ELECTRIFYING CARS: A dream nearing realization or a far cry still?
With whatever little to suggest that Pakistan’s 42 per cent of the air pollution comes from billowing tailpipes and that it’s amongst the worst countries to bear the brunt of global recklessness towards climate change, one thing is for sure that cutting down on its fossil fuel usage will not only lessen the direct emissions, it is most likely to save government “$2 billion in oil import bills” as well.
Pakistan has pledged to electrify about 30pc of its all vehicles by 2030 in its bid to further concerted global efforts to mitigate climate change. But on the ground, the things may not be as ideal.
“Our electric vehicle endeavor failed terribly due to resistance by big market stakeholders,” said Crown Group chairman Farhan Hanif, who just about last year launched their own range of electric vehicles costing as low as Rs400,000.
“We need tax cuts not only on specific parts that qualify as electric kits but all parts invariably given that the mechanism of EVs are different than traditional vehicles and local market doesn’t cater to the needs.”
An automobile, typically a four-wheeled, is made up of about 10000 components and parts out of which the local manufacturing hardly accounts of a handful few while for the remaining parts vendors and subcontractors are outsourced to import them as only a limited number of spare parts are available locally.
Crown Group came forward as a new player in the electric vehicle industry that said to have invested about Rs2 billion in collaboration with eight Chinese companies to set up its manufacturing plant.
We cannot compete with established players in terms of cost unless we are given an absolute 1pc custom duty and sales tax rates, Hanif said today when asked why his venture he boasted so passionately failed just as terribly.
At CG launch ceremony, February 2020, the chairman said their vehicles would cost Rs1.25 for each kilometre travelled making them “the cheapest” option available for transport.
Hanif is not the only one to make such a claim as a similar assertion has recently been put forward by Shaukat Qureshi of EV Technologies Consultant who cited a study conducted by his company.
“A motorcyclist switching to an EV bike will save Rs4,000 on fuel, electric car user can save up to Rs25,000 and EV bus companies can save between Rs600,000 to Rs900,000 monthly,” he was quoted as saying.
However, the losses cited by Crown Group remained singular in nature as the hydrocarbon-based automotive manufacturers’ association PAMA has wielded a major sales jump in the first eight months of the present fiscal year, ie from July to end February.
It posted a year-on-year surge of 24.3pc to more than 113,905 units of passenger cars, jeeps, vans, pickup trucks being sold even when it doesn’t include the accounts of new emerging entrants. Another two- and three-wheeler segment also expanded by 17.3pc year-on-year to 1.27m units.
This says volumes that consumer cares only about the value of their money and it’s only the state’s responsibility to roll out, or expedite, policy for eco-friendly vehicles if it must chip away at the pace of airborne emission and stay on-track to deliver on its promise of electrifying its traffic by 30pc at least.
ON THE POLICY END
It’s due to the cartelization of market players and their sway at relevant ministries overseeing the framework that government’s EV policy remains to be a bureaucratic red tape, said Sabir Shaikh of Pakistan Electric Vehicles Manufacturers Association (PEVMA).
“We are asked to frequent to Islamabad incurring travel and other expenses up to Rs40- to 50 thousand only to drink tea over said policy meetings but nothing comes to fruition.”
My EV ventures have borne huge losses because at the face of it, the government says they have brought down the duties to 1pc but the anomalies are such that only a few EV related Completely Knocked Down (CKD) parts can avail this while entire body of electrified vehicles remain deprived of any concessions, he said building on what Hanif said above.
EV vehicles are different from conventional fuel engine cars on so many levels and parts available locally are of no use to this new technology
“It’s only an eye wash, the concession policy,” Shaikh says.
He says the last policy to have actually materialized was rolled out by Miftah Ismail which mandated that EV Completely Built Units (CBU) will be given a 50pc duty concession on imports and it is still available.
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EV policy by incumbent government was approved erratically in three phases for heavy vehicles and tractors, for two- and three-wheelers, and for passenger cars.
Even though the “rubberstamp policy via a presidential ordinance has come about”, its cementing and tax Statutory Regulatory Orders (SROs) are still awaited, without which there will be no import duty concessions as per new developments.
On the other hand, Pakistan Automotive Manufacturers Association (PAMA) chairman and Indus Motor Company (IMC) CEO Ali Asghar Jamali told ARY News that they are all for new policies as long as one caveat is “Make in Pakistan”.
Despite being alleged to be behind the resistance in implementation of policies, PAMA’s Jamali said their position is clear that only concrete and long term policies, spanning over 20 years, can help auto industry thrive and new players, whatever their number maybe, can capitalize on the market.
Recent policies have encouraged about five news players already and their combined produce is well over 400,000 units, Jamali said. “You can imagine what would happen when new long-term policies reclaim confidence in potential entrants.”
Jamali thought it right stress that about 40pc of total car cost is collected by the government in the form of duties, sales taxes and other forms of various taxes. “Before 2019, this quotient was about 33pc only but people don’t understand it while citing current exchange rate to allege cartelization behind price hike.”
SCRAPPAGE POLICY BEFORE EV
The electric vehicles association demands, agreed upon by market’s big players dealing in hydrocarbon based sedans, that a scrappage policy be hammered out setting the limit of 15- to 20 years before the car is scrapped or banished from city roads.
The unanimous call from the auto-sector for soon rolling out the scrappage policy gained momentum following our Southern neighbor announced the framework.
If we are to undertake steps towards environment friendly policies, scrappage policy is one thing to top the priority list, Jamali said.
Indian policy encourages scrapping vehicles older than 15 years and turn to new ones with the government offering financial aid on purchase, their local media reported.
Following neighborly lead, the Pakistani auto patrons argue that in order to increase new car sales and also lower air pollution, first step before launching EVs must be rendering old and fuel-inefficient cars outdated.
They say developed countries have set the age of six to eight years before outlawing a vehicle but countries like Pakistan can even extend this limit to 15- to 20 years.
For the comments, official sources including minister for science Fawad Chaudhry, directly responsible for the policy, were contacted, too.
If their accounts arrive now, those will be added in the story.