THE new initiative to roll out a Rs100bn subsidy scheme for e-bikes and e-rickshaws is an important step in Pakistan’s transition to electric mobility. The goal is to distribute 116,000 e-bikes and 3,170 e-rickshaws over five years as part of the effort to reduce the country’s dependence on dirty fuels, cut the oil import bill, curb pollution, offer cleaner mobility solutions to the middle class and utilise excess electricity. The scheme will be subsidised with a new 1-3pc e-vehicle adoption levy on the sale of petrol-fuelled vehicles, which is projected to generate Rs122bn. Financing will be available through interest-free bank loans of up to Rs200,000 for e-bikes and Rs880,000 for e-rickshaws. The loans will be backed by government guarantees and interest rate subsidies to help reduce the high upfront cost of electric-powered vehicles, particularly for youth and low-income individuals who rely on two- and three-wheelers for livelihoods and daily commutes.

Reflecting an integrated approach to EV transport policy — where climate goals and economic obligations will be pursued simultaneously — this levy creates a self-sustaining financing mechanism. Besides, the scheme stresses on inclusivity and social targeting, with quotas allocated for women, students and underserved Balochistan in recognition of the equity dimension of electric mobility. Although the scheme is aligned with climate mitigation efforts, a broader push for transition to electric mobility requires more than this initiative to meet the goal of converting 30pc of new vehicle sales to electric by 2030. Pakistan needs a holistic strategy to attract investment in charging infrastructure, improving power grid readiness, introducing bank financing options and giving incentives to local vehicle and battery manufacturing in order to slash the upfront costs of the transition to electric-powered vehicles, which can be twice or thrice the price of comparable petrol-fuelled vehicles. At the end of the day, the choice between a petrol-fuelled or an e-vehicle — be it a two- or three-wheeler or a car — is determined by economic factors like the price of the vehicle. That is why the adoption of e-vehicles in Pakistan has been disappointing despite benefits like fuel savings and the ease of mobility. That said, while the new push to subsidise electric mobility through a tax on petrol-fuelled vehicles may be fine to the extent of rickshaws and motorbikes, the use of these funds to cut the prices of cars for the rich would be unacceptable.

Published in Dawn, August 11th, 2025