wheels, allowing the vehicle to
move at different speeds. In Pakistan, commonly
used ICE-based two- and three-wheelers have
traditional manual transmission gear systems.

• Cooling System
This system helps regulate the temperature of
the engine to prevent overheating. It typically
includes a radiator, coolant reservoir, water
pump, and a thermostat.

• Exhaust System
This system includes components such as the
exhaust manifold, muffler, exhaust pipe, and
tailpipe. It is responsible for managing and
expulsion of the exhaust gases produced during
the combustion of fuel.

20
 1.7 GLOBAL ELECTRIC TWO- AND THREE-WHEELER MARKETTRENDS
The global market for electric two- and three-wheelers is witnessing significant developments
that are reshaping the industrial landscape. One notable trend is the increasing affordability and
efficiency of electric two-wheelers, which is expanding their accessibility to a broader consumer
base. This shift is particularly evident in emerging economies, where factors such as urbanization
and rising disposable income are fueling demand for electric scooters and bikes.
Furthermore, the technological advancements in battery technology are playing a crucial role in
improving the range and performance of EVs. The growing affordability and efficiency of lithium-
ion batteries, for instance, are contributing to longer driving ranges and shorter charging times
for electric two- and three-wheelers.

In addition to the battery advancements, the integration of smart and connected features is
gaining traction in the market. Features such as Global Positioning System (GPS) navigation,
smartphone connectivity, and real-time monitoring are enhancing the user experience and
improving the safety and convenience of EVs.

In the electric two- and three-wheeler market across Asia, several

key players dominate the landscape with their innovative offerings
In2021
and extensive market reach. Yadea, Niu Technologies, and SUNRA,
the electric two- and based in China, stand out as major contributors to the region’s electric
three-wheeler market in mobility sector, providing a wide range of EVs and a strong global
the Asia-Pacific region presence. Meanwhile, in India, Hero Electric, Bajaj Auto, TVS Motor
boasted to a substantial Company, and Ather Energy lead the charge with their cutting-edge
electric scooters and motorcycles, catering to the diverse needs of
size of
consumers. Additionally, companies like Accell Group, with a notable
USD14,012.2million. presence in the Netherlands, also play a significant role in the Asian
market, further enriching the electric mobility ecosystem. With
Looking ahead,the market competition intensifying and demand for sustainable transportation
on the rise, these key players continue to drive innovation and shape
is poised for remarkable
the future of the electric two- and three-wheeler markets in Asia.
expansion,with forecasts
indicating a surge to 1.7.1 CASE STUDY:CHINESE EV MARKET
USD41,018.2million
The Chinese electric two-wheeler market has undergone a remarkable
by2030. evolution over the years, transitioning from its nascent stages to
becoming a global leader in electric mobility. In the early stages,
This growth trajectory Chinese companies focused on producing basic electric bicycles
reflects a robust to address local transportation needs and combat urban pollution.
However, as the technology advanced and consumer preferences
compound annual shifted towards more sophisticated vehicles, the market witnessed
growth rate (CAGR) of a surge in innovation. Companies like Yadea, Niu Technologies, and
SUNRA emerged as frontrunners, introducing advanced electric
12.7% scooters and motorcycles equipped with cutting-edge features such
expected between as smart connectivity, improved battery technology, and enhanced
2022 and 2030. safety features. This evolution was driven by various factors including
government support, technological advancements, and growing
environmental concerns.
21
 02CURRENT STATE OF EV INDUSTRY AND
MARKET IN PAKISTAN
2.1 TRENDS IN EV MANUFACTURING INDUSTRY
The approval of the EVP in 2020
Most of the EV manufacturing industry in Pakistan is concentrated
in the segment for two- and three-wheelers. Additionally, ancillary/
has encouraged private sector support industry has also started to emerge to provide indigenously
investment in the EV manufac- developed parts and modules for the electric automotive sector.
turing in Pakistan. The fiscal Most notably, some companies have been formed in the segment
incentives of the policy coupled of battery pack manufacturing, while other sub-sectors of the
support industry, such as motor manufacturing, have also started
with sizeable potential market
to emerge.
size resulted in emergence of
many Pakistan-based EV
2.1.1 ELECTRIC TWO-WHEELER INDUSTRY
manufacturers. Till date, 32
manufacturers have been
granted license by the Engineering
Industrial Players
Development Board (EDB) for Most of the players in the EV industry of Pakistan are from the
indigenous manufacturing of EVs two-wheeler segment. Of the 32 licensed EV manufacturers, 30
have developed or are at various stages of developing electric two-
in Pakistan. All of these
wheelers. Annex 2A provides a list of licensed electric two-wheeler
manufacturers have obtained manufacturers in Pakistan.
license for the development of
either electric two- or-three- Characteristics
wheeler, while few have been Most of the current electric two-wheeler variants developed
indigenously share many attributes with their ICE-based
authorized to develop both types
counterparts that are widely driven across the country. Other
of vehicles. Another common than batteries, motors, and EV specific modules, the electric two-
trait amongst these licensed wheeler manufacturing sector is reliant upon the existing and
manufacturers is that most of already well-established parts and components ancillary industry
them are Pakistan-based young for ICE-based two-wheelers. It allows the electric two-wheeler
manufacturers to leverage the existing supply chain of parts and
private-sector companies that
modules of current ICE-based two-wheeler sector. This approach
have been established after the yields several benefits. First, the low cost of locally available parts
approval of the EVP in 2020. results in overall reduction in the price of the vehicle. Secondly, it
allows the industry to avoid challenges associated with import of
such items such as exchange rate fluctuations. Lastly, it enables
existing repair centers to service and maintain the electric two-
wheelers (other than EV specific parts). Table 3 highlights key
characteristics of the current two-wheeler variants developed in
Pakistan.
22
The electric two-wheeler variants develop by most manufacturers possess similar technical
characteristics as described in Table 3. There are also few electric two-wheeler manufacturers
in Pakistan that offer vehicles that are often characterized under the ‘luxury’ segment. These
two-wheelers offer more battery capacity, higher speed, and torque, and often have a unique
sporty design. However, such vehicles are developed to target a specific niche in the two-wheeler
market that is willing to pay a much higher upfront purchase price. Figure 6 illustrates selected
electric two-wheeler models developed in Pakistan.

Production Capacity
Most of the already well-established ICE-based two-wheeler manufacturers have not ventured
into the EV manufacturing sector.Therefore, most electric two-wheeler manufacturers in Pakistan
are young companies or start-ups. Consequently, these electric two-wheeler manufacturers
possess limited manufacturing and production facilities resulting in restricted roll-out of
vehicles. Many of these manufacturers currently possess the capacity to develop less than a few
thousand vehicles annually. Some manufacturers possess production capacity that is limited to
a few hundred vehicles annually.13

13 Arshad, N. et al. (2021) PAKISTAN: ELECTRIC VEHICLES AND BATTERIES MARKET ASSESSMENT. rep. United States
Agency for International Development. Available at: https://pdf.usaid.gov/pdf_docs/PA00XXDK.pdf (Accessed: 13 February
2024).

Compliance with Standards

Lack of sophisticated manufacturing facilities have limited the ability of the electric two-wheeler
manufacturers to ensure compliance to international standards which is essential to the pave
the way for exports. The non-EV specific parts, leveraged from ICE-based ancillary industry,
utilized in electric two-wheeler manufacturing are often compliant with standards introduced
by Pakistan Standards and Quality Control Authority. However, EV-specific parts, that include
batteries, motors, and peripheral electronics, are typically not compliant with local or international
standards. Furthermore, there are few advanced testing and characterization facilities in
Pakistan that can be availed to ensure compliance to globally accepted standards.

23
 The provincial governments in Pakistan have
attempted to increase female ridership in
the two-wheeler segment. For instance, the
Government of the Punjab initiated the Women
on Wheels project under which 700 two-
wheelers were distributed amongst women in
Pakistan along with imparting required training.
However, efforts at such scale often do not have
a sustainable and noteworthy impact.

User Acceptability and Gender Patterns Challenges

in Two-wheeler Usage The upfront purchase price of electric two-
The two-wheelers in Pakistan are largely driven wheelers remains a critical challenge. The price
by the male segment of the population due to of a typical electric two-wheeler in Pakistan is
deep-rooted social and cultural reasons. Since almost twice the price of its gasoline equivalent.
most ride sharing services employing two- This is because the price of lithium-ion batteries
wheelers are offered by the male segment of in electric two-wheelers is more than half of
the population in Pakistan, women typically the total price of the vehicle. To address this
tend to shy away from availing such services. challenge, some manufacturers have retorted
Furthermore, due to lack of lane discipline to employing lead-acid batteries which not
and frequent rash driving on roads, the two-
only offer limited driving range but also add
wheeler riders are highly prone to accidents
substantial weight to the vehicle as well as offer
which is considered a discouraging factor for
much lower battery cycles, implying frequent
potential women two-wheeler drivers. Lastly, the
typical eastern dresses worn by many women need for battery replacement.
in Pakistan are deemed unfit for rising two-
wheelers.

However, this trend is being challenged with the

electric two-wheeler adoption. A category of
electric two-wheelers, often referred as ‘scooty’,
is gaining popularity amongst female drivers.
The electric scooties are relatively smaller in
size than typical electric two-wheelers and have
reduced acceleration and weight. This allows
convenient handling of the vehicle. Moreover,
these vehicles can be driven with convenience
by women wearing tradition dress.

Figure 6: Illustration of selected electric two-wheeler

models developed in Pakistan.

24
2.1.2 ELECTRIC THREE-WHEELER INDUSTRY

Industrial Players
Unlike the electric two-wheeler manufacturing sector in Pakistan,
there are relatively few licensed companies in the electric three- 5/32
wheeler segment. This is fundamentally due to higher complexities licensed
in e-three-wheeler manufacturing in contrast to two-wheeler
manufacturing. Of the 32 licensed EV manufacturers in Pakistan,
EV manufacturers
only 5 are developing electric three-wheelers. Annex 2B provides in Pakistan
a list of licensed electric three-wheeler manufacturers in Pakistan. are developing
electric
Characteristics three-wheelers
The electric three-wheeler segment shares many traits with the
electric two-wheeler sector in Pakistan. Like the electric two-
wheeler industry, the electric three-wheeler sector, relies on local
vendor industry for provisioning of non-EV specific parts and
components due to similar reasons as mentioned above. However,
unlike the electric two-wheeler market, the price of electric
three-wheelers is three-four times the price of their gasoline
counterparts. This is due to requirement for much larger battery
capacity to prevent range-anxiety for the drivers. Due to utilization
of existing supply chain of ICE-based three-wheeler segment
for provisioning of non-EV-specific parts and components, the
electric three-wheeler variants share many traits with their ICE
equivalents. Therefore, the characteristics of most electric three-
wheeler variants, developed by different manufacturers, closely
resemble each other. Figure 7 illustrates selected electric three-
wheeler models developed in Pakistan. Table 4 highlights key
characteristics of the electric three-wheeler models developed
indigenously.

25
Production Capacity
Challenges
Unlike the electric two-wheeler industry, the
production capacity varies across a wide The most critical challenge faced by the electric
range in the electric three-wheeler segment. three-wheeler industry is the high upfront
The existing well-established ICE-based cost of the vehicle. The purchase price of most
three-wheeler manufacturers that have electric three-wheelers is at least three-to-four
developed e-three-wheeler manufacturing times the price of their ICE-based counterparts.
lines possess sizable production capacity to This is primarily due to the requirement of larger
the tune of thousand annually. However, there battery capacities since these vehicles are
are some newly established companies that solely utilized for commercial purposes and thus
have ventured into the electric three-wheeler traverse much longer distances than privately
manufacturing segment. Such companies are owned passenger vehicles like the two- and
often characterized by limited manufacturing four-wheelers. Furthermore, these vehicles are
capacity that is typically less than a few thousand
not designed to accommodate fast charging.
vehicles annually.
This is because enabling fast charging results in
Compliance with Standards further price escalation and rapid degradation
of battery.
The electric three-wheeler industry is facing
similar challenges in standardization as the
electric two-wheeler manufacturing segment.
Most of the non-EV specific parts in electric
three-wheelers are compliant with locally
developed standards, while the components
of the electric drivetrain lack standardization.
However, it has been observed that in contrast
to the electric two-wheeler industry, the electric
three-wheeler manufacturers typically employ
better quality components in the electric
drivetrain. One fundamental reason for this is
that the three-wheelers need to be highly robust
vehicles due to their much more frequent usage
and larger load carrying requirements.

User Acceptability and Gender Patterns in

Three-wheeler Usage
The three-wheelers are almost exclusively driven
by the male segment of the population. This trend Figure 7: Illustration of selected electric three-
is likely to continue with the emergence of the wheeler models developed in Pakistan.
electric three-wheeler sector. However, the GoP
has announced certain incentivized schemes
to promote e-three-wheeler adoption that set a
fixed quota for prospective women drivers.

26
Swappable Battery-based vehicles
Some electric three-wheeler manufacturers have offered another approach to energizing the vehicles
in contrast to conventional wired charging of fixed batteries. Under this approach, the cost of the
vehicle is separated from the cost of the batteries. The owner of the vehicle purchases the vehicle
excluding the batteries. The batteries are obtained on rental basis from a chain of franchisees
just like the gasoline value chain. Through such an approach utilizing swappable batteries, the
vehicle owners can purchase the vehicle at a price that is at parity with existing fossil fuel-based
counterparts, while at the same time enjoy a lesser running cost. The entire process of the battery
swapping can take place in less than a minute, thus removing the critical barrier associated with
long charging time.

The ancillary industry supports 2.2 TRENDS IN EV ANCILLARY INDUSTRY

the automotive manufacturing
sector through provisioning of 2.2.1 BATTERY PACK MANUFACTURING INDUSTRY
parts and components. In the
electric two- and three-wheel- Industrial Players
er segments, the indigenous Pakistan has a well-established battery industry that is focused
industry is supplying almost on development of lead-acid based energy storage solutions.
all non-EVs specific parts and The demand for lead-acid batteries in the ICE-based automotive
components. Though there are
sector, telecommunication sector, and power backup solutions
such as uninterruptible power supplies (UPSs) is catered through
handful of lithium-ion battery indigenously developed energy storage solutions. The industry for
pack manufacturers and EV mo- the development and production of lithium-ion batteries is at a
tor developers, the batteries and nascent stage in Pakistan. Over the recent years, few companies
motors are still being imported at have been established that are manufacturing lithium-ion battery
packs using imported cells. Due to the lack of maturation of the
large due to the unavailability of
respective industry in the country, the e-mobility sector is reliant
required manufacturing expertise upon imported solutions that are not only costly but also have
and capacities in the country. associated challenges such as after sales service.

27
Manufacturing Capacity
Most lithium-ion battery manufacturers currently possess limited roll-out capacity and lack
sophisticated manufacturing equipment and expertise. The battery packs are assembled using
imported cells. Currently, indigenous battery cell manufacturing appears to be out of reach in the short-
term due to the fact that it requisites supply of rare-earth materials which have a highly monopolized
market and cell manufacturing gains commercial viability at economies of scale.

2.2.2 ELECTRIC MOTOR MANUFACTURING INDUSTRY

State of the Current Motor Industry in Pakistan

Pakistan has a well-established motor manufacturing industry
that has been developing induction motors for the past several
years. Motor manufacturing mainly takes place in Gujranwala
and surrounding areas in Pakistan. Recently, the industry has
commenced manufacturing of BLDC motors. These indigenously
developed motors are used in a wide range of applications such
as water pumps and electric fans. Currently, the motor industry
in Pakistan lacs the capacity to design and develop motors for e-
mobility applications.

Characteristics of the Current Motor Industry in Pakistan

The motor industry in Pakistan primarily develops low-power
products with rating of up to 10KW. These motors typically deliver
low rpm (1,500-3,000) and are thus not suitable for EV applications
that require high output that is often to the tune of 10,000 rpm.
Furthermore, most of the locally developed motors are efficient up
to 80 percent and hence are not worthy for EV applications that
require up to 95 percent efficiency. The current production process
mostly relies on recycled materials; the electric steel sheets are
mainly recovered from international scrap. Furthermore, since
manufacturing of original copper wire requires scale, so second
hand copper wires are used in manufacturing of motor winding.

Technical Capacity of the Motor Industry Compliance with Standards

The current motor industry in the country is reliant upon old Most of the motors developed
designs that yield poor weight-to-power ration. The industry also in Pakistan are not compliant
faces scanty of skilled human resource (HR) to conduct research with EV requirements and
and development (R&D) into new and efficient designs and standards. The challenges
manufacturing techniques. As for adapting production to with compliance to standards
accommodate EV demand, most manufacturers believe that they are further augmented by
can possibly reverse engineer over time (5-7 years) while designing the lack of motor testing and
might take longer. Since motors must operate between an characterization facilities
optimal temperature range in order to maintain their efficiency,
fan manufacturing industry has the potential to play an important
role in the EV value chain.

28
2.3 CONSTRAINTS IN THE EV MANUFACTURING SECTOR
Financing Constraints: Supply Chain Constraints:
Limited access to financing options with Dependency on imports for components
affordable financing rates for setting up EV and limited local manufacturing capabilities
industry is a major barrier. The interest rate contribute to supply chain challenges. Delays
presently hovers around 23% and for any in component procurement, high import tariffs
industry this high rate becomes a showstopper. for certain components, and supply chain
disruptions can hinder production and increase
Policy and Regulatory Challenges: costs for manufacturers.
Inconsistent government policies and regulations
create uncertainty for manufacturers and
Skill Shortages:
investors. Lack of clear guidelines on incentives, The shortage of skilled workforce in the EV
subsidies, import tariffs, and emissions sector presents a barrier for industrial growth.
standards hinder investment and growth in the Lack of training programs and educational
sector. Since EV is a cross disciplinary subject, opportunities limit the availability of qualified
close coordination is indispensable between personnel for manufacturing, maintenance, and
departments and ministries of the federal and repair purposes.
provincial governments as well as regulatory
agencies.

Testing and Certification Requirements:

Stringent testing and certification requirements
for EVs may pose challenges for manufacturers
looking to enter the Pakistani market for
quality products. Presently, testing labs that
certify vehicles are not setup in the country.
Thus, compliance with international safety,
performance, and emissions standards adds
to the cost and complexity of bringing EVs to
export market. Thus, many companies either
develop sub-standard vehicles for local market
or introduce imported vehicles from China which
do not give any industrial uplifting to the EV value
chain in the country.

2.4 REQUIRED HUMAN RESOURCE SKILLS FOR EV INDUSTRY

One of the key challenges faced by the current electric
two- and three-wheeler industry is the absence of the
required skilled Human Resource (HR). This can be
partly explained by the lack sufficient funds to lever-
age the required HR as well as scarcity of personnel in
the country with the required expertise. Therefore, it is
crucial that the indigenous industry develops skills in
the following domains:

29
Battery Technology:
The understanding of battery chemistry, energy
storage, and battery management systems is
crucial for engineers involved in designing,
developing, and testing EV batteries. Skills in
battery modeling, simulation, and optimization
are also valuable for improving performance and
efficiency in EVs.

Electric Powertrain Engineering:

A proficiency in electric motor design, power
electronics, and control systems is essential for
engineers working on electric powertrains. This
includes expertise in motor sizing, thermal
management, and integration with vehicle
systems to ensure optimal performance, safety,
and efficiency.
Electric Vehicle Diagnostics and
Charging Infrastructure: Maintenance:
Detailed knowledge of EV charging standards, Technical expertise in diagnosing and
protocols, and infrastructure design is necessary troubleshooting EV systems, including battery
for professionals involved in planning, installing, health monitoring, electric drivetrain diagnostics,
and maintaining charging stations. Skills in grid and software updates, is critical for technicians
integration, smart charging technologies, and and personnel in servicing industry. Skills in
interoperability are increasingly important as e-vehicle repair, maintenance procedures,
the EV charging network expands. and safety protocols ensure the reliability and
longevity of EVs throughout their lifecycle.
Energy Storage Systems:
Deep understanding of energy storage Regulatory Compliance and Standards:
technologies beyond traditional batteries, such Understanding regulatory requirements, safety
as supercapacitors and fuel cells, is valuable standards, and certification processes relevant
for engineers working on advanced energy to EVs is essential for professionals involved in
storage systems for e-vehicles. Skills in energy product development, testing, and compliance.
conversion, efficiency analysis, and hybridization Knowledge of emissions regulations, vehicle
techniques contribute to the development of safety standards, and cybersecurity protocols
next-generation EVs with improved range and helps ensure regulatory compliance and market
performance. acceptance of electric vehicles.

Sustainable Supply Chain Management: Data Analytics and Telematics:

Proficiency in sustainable sourcing, material Proficiency in data analytics, machine learning,
selection, and supply chain optimization is and telematics systems is valuable for
essential for professionals involved in procuring extracting insights from vehicle telemetry data,
components and materials for electric vehicle optimizing performance, and enhancing user
manufacturing. Knowledge of environmental experience. Skills in data visualization, predictive
impact assessment, lifecycle analysis, and maintenance, and remote diagnostics support
ethical sourcing practices helps mitigate continuous improvement and innovation in the
environmental and social risks in the supply e-mobility sector.
chain.

30
2.5 KEY EV MARKET BARRIERS

Electricity Shortage and Battery Charging:

The existing shortfall in electricity supply directly
impacts the practicality of EVs in Pakistan.
Despite the grid’s overall capacity being
sufficient, revenue-driven load management in
numerous areas poses challenges for operating
charging stations. Additionally, the prolonged
charging durations and limited driving range per
charge contribute to the perception of EVs as
less convenient, further impeding their adoption.

Restricted Model Options and Availability:

The limited availability of EV models in Pakistan
constrains consumer choice and preference.
The dearth of diverse options tailored to
specific requirements, tastes, or financial
constraints compared to traditional vehicles
could deter potential buyers due to a lack of
appealing alternatives. While more than 30 EV
manufacturing licenses have been granted
by the Engineering Development Board (EDB),
manufacturers have been sluggish in introducing
new models to the market.

Elevated Initial Costs: Skilled Workforce for EV Maintenance:

One of the major obstacles hindering the The transition to EVs necessitates specialized
widespread adoption of EVs in Pakistan is skills for maintenance and repair, which
the significantly higher upfront expenditure Pakistan currently lacks. This shortage of
associated with purchasing these vehicles trained professionals may lead to escalated
compared to their traditional counterparts. maintenance expenses and discourage
This cost differential renders EVs financially prospective EV buyers. Moreover, manufacturers
inaccessible to a considerable portion of the encounter difficulties in recruiting skilled
population, thus constraining their market personnel proficient in batteries, high-efficiency
penetration to a wealthier demographic. motors, and power electronics.

Range Anxiety andInfrastructureforCharging: Policy Inconsistency and Regulatory Hurdles:

The prevalent concern of ‘range anxiety’, which Inconsistent governmental policies and a dearth
pertains to the fear of an EV running out of of clear regulations create an atmosphere of
power before reaching a charging station, poses uncertainty for both consumers and
a significant deterrent to potential buyers. This manufacturers. This ambiguity can impede
issue is particularly pronounced in Pakistan due investments in EV infrastructure and technology,
to the inadequate infrastructure for charging, thereby hampering the growth of the EV market.
dissuading many prospective customers from Notably, uncertainties persist regarding the
considering EVs as a feasible alternative to entity responsible for battery safety and
conventional fuel-based vehicles. the standardization of charging protocols,
exacerbated by conflicting regulations between
federal and
31
Financing and Accessibility of Loans: Disposal and Recycling of Batteries:
Access to financing options for purchasing EVs The disposal and recycling of used EV batteries
is limited in comparison to traditional vehicles, present environmental and logistical challenges
thereby posing a financial barrier to a significant in Pakistan. In the absence of proper facilities
portion of the population, including consumers and regulations, improper battery disposal could
and small businesses. Furthermore, high lead to adverse environmental consequences.
interest rates and capital costs render EVs less Currently, there are no policies or regulations
appealing to potential buyers. governing the proper disposal of EV batteries.

Supply Chain and Manufacturing Limitations: Public Perception and Awareness:

Pakistan encounters challenges in establishing There is a pressing need to shift public attitudes
a robust supply chain for EV components and towards EVs and enhance awareness regarding
establishing local manufacturing facilities. their economic and environmental advantages.
These hurdles can result in increased costs and
dependencies on imports, rendering EVs less
competitive. The local manufacturing of battery
packs and motors is crucial for the success of
EVs, necessitating a reduction in import duties
on components to incentivize local production.

32
 03SHORT–TERM OPPORTUNITIES IN THE
EV SECTOR

The demand for EVs in Pakistan has been largely driven

by swift increase in gasoline prices in the country over
the past two years. However, this demand has not been
able to proportionately translate into EV adoption due
to various market barriers. The most notable of these
barriers include deficiency of intra- and inter-city fast
charging facilities, high upfront purchase price of vehi-
cles, and limited presence of repair and maintenance
centers. The ability of EV and parts manufacturers to
provide effective solutions to these barriers provides
them business and commercial opportunities. The
high demand in the country for cost effective e-mobil-
ity solutions and a sizeable potential market share has
provided EV and parts manufacturers with valuable
market opportunities. Keeping in view the current state
of the EV manufacturing sector, marked by limited cap-
ital as well as manufacturing and R&D capacities, the
existing and prospective manufacturers need to strate-
gically plan and utilize their available resources to cap-
ture maximum market share. This chapter provides in-
sights on various opportunities available to the EV and
parts manufacturers in the short-term. The ‘short-term’
is defined in this report as a timespan of five years.

33
3.1 OPPORTUNITIES IN THE TWO-WHEELER SEGMENT
The electric two-wheeler segment provides many valuable business opportunities to the EV and
parts manufacturing sector. This is due to several underlying reasons. First, the two-wheeler
segment offers the largest market potential in terms of vehicle numbers. There are almost two
million registered two-wheelers in the country which are a potential candidate for transition
towards EVs. Secondly, the automotive parts manufacturing industry for the ICE-based two
wheelers in Pakistan has achieved sufficient self-reliance and economies of scale. This has
established a dependable and cost-effective supply chain of parts and components which can
be leveraged by the EV industry for application of non-EV-specific parts such as tires, chassis,
and brakes etc. In particular, there are two areas in the electric two-wheeler segment that can
provide opportunities for manufacturers to capture a larger market share in the short-term.

Retrofit Kits:
A retrofit kit for the two-wheeler consists of a
battery pack, an electric motor, and associated
electronics. A typical ICE-based two-wheeled
vehicle can be retrofitted with such a kit and
transformed into an all-electric vehicle. This
implies that new as well as old ICE-based two-
wheelers can be converted into EVs through
these kits. A typical retrofit kit, consisting of a 2
KWh li-ion battery, a 1,500 Wp motor, and a slow
home-based charger, costs almost USD 350.
While the purchase cost of a new electric two-
wheeler in Pakistan is at least USD 800, retrofit
kits provide a cost-effective solution for vehicle
owners to transition towards EVs. Therefore, the
electrification of the two-wheeler segment via
retrofit kits can enable manufacturers capture
larger market share in the short-term.

3.1.1 BRIDGING GAPS IN THE SUPPLY CHAIN

Leveraging existing automotive parts industry:
Other than the EV-specific parts, that include battery, motor, and associated electronics, the electric
two-wheelers can be developed using the existing well-established supply chain of ICE-based
automotive parts and components. Over the past few decades, the ancillary industry supplying
automotive parts for the ICE-based two-wheeler segment has achieved economies of scale and
sufficient self-reliance. It has enabled the ancillary industry to supply automotive parts at a cost-
effective price with reliable quality. The current and prospective electric two-wheeler manufacturers
can leverage the indigenous ICE-based ancillary industry for provisioning of non-EV-specific parts.
Such an approach will enable the electric two-wheeler manufacturers secure a reliable supply chain
of automotive parts and reduce the cost of the vehicle.

34
3.2 OPPORTUNITIES IN THE THREE-WHEELER SEGMENT
The highest demand for EVs is in the segment for
three-wheelers. According to a survey involving
more than 500 ICE-based three-wheeler drivers,
the daily profit of ride hailing services is USD
3-4. The swift increase in gasoline prices in
Pakistan over the past two years has compelled
three-wheeler drivers to increase ride fare
proportionately which has resulted in reduced
ridership and thus decrease in income. The
electric three-wheelers offer up to 70 percent
reduction in operating expense in contrast to their
ICE-equivalents. However, the major challenges
in electric three-wheeler adoption are high
upfront purchase cost of the vehicles and lack
of on-road fast charging facilities. Addressing
these challenges provides opportunities to the
electric three-wheeler and parts manufacturers.
To this end, this report identifies the following
key opportunities for automotive manufacturers
and charging services providers in the short-term:

Swappable battery-based electric three-wheelers:

The swappable battery-based electric three-wheelers provide an effective solution to the high
upfront purchase price of their counterparts with fixed batteries. Under the battery swapping regime,
the cost of the EV and batteries is separated i.e., the vehicle owner purchases the vehicle without
batteries. This brings the cost of the EV at par with their ICE-based equivalents. The vehicle owner/
driver obtains the batteries on rental basis from a network of battery swapping stations. As the
batteries deplete due to the usage of the vehicle, the three-wheeler approaches a battery swapping
station where depleted set of batteries are replaced with fully charged ones and the whole process
of battery swapping can be completed in less than 3-4 minutes. The batteries under this model are
owned by the charging services providers and not the vehicle operator. The battery swapping regime
enables, the end-users to purchase an EV at a price that is at par with ICE-equivalents while at the
same time reap benefits due to lower operational expense incurred by the electric drive train. The
battery swapping regime provides an effective alternative to the conventional three-wheelers with
fixed batteries carrying a much higher upfront purchase price. Therefore, in the short-term of next
five years, local manufacturers can introduce vehicles customized for battery swapping protocols.

35
3.2.1 BRIDGING GAPS IN THE SUPPLY CHAIN
In addition to the opportunities present for the electric three-wheeler manufacturers in the battery
swapping regime, there are opportunities available for leveraging existing ICE-based ancillary
industry for the supply of automotive parts and components. An electric three-wheeler can be
retrofitted in a similar manner to two-wheelers and can be converted into all-electric vehicle. In the
short-term, where are most current electric three-wheeler manufacturers are faced with challenges
such as limited capital, few advanced vehicle manufacturing facilities, and unavailability of skilled
human resource, the existing ancillary industry for ICE-based three-wheeler parts can be utilized for
the provisioning of non-EV specific parts and components. In the medium to long-term, as the electric
three-wheeler industry matures in Pakistan, the reliance on ICE-based three-wheeler ancillary
industry for supply of parts and modules can be reduced through phased indigenous research and
development.

3.3 OPPORTUNITIES IN THE BATTERY PACK MANUFACTURING – SECURING

ACCESS TO RAW MATERIALS

3.3.1 GAPS IN SUPPLY CHAIN OF RAW MATERIALS

Battery is the most critical component in an In the short-term, the indigenous battery back
EV, constituting almost half of the total cost of manufacturers will need to rely on imported
the vehicle. Often lithium-ion or other lithium- lithium-ion cells. However, the global market for
based derived battery chemistries are employed lithium-ion cells is also not very friendly to early or
in EV applications. The lithium is a rare earth small-scale battery pack manufacturers. There
material with few mines located at a handful of are few lithium-ion cell manufacturers globally.
locations globally. As a consequence, the lithium Most lithium-ion cell manufacturers only engage
mining sector is high monopolized and access in business deals involving cell order to the tune
to this rare earth material requires government- of millions. This creates challenges for young
to-government engagements. Furthermore, battery pack manufacturers to directly purchase
companies having lithium also typically do not cells from these manufacturers. Therefore,
trade the raw material as it decreases the value many new battery pack manufacturers have to
added to the export. Instead finished products rely on import of cells from third party vendors.
employing lithium, such as batteries or cells, This creates few challenges such as access to
are exported. Therefore, in the short-term it is high quality cells and claims for warranty and
not possible to establish cell manufacturing replacement of potential cells.
industry in Pakistan as it requires access to rare
earth materials, especially including lithium and
nickel.
36
3.3.2 RECOMMENDED SHORT-TERM APPROACH FOR BATTERYPACK MANUFACTURERS
Pakistan has a sizeable opportunity for indigenous battery pack manufacturing through importing
cells from the international market. The imported battery cells can be assembled into a battery pack
indigenously and the battery management system (BMS) can be locally developed that batter suits
the unique requirements of two- and three-wheeler market in Pakistan. With very few lithium-ion
battery pack manufacturers currently in Pakistan and growing demand for lithium-ion based energy
storage solutions, there exists a valuable opportunity for investment in this emerging industrial sector.

Caution of two-wheeler,three-wheeler and battery pack manufacturers:

Emerging battery pack manufacturers often
tend to utilize lower quality cells that can be
purchased with relative convenience from
vendors or middleman. However, these tier-2
or tier-3 cells create many challenges when
assembled into a battery pack and utilized
in e-mobility applications. Such cells often
yield considerably lower lifecycles and thus
end-users need to frequently incur battery
replacement costs. Furthermore, the mileage
offered by the batteries employing such cells
drastically decreases in contrast to batteries
utilizing high quality or tier-1 cells. Moreover,
such cells are also more suspectable to faults
and fire incidents. Challenges due to poor quality
of cells during early stages of EV adoption in
Pakistan or any other country can have negative
impact on public perception at large regarding
viability of e-vehicles. While tier-2 or tier-3 cells
also carry a relatively lower price in contrast to
tier-1 cells and are often leveraged to reduce
the upfront purchase price of the vehicles,
application of these cells can create challenges
for manufacturers as well as end-users in the
medium-to-long-term and the at the same time
reduce end-user confidence, especially amongst
prospective early adopters of EVs.

3.4 STANDARDIZATION REQUIREMENTS FOR THE SHORT-TERM

Standardization of the entire EV value chain, especially including e-vehicles and associated charging
infrastructure, is one of the most crucial aspects in the development of the EV sector in Pakistan. The
‘standards’, in the context of automotive sector, refer to set of mandatory requirements, characteristics
or rules that must be followed across the entire vehicular value chain or its specific segments. While a
myriad of standards governing electric mobility have been developed globally by multiple Standards
Development Organizations (SDOs), it is of paramount significance that these standards must fulfil
indigenous requirements and conditions. Standards in the EV value chain ensure compliance with
local, regional, and globally accepted practices as well as govern and regulate the respective sector.

37
Standardization ensures interoperability between vehicles, charging infrastructure and vehicular
parts and components, enables national and international trade of vehicles, their parts, and
components, and charging hardware, allow regularization through establishing benchmarks, and
ensure Safety of the passengers, vehicles and vehicular parts and components as well as provide a
reasonable minimum level of quality products and services to the consumers.

The Government of Pakistan has commenced the process of standardizing the EV sector. The Cabinet
Committee for Disposal of Legislative Cases on January 6th, 2024, approved safety standards for
the automotive sector including EVs. Furthermore, Pakistan Standards and Quality Control Authority
(PSQCA) has established a Technical Committee on Electrically Propelled Road Vehicles (TC-05) to
develop EV-specific standards. This TC has already developed and adopted few standards for the
electric power train for electric vehicles. While, the process of standardization is ongoing in Pakistan,
it is crucial that a mandatory framework for standards must be adopted at earliest to harmonize
the EV sector. In the short-term, it is crucial that the following standards must be developed and
adopted by all manufacturers:

1. Charging standards for communication protocol(s) and charging connector

2. Battery cell standards that define quality/tier of the cells, their lifetime, type/category, and
parameters such as SoH, SoC etc.
3. Safety Standards for the passengers, vehicle, charging standards and especially including
components of the electric drive train.
4. Vehicle Performance standards such as top speed, minimum range etc
5. Environmental Standards including IP rating of the drivetrain, and mechanical shock and
vibration tolerance etc.

The standardization is one of the most important factors determining EV adoption in the country.
However, it is important to note that since the indigenous industry is at a nascent stage of development,
a stringent standardization and regulatory regime can create barriers for the local industry to
develop and introduce their solutions in the market. Therefore, it a prudent approach is introduce
a minimum mandatory standardization and regulatory regime and as the industry gradually gains
maturity, more standards can be introduced to better regulate the sector.

38
3.5 OPPORTUNITIES IN CHARGING SERVICES PROVISIONING SECTOR
The development of charging infrastructure and introduction of EVs on roads in often referred as
‘chicken or the egg’ causality dilemma. It is often argued whether required charging infrastructure
should be established to encourage EV adoption or vice versa. In the context of Pakistan, a prudent
approach shall be establishing a bare minimum network of charging infrastructure to prevent ‘range-
anxiety’ or fear or running out of battery power while on road. The establishment of the minimum
mandatory network of charging infrastructure will then encourage EV adoption and provide more
commercial opportunities to the charging services providers.

During the short-term, the charging service providers need to identify strategic intra- and inter-
city locations where EV drivers will need fast charging. These strategic locations can potentially
include service areas along key national highways and motorways. A report by Lahore University of
Management Sciences (LUMS) identifies 16 locations across motorways and highways of Pakistan
where if fast charging infrastructure is deployed, it can enable commute across most large cities
within the country.13 Such strategic locations across key highways provide an opportunity to the
prospective charging services providers. Furthermore, similar strategic locations can be identified
within large cities that are suitable for development of fast charging infrastructure in the short-term.
These
intra-city locations can include large shopping malls or markets with sizeable customer base.

13 Arshad, N., Javed, M.A., Arslan, M.M. and Khan, H.O.A. (2021) Developing Electric Vehicle Charging Infrastructure Across Mo-
torways and Highways of Pakistan. publication. Ministry of Climate Change and Environmental Coordination. Available at: https://
lei.lums.edu.pk/index.php/ev-charging-infrastructure/.

39
3.6 OPPORTUNITIES FOR EXPORT
There are several factors that determine the
opportunities for export of EV solutions. Some of
these important factors include manufacturing
capacity of the local industry, standardization
requirements in the targeted country(s), and
the ability to effectively market homegrown
solutions. Many countries have their own unique
standardization requirements to introduce
products that are better suited to meet unique
local requirements. However, in general the
standardization requirements of each country
fall undert the umbrella of globally accepted
standards that have been developed Standards
Development Organization (SDOs) such as
International Electrotechnical Commission (IEC),
International Organization for Standards (ISO),
and Underwriters Laboratories (UL) amongst
others. For the electric two- and three-wheeler
industry in Pakistan to export their solutions,
standardization requirement for each country
needs to be fulfilled.

04MEDIUM-TERM OPPORTUNITIES IN THE

EV SECTOR
The medium-term in this report refers to the period from the fifth year to the tenth year from
the present. It is assumed that in the short-term, i.e., over the next five years from the current
point in time, the indigenous EV and parts manufacturers have benefitted from the opportunities
mentioned in the preceding section. It is further assumed that while capitalizing the opportunities
in the short-term, the EV industry in Pakistan has progressed in several aspects, including the
development of skilled human resources, vehicle design, research and development, and overall
growth.

40
It is expected that over the next five to ten years, the demand for e-mobility solutions from the two-
and three-wheeler segment would have evolved relative to the present-day context. The evaluation
of demand can potentially include more aspiration for EVs and higher degree of sophistication of
the e-mobility solutions. There are multitude of factors that will shape the demand for EVs in the
medium-term. These factors can include differential between OPEX and CAPEX of EVs in contrast to
their ICE-equivalents, transformation of the global trends in the transportation system, and national
and international regulations on mitigating GHG emissions. The demand for the e-mobility solutions
in the medium-term will provide opportunities for the manufacturing sector. Therefore, the EV and
parts manufacturers will need to ensure that they possess the required capacities to meet the
projected demand and thus make most from the available market opportunities. In order to avail
the medium-term opportunities, the manufacturing sector will need to strategically mature their
various capacities through collaborations, and engagements with national and international players
in the EV sector. To this end, this report identifies the following opportunities for the EV and parts
manufacturers in the medium-term and provides recommendations to optimally benefit from them.

4.1 OPPORTUNITIES IN THE BATTERY MANUFACTURING SECTOR

In the medium term, the domestic industry is
anticipated to have reached a mature state,
resulting in a considerable rise in the demand for
EVs compared to the present time. Therefore, it is
essential to ensure the presence of a homegrown
industry dedicated to the production of battery
cells and packs, supported by a resilient and
dependable supply chain.

It is important to note that in the next five to ten

years a sizeable number of electric two- and
three-wheelers are projected to be on roads,
which requires presence of an indigenous well-
established battery cell manufacturing industry.
This is because during this period sole reliance
on international vendors for aftersales services
of battery cells will become highly unviable.
However, in the medium-term direct access of
indigenous cell manufacturers to the rare earth
metals employed in battery cell manufacturing
seems unlike due to the highly monopolized
nature of market for these raw materials. Thus,
the cell manufacturing industry in Pakistan will
need to secure dependable supply chain of rare
earth materials.
41
4.1.1 SECURING ACCESS TO RAW MATERIALS
Partnership with International Battery Pack Manufacturers:
Other than the EV-specific parts, that include battery, motor, and associated electronics, the electric
two-wheelers can be developed using the existing well-established supply chain of ICE-based
automotive parts and components. Over the past few decades, the ancillary industry supplying
automotive parts for the ICE-based two-wheeler segment has achieved economies of scale and
sufficient self-reliance. It has enabled the ancillary industry to supply automotive parts at a cost-
effective price with reliable quality. The current and prospective electric two-wheeler manufacturers
can leverage the indigenous ICE-based ancillary industry for provisioning of non-EV-specific parts.
Such an approach will enable the electric two-wheeler manufacturers secure a reliable supply chain
of automotive parts and reduce the cost of the vehicle.

South Korea, China, and Japan currently dominate the global battery market. Four battery cell
manufacturers in China, three in South Korea, and three in Japan account for 90% of the global
market. Many of these major cell manufacturers benefit from direct access to the monopolized rare
earth metals mining sector, which is often facilitated through long-term government-to-government
agreements.

Private sector companies in Pakistan can establish cell manufacturing industry in the country in
the medium-term through forming partnerships with existing global giants in the respective sector.
These partnerships can be formed in the following, but not limited to, ways:

1. Foreign Direct Investment: Under this model international companies can establish business
operations or acquire assets in a Pakistani company. It generally entails technology and management
interventions in addition to financial investment.
2. Joint Venture: Through a joint venture indigenous and internal companies can establish cell
manufacturing facilities in Pakistan through shared investment and equity.
3. Technology Transfer/ Equity-for-Technology: In this mode of partnership, often one party (the
licensor) grants another party (the licensee) the rights to use, manufacture, sell, or further develop a
specific technology, product, or intellectual property. The licensor typically retains ownership of the
technology or intellectual property and receives compensation, such as royalties, equity, or upfront
payments, from the licensee for the rights granted.

Establishing cell manufacturing industry in Pakistan through partnerships with existing well-
established international players in the respective sector can yield multitude of benefits. First, these
collaborations can enable businesses in Pakistan to promptly bolster their technological, human
resource, and manufacturing capabilities. Secondly, it reduces risks for indigenous manufacturers
associated with development of emerging technologies as they can leverage proven solutions from
licensors. Moreover, these partnerships reduce valuable time and capital that otherwise would have
been required for research and development. Most importantly, these partnerships can enable
Pakistani companies gain access to crucial rare earth materials and other raw materials from their
international partners.

42
Development of Advance Battery Pack Technologies:
In the short-term the manufacturers are expected to achieve fundamental capacities in battery pack
manufacturing as mentioned in the preceding section of this report. The medium-term provides an
opportunity to focus on optimizing battery performance through integration of data-driven and IoT-
based techniques and technologies. Therefore, the period from the next fifth year to the tenth year
provides an opportunity for battery pack manufacturers to develop capacities in the following areas:

1. Smart Battery Management System Design

and Development: The enduring disparity in
purchase prices between EVs and their ICE
counterparts is poised to pose a persistent
challenge for manufacturers in the medium
term. This is primarily because the battery
pack(s) are projected to occupy a substantial
share in the total cost of the e-vehicles. Design
and development of smart battery management
system (BMS) provides an opportunity for
the manufacturers to optimize and control
individual cells inside a battery pack in contrast
to the currently employed typical BMS that has
the capacity to optimize performance of battery
pack as a whole. Therefore, a smart BMS performs
almost the same function that a typical BMS
performs but has the capacity to do it at cell level.
Application of smart BMS results in improved
battery and vehicle performance, increased life
of battery pack, reduced faults, and curtailed
operational expense. Indigenous development
of smart BMSs, that are designed keeping
in view unique requirements of the two- and
three-wheeler segment in Pakistan, is valuable
opportunity for manufacturers in the medium-
term. However, it is important to note that such
solutions need time and extensive research
and development efforts for maturation. The
Pakistan-based battery pack and two- and
three-wheeler manufacturers can leverage
experience gained during the short-term to
achieve capacities to develop these smart BMSs.

43
4.2 OPPORTUNITIES IN THE MOTOR MANUFACTURING SECTOR
In contrast to the mature motor industry
in Pakistan focused on electric fans and
water pumps, the sector dedicated to the
manufacturing electric motors for e-mobility
applications demands significantly greater
expertise, manufacturing capabilities, and
investment in research and development.
Unlike the brushed DC motors, BLDC motors,
and induction motors, e-mobility applications
necessitate high-performance motors that
typically achieve efficiency levels of up to 95%.
Therefore, the motors employed in EVs need
to possess a superior power-to-weight ratio,
compactness, and deliver exceptional energy
efficiency. These requirements necessitate
establishing state-of-the-art manufacturing
facilities, availability of skilled HR, and
dependable supply chain of raw materials.
Furthermore, the electric motors employed
in EVs typically need to abide by a stringent
standardization and regulatory regime and
therefore, require testing and characterization
facilities. The high-performance motors need
a matured associated electronics industry for
the provisioning of controllers such variable
frequency drive (VFD) and variable speed drive
(VSD) which is currently not well-established in
Pakistan. Indigenous EV manufacturers expect
that it will take a minimum of 5-7 years for the
motor industry in Pakistan to mature sufficiently
to fulfill the demands of electric two- and three-
wheelers in the country. A prudent approach
for the potential electric motor manufactures
will be to establish partnerships, on similar
pattern(s) as detailed in section 5.1, to expedite
the maturation of respective industrial segment.
These collaborations will yield several benefits
such as reduced research and development
time and cost, lower risks attributed with
commercialization of new technologies, securing
of supply chain for raw materials, and training of
HR amongst others. Therefore, it is imperative for
aspiring electric motor manufacturers targeting
EV applications to promptly and strategically
devise their plans for product introduction in the
medium term.

44
4.3 OPPORTUNITIES IN THE SWAPPABLE BATTERY-BASED TWO-WHEELER
MANUFACTURING
The two-wheeler segment in Pakistan mostly consists of privately owned vehicles that are utilized
for non-commercial purposes. There are almost 26 million registered two-wheelers in Pakistan,
representing 83% of all vehicles in the country. The experts in the e-mobility sector widely believe
that the swappable battery-based approach for vehicular charging is most suited to commercial
vehicles that traverse considerably more distance per day compared with privately owned vehicles
utilized for non-commercial purposes. This is because long charging downtime of vehicles with fixed
batteries considerably reduces their viability for commercial purposes. It is estimated that about
2% of the two-wheelers in Pakistan are utilized solely for commercial purposes such as ride-hailing
services, postal services, and food delivery etc. Thus, the 0.5 million two-wheelers, representing 2%
of the commercially operated two-wheelers, are a potential candidate for transition to EVs.

4.4 STANDARDIZATION REQUIREMENTS FOR THE MEDIUM-TERM

The short-term provides opportunities to the This report further details test conditions under
automotive and parts manufacturer for upgrading which compliance to standards must be ensured.
their manufacturing facilities and establishing Furthermore, the report highlights battery
testing and characterization facilities. During and charging standards, including swappable
the medium-term, the development and battery specifications, that are essential for
manufacturing capacities of the indigenous the electric two- and three-wheeler industry in
industry are expected to considerably increase. Pakistan. Ensuring compliance to universally
These enhanced capacities will enable the EV accepted standardization regime will yield multi-
manufacturing sector to ensure compliance dimensional benefits for the industry that
with international standards that are accepted include development of better-quality solutions,
across most countries. A report by the National interoperability with global industry, enhanced
Renewable Energy Laboratory lists international consumer satisfaction, and further opportunities
standards for electric two- and three-wheelers, for export amongst others.
including safety, electric, environment durability,
and performance parameters.13

13 https://www.nrel.gov/docs/fy24osti/87955.pdf

45
Development of Testing and Characterization Facilities
Compliance to globally accepted standardization
regime necessitates presence of state-of-
the-art testing and characterization facilities.
Most global SDOs have elaborated stringent
requirementsunderwhichtests/characterization
of the products must be performed to ensure
compliance with the standards. There are very
few testing/characterization facilities currently
in Pakistan that possess the requires capacity
to certify industrial products for compliance
with standards. To this end, the EV industry
and relevant public sector entities can jointly
establish advanced testing/characterization
facilities through public-private partnership
that can certify e-mobility products/solutions
for compliance with international standards.

4.5 OPPORTUNITIES FOR EXPORT

The degree of compliance by the indigenous manufacturers to the globally applicable standards will
be the most important factor determining export potential. Each country has its own standardization
requirement for the automotive sector, which typically falls under the umbrella of global
standardization regime by SDOs. Therefore, the sale of two- and three-wheelers in most countries is
contingent upon fulfillment of standardization requirements. If Pakistan-based EV manufacturers
can ensure compliance with to a large extent with these standards, the number of countries with
prospects of export will substantially increase.

It is expected that during the medium-term, the indigenous manufacturers will have developed
the capacity to ensure compliance with all local and many international standards. This will open
a sizeable export market for electric two- and three-wheeler manufacturers from Pakistan in
South Asian and Southeast Asian countries that have a large two- and three-wheeler segments.
It is important to note that these countries have comparable two- and three-wheeler segments
with Pakistan in terms of key characteristics of the vehicles. Furthermore, many countries in South
America can also serve as a potential export market for Pakistan-based electric two- and three-
wheeler manufacturers due to similar reasons. The European and North American markets may not
be suitable for export during the medium-term due to more stringent standardization needs and
quality of the products.

46
 05LONG-TERM OPPORTUNITIES IN THE
EV SECTOR
Pakistan has the potential to emerge as a prominent
export hub for two and three-wheelers in the long term.
However, realizing this potential necessitates a thor-
ough examination of the requirements of potential ex-
port markets. Each export market presents its unique
set of challenges and opportunities. A distinctive ad-
vantage for Pakistan lies in the similarity of challeng-
es faced by many African and Asian markets. Conse-
quently, vehicle designs and infrastructure suitable for
Pakistan may also prove effective in these comparable
markets. Additionally, Pakistan can capitalize on its
strengths in manufacturing and the service industry
to deliver superior vehicles tailored for export markets.
The following key interventions can equip Pakistani
companies for success in export markets.

5.1 OPPORTUNITIES IN EV DESIGN INDUSTRY

The popularity of two and three-wheelers in Pakistan stems from their affordability in terms of
upfront costs and maintenance. Traditionally, vehicle designs have been influenced by the CD-
70 motorcycle and rickshaw designs from the 1960s, with minimal alterations over the decades.
However, the transition to electric powertrains necessitates significant design changes for both
Electric Two-Wheelers (E2W) and Electric Three-Wheelers (E3W). Design considerations such as
weight distribution, aerodynamics, and modularity are crucial for achieving mass affordability and
energy-efficient operations in electric vehicles. Battery weight necessitates positioning as close
to the ground as possible to maintain stability during turns, which is challenging with the current
CD-70 motorcycle design. Furthermore, aerodynamic shapes are essential for maximizing energy
efficiency. Additionally, vehicle materials must strike a balance between lightweight construction
and durability to withstand rough terrain, high temperatures, and heavy loads.

47
Currently, Pakistan faces a shortage of human resources with expertise in vehicle design. While some
engineering programs and arts colleges offer courses in product design, there is a lack of dedicated
programs in vehicle design. Such programs should encompass not only engineering principles and
aesthetics but also materials science to meet design and affordability requirements. Establishing
diploma or degree programs in vehicle design is imperative to ensure an adequate workforce for new
design developments.
Vehicular software development is a highly
sought-after skill globally, with demand
outstripping available talent. Pakistan’s thriving
IT industry positions it well to transition into this
5.2 OPPORTUNITIES IN EV domain. However, there is a notable shortage of
SOFTWARE INDUSTRY skilled professionals in this segment, attributable
in part to enrollment shortfalls in computer
engineering and electrical engineering programs
Software plays an increasingly pivotal role in nationwide. Unlike traditional computer science
electric vehicles, constituting a significant and information technology programs, vehicular
portion of their intellectual property. While software development demands expertise in
historically a small component of vehicle costs, both hardware and software. Therefore, merely
software now comprises up to 30% of the total upskilling graduates in these fields may not
price, a figure expected to rise further with suffice. To address this shortage, Pakistan must
advancements in automation, electronics, and attract qualified students to computer engineering
artificial intelligence. Beyond in-vehicle software, and electrical engineering programs. However, this
additional software is required for managing process will take time, as new graduates typically
vehicle infrastructure and fleet operations. This require 4-5 years before becoming industry-ready.
includes systems for vehicle communication, Nonetheless, bridging this skill gap is essential for
battery and thermal management, infotainment, nurturing the vehicular software industry in the
motor control, and performance optimization. country.

48
 06 CONCLUSION:RECOMMENDATIONS
AND THE WAY FORWARD
6.1 RECOMMENDATIONS FOR CHARGING SERVICE
This report extensively discusses
Integration of charging infrastructure with renewable generation
the opportunities available to
offers charging to vehicle owners at an affordable price, the
the indigenous electric two- and integration of charging stations with renewable sources of
three-wheeler manufacturers generation, such as solar PV or wind power, would be desirable
Pakistan and provides a roadm- from both an economic and environmental point of view. Charging
ap to reap them optimally and stations, however, would need large solar PV arrays to provide
sufficient electricity which, in turn, would require vast acreage for
strategically. Besides mentioning
their installation. Such vacant space is seldom available in urban
these opportunities at length, areas where EV chargers would be most needed, and land prices
there are some additional in such locations would make them unviable anyway. Instead,
measures that can determine the renewable generation could be installed at a considerable
distance from charging stations, even outside city limits, where
success of the EV sector in Paki-
sufficient inexpensive or barren land could be available, and the
stan. Some of these steps need energy produced wheeled to the charging stations utilizing the
to be taken by the manufacturers electricity utilities’ transmission lines.
while others need to be fulfilled
by the relevant public sector
entities. Therefore, this report
identifies and recommends the
following key areas for interven-
tion by the manufacturers and the
government:

49
6.2 RECOMMENDATIONS FOR MANUFACTURERS AND
PUBLIC SECTOR ENTITIES

1. Establishing Vehicle/Parts Testing and Characterization Facilities:

Grading the quality of batteries and motors is not possible without suitable hi-tech equipment. For
small to medium industries, there are no publicly available laboratory facilities currently in Pakistan
that could independently verify the quality or performance of EV/EVSE parts, a prerequisite of any
product certification process. Quality certification of EV-specific parts, especially batteries and
motors, is therefore presently not possible locally, due to which lower quality parts could easily
proliferate in the industry, compromising the safety and performance of electric vehicles or charging
infrastructure in the country. Under such circumstances, an accredited EV/EVSE testing facility
needs to be established on a priority basis that can ensure product quality and compliance with
standards.

2. Human Resource Development (HRD):

EVs have a significantly different powertrain compared with ICE-based vehicles. While there
is sufficient availability of skilled engineers and technicians in Pakistan to design, develop,
manufacture, and provide after-sales services for ICE-based vehicles, similar EV-related skill sets,
being a comparatively new technology, are relatively scarce in the country. To nurture the nascent EV
ecosystem in the country, there is a need to equip a sizeable work force with various EV-specific skills
and knowledge. For this purpose, policies could identify and guide the quick development of relevant
training programs and HRD programs directed at automobile assemblers, parts manufacturers,
vendors, and service professionals.

3. Developing Ancillary Industry:

Globally, during the next ten years, a major shift from ICE vehicles to EVs is expected to take place.
Considering Pakistan currently has more than 400 auto parts vendors, a serious effort to transition
the vendor industry towards catering for EV manufacturing needs to be planned by the government
and carried out in collaboration with the private sector. Currently, the quality of key EV components
available locally—such as motors, motor control units and other electronics—does not meet the
efficiency and quality requirements of EVs. Additionally, parts related to internet-of-things (IoT)
features, where the main intellectual property (IP) is in developing software to operate a given
hardware platform, are not available generally. Pure software startups are numerous in Pakistan, but
IoT startups are not considered a popular investment option. While software startups in Pakistan are
becoming increasingly attractive for venture capital funds, IoT startups are still largely not favored.
A significant reason for this is the lengthy, laborious, and heavily regulated manufacturing licensing
process, due to which few companies venture into IoT setups. Proper government facilitation and
incentivization of the local software industry, including the EV IoT segment, could help indigenize
this important element of future electric vehicles (potentially accounting for a third of total vehicle

50
4. EV Waste Recycling / Disposal Infrastructure:
As mentioned, access to many raw materials and rare used in EVs is already limited globally. To
better manage the supply chain of rare earths and raw materials, it is crucial that an effective EV-
related waste recycling industry be established in parallel. Once the batteries and many other
components have completed their useful lives, they can be recycled to extract rare earth metals
and key raw materials to be further processed and used in further industrial processes. For this
purpose, the GoP needs to develop a policy support and regulatory regime to develop and support
the EV recycling ecosystem.

5. Gender Equality and Social Inclusion (GESI):

There are almost negligible number of drivers in the two- and three-wheeler segments in Pakistan.
These two vehicular categories are an import mode of commute for the lower- and middle-income
segments of the population. Reversing these trends require intervention by the public and private
sector.

* Recommendations for Public Sector Entities * Recommendations for Public Sector Entities for
for Ensuring GESI: Ensuring GESI:

- To promote GESI in the two- and three-wheeler - The electric scooty in contrast to the typical
segments, the government needs to introduce electric two-wheeler in Pakistan offers many
subsidized financing schemes to offer two- and advantages for prospective women riders. First of
three-wheelers to women at affordable rates.
it allows convenient handling of the vehicle which
makes it less prone to accidents. Secondly, the
- On some key roads/highways in the country, the
government can dedicate ‘women only’ lane for unique design of the vehicle allows women with
female two- and three-wheeler drivers. This will traditional eastern dresses to drive them with
make female drivers less susceptible to road- convenience. Finally, the low upfront purchase
side accidents. price and reduced operational expense in contrast
makes these vehicles an attractive choice for
- The government can commence educational prospective women drivers. To this end, the
campaigns aimed at dispelling stereotypes and manufacturers need to focus on development of
encouraging more women to consider riding such vehicles to promote GESI.
two-wheelers. These campaigns could highlight
the benefits of two-wheeler transportation,
such as affordability, convenience, and reduced
commute times.

- Training programs can be established that are

specifically tailored to women riders, providing
them with the skills and confidence needed to
ride safely. These programs could include both
basic riding skills and advanced safety training.

51
 ANNEXURES
ANNEX1A: TOTAL REGISTERED TWO- AND THREE-WHEELERS
IN PAKISTAN, ANNUAL SALES NUMBERS, AND PERCENTAGE
CHANGE IN ANNUAL SALES

52
ANNEX 1B: PROJECTED ELECTRIC TWO-WHEELER
GROWTH TRENDS

53
ANNEX 1C: PROJECTED ELECTRIC THREE-WHEELER
GROWTH TRENDS

54
ANNEX 1D: FUEL SAVINGS AND GHG MITIGATION POTENTIAL
UNDER EV ADOPTION

SCENARIO-A: EV ADOPTION SCENARIO-B:

AS PER POLICY TARGETS 0% EV ADOPTION

55
ANNEX 1E: INDIRECT INCENTIVES FROM THE AIDEP 2021-26
FOR ALL VEHICLE CATEGORIES

INDIRECT INCENTIVES FOR OFFERED BY THE AIDEP 21-26

56
ANNEX 1F: LIST OF INTERVIEWEES

LIST OF INTERVIEWEES

57
ANNEX 2A: LIST OF ELECTRIC TWO-WHEELER
MANUFACTURERS APPROVED BY EDB

2-WHEELER EV MANUFACTURERS APPROVED BY EDB

58
59
60
ANNEX 2B: LIST OF ELECTRIC THREE-WHEELER MANUFAC-
TURERS APPROVED BY EDB

3-WHEELER EV MANUFACTURERS APPROVED BY EDB

61
62