KARACHI: Auto sector players are optimistic about China’s BYD entering Pakistan in collaboration with Hub Power Company Ltd (Hubco) to locally assemble electric vehicles (EVs), which could benefit exports.

“[The] Entry of BYD in Pakistan should be looked at from a global perspective instead of [a] regional one,” GM Marketing Division, MG JW Automobiles Syed Asif Ahmed told Dawn from Lahore.

He said China will focus on other potential markets for EVs after restrictions in North America and Europe. Turkiye has already imposed a 30 per cent duty to protect its EV brand TOGG, while South America plans to follow the duty curbs.

He added that India has already shunned Chinese investment. Far East Asia, Australia and the Middle East are currently attractive alternatives. “Pakistan can benefit from this global shift by converting its internal combustion engine (ICE) to electric cars, thus reducing fuel bills,” Asif advised.

Auto sector welcomes BYD’s entry

Dispelling the impression that EV production in Pakistan will cost more than fossil fuel vehicles, he said “It’s time to burst these myths. The breakeven period at the current price of EV versus petrol/diesel-driven vehicles is 1.8 years. The breakeven is calculated taking into consideration the acquisition, operational and maintenance cost of EV versus burners.”

When asked why the assemblers are focusing on EVs instead of introducing 660-1,000cc petrol-driven cars for low and middle-income people, he said Pakistan is an inverted pyramid for the automotive market, i.e. demand for high-priced cars is more than low-priced cars.

In the Auto Industry Development and Export Policy (AIDEP) 2021-26, the government has introduced incentives for below 1,000cc cars under the Merri Gari Scheme.

However, on CBU imports of EVs costing less than $50,000, the customs duty is 25pc, 18pc GST and other taxes making a cumulative 53pc as against over 100pc taxes and duties on imports of over $50,000 worth of EVs.

Mr Asif said the pre-budget duty structure supports completely knocked down (CKD) EVs and hybrids by applying 1pc customs duty and 4pc on exclusive parts only. For EVs, a further benefit of 10pc on non-localised parts and 25pc on non-localised parts is given, similar to greenfield benefits.

On future expectations of EV vehicle sales in Pakistan amid limited buyers, he said the adoption rate is rapidly increasing with time. From picture tube to flat screen TVs and landline to smartphones, it took 10 years, while EVs will take less than three years if given the right environment.

He said that to achieve higher localisation in the assembly of EV vehicles in Pakistan, “we have to learn from ASEAN how to tackle the volume issue. Free Trade Agreement (FTA) should not restrict automotive parts trading, especially with the landlocked STAN countries.

Currently, six brands are actively promoting EVs in Pakistan. Foreign and local investors are waiting for a conducive business environment to develop charging infrastructure. Furthermore, Asif said high-growth domestic solar charging solutions will integrate horizontally with EV chargers.

Local part maker/exporter Mashood Ali Khan said the arrival of BYD is a great opportunity for Pakistan, and it will prove highly feasible if BYD makes Pakistan a hub for EV right-hand drive vehicles for export to various countries.

A Korean car assembler said BYD’s arrival bodes well for Pakistan, as more choices always benefit customers.

Published in Dawn, June 30th, 2024