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Time of electric vehicles

Time of electric vehicles

The history of Pakistan’s automotive industry is one of the oldest in the Asian countries. The industry started semi knockdown production of trucks (Bedford) in 1949 by General Motors, which marked the start of the industry’s history after the independence from British India. Trade liberalization has not been supported by the automotive industry of Pakistan, which has led to consumers facing higher prices, low quality standards and inadequacy of competition in this sector. Being the sixth largest manufacturing subsector of the economy the automobile industry employs over 3.5 million workers, Pakistan’s auto sector has potential to create much value for the country and can also attract foreign direct investment and foreign exchange revenues by exporting vehicles.

Prime Minister Imran Khan recently chaired a meeting on climate change and decided to introduce EVsby setting up electric vehicle plants for the first time in Pakistan. The Prime Minister ordered the authorities concerned to ensure conversion of 30 percent of all cars running in the country into EVs by 2030.

Electric vehicles (EVs) have advanced significantly this decade, mainly because of decreasing battery costs, yet EVs remain more costly than fuel based vehicles over their useful life. Commercial success for EVs will require installing charging infrastructure that is accessible, easy to use, and relatively inexpensive—whether at home or in public locations. There are a lot of innovation going on in this segment and in coming months and years, we will see new technology. Therefore, the form this infrastructure will take is still uncertain, with a range of charging technologies currently available, much more is expected to emerge over the next five years.

Adviser to Prime Minister on Climate Change Malik Amin Aslam says; most countries are opting for EVs across the world and Pakistan is far behind in it and once introduced in the country, EVs will help save at least Rs2 billion worth of oil imported into the country besides reducing the country’s air pollution. The adviser said that smoke emissions from vehicles were a major source of air pollution in the country and it contributed heavily to smog during winter season in Punjab, especially in Lahore. In this situation, EVs would help lessen dependence on LPG and compressed natural gas stations, most of which were shut down because of gas closure on different days especially in winter in Punjab and these stations would be converted into charging docks for EVs.

So the big question is; will the transportation sector of the future be electrified? This question is at the core of the energy and transport debates these days. Various developed countries have now even enacted subsidy programs, are supporting the installation of a charging infrastructure, and are starting to develop regulatory initiatives to support and manage an electric vehicle fleet. In fact, some governments—including the United Kingdom and France—have announced that they will not permit the sale of new fossil-fueled automobiles after 2040. The car manufacturers that were initially skeptical about electric vehicles are now committing billions of dollars to their production. As per an estimate, by 2022 there will be 127 different fully battery-electric car models available for purchase in the United States alone.

The current range of equipment spans chargers that are best suited to home or office locations and for short trips, and much faster direct chargers for rapid refueling in public locations are yet to be tried and tested which would be best suited for longer journeys. The costs of charging infrastructure will both fixed (installation, utility service, transformers, and equipment) and variable (electricity charges). Operating cost of the chargers will actually determine the electricity tariffs. The total cost of power from fast charging stations would be higher than slower residential chargers unless the former can achieve sufficiently high utilization rates. As a matter of fact, commercial chargers are almost universally not economically profitable, suggesting a significant and sustained increase in demand will be needed for commercial charging infrastructure to deliver financial returns, and compete with other cheaper residential charging methods.

Pakistan is considering to have EVs whereas its electricity transmission and distribution network doesn’t support such initiatives in near term at least. The charging stations for EVs will require electricity which will be through distribution companies only unless someone makes its own electricity supply arrangement. Current network of distribution companies in Pakistan is weak and unreliable. Managing additional power demand from EVs is both a challenge and an opportunity for electricity distribution companies commonly known as DISCOs. High concentration of EV home charging during peak periods can overload local transformers. DISCOs may have to procure additional capacity, unless they are able to shift demand to off-peak periods. The tariff charges in Pakistan are different for off-peak and peak hours. Peak hours start from 7pm till 11pm. Tariff of peak hours are higher than off-peak hours. In USA, time-of-use electricity pricing, along with smart metering, have already been deployed in some states to incentivize off-peak charging and manage peak loads, respectively. Even in USA, it is still unclear whether the mechanism will be sufficient to offset increase on the demand whereas we are talking about Pakistan where electricity network is still decades old. But this should not be an excuse for not making progress on EV sector. Vehicle-to-grid technology, allowing EVs to serve as mobile electricity storage units, could complement these efforts but will need adequate incentives, which are not presently available worldwide. One of the things which will require special attention would be overall electricity tariff reforms and those are very essential.



Since last decade there has been a growing interest for EVs. Due to ever increasing oil pricing, depleting oil reserves and global warming and climate change challenges, it is being considered to have less reliance on fuel based vehicles. If EVs are successfully developed and cost is marginalized then reliance on imported fuel will also be reduced gradually whereas local resources will be more utilized such as hydro power. Pakistan has an immense potential of hydro power generation which should be utilized at full capacity.

The local auto parts manufacturing industry is criticizing the proposed national EV policy and urged the government to promote and protect the existing sector. Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) said that the government needed to consider three categories — Hybrid Electric Vehicles (HEVs), Battery Electric Vehicles (BEVs) and Plug-In Hybrid Electric Vehicles (PHEVs) — under one policy to curb fossil fuel utilisation. EVs in Pakistan would solve many of issues, including air pollution, unmet capacity charges besides reducing fuel import bill and saving two-third cost of transportation. Pakistan’s EV introduction plans is to have 30 percent BEVs vehicle by year 2030.

The salient features of policy framework should be in line with the ground realities. Pakistan should have a three-step policy, in the first step from year 2020-25, the government should promote indigenisation in prevailing products and promote clean renewable energy program. In the second step from year 2026-30, the country can introduce HEV/PHEV promotion policy and build charging infrastructure and then from year 2031 onwards EV policy should be executed to achieve targets. India, USA, Thailand, and Indonesia are securing their auto industry by gradual shift from fossil fuel to EVs without affecting their existing auto industry. Paapam says that the government should govern local auto industry as per incentives given in Auto Development Policy 2016-21, and promote EVs in the next policy.

There was a time when the future of EVs was depended largely on a combination of high government subsidies, high oil prices, and dramatic improvements in battery technology. Today, the outlook is more positive, but several questions are still unresolved. Will battery powered EVs be competitive with conventional fueled vehicles in the next five to ten years? Will a cost-effective charging infrastructure emerge? What are the economic and financial challenges that must be overcome?

The most encouraging thing is that battery costs have fallen significantly in last five years and the size of battery packs has increased in developed countries. Improvements in battery technology over the past few years have been impressive. Today’s battery cells have higher energy densities and are much less expensive on a per kWh basis than they were just a few years ago. Lithium-ion (also called Li-ion) cells is attracting bulk of investment, and remain the preferred technology for giants like LG, Panasonic, and Samsung, the three largest producers. Lithium-metal technologies with much higher energy densities are in development.

Toyota Motor Corp aims to get half of its global sales from electrified vehicles by 2025, five years ahead of schedule, and will tap Chinese battery makers to meet the accelerated global shift to electricity-powered cars. The change illustrates the breakneck growth in the EV market, which is transforming the auto industry, and is also an acknowledgement by Japan’s top carmaker that it may not be able to meet demand for batteries on its own. Toyota is now faced with a higher-than-expected demand for cars that use batteries, rather than gasoline.

Without an accessible infrastructure that can re-charge an EV in a reasonable period of time, most motorists will be unwilling to purchase one, even if it is cheaper and its performance is better. The commercial success of the EVs requires the development of a charging infrastructure that is accessible, easy to use, and relatively inexpensive. Anyhow, the challenges facing EV deployment have become more tractable in recent years, but they are still considerable. The life cycle cost of ownership of BEVs has fallen substantially. New designs, better smart metering, charging equipment technologies, and a charging infrastructure that is convenient and price competitive will need to be developed and implemented. These are difficult but achievable tasks. Pakistan is planning to have EVs and it is right time to learn lessons from past mistakes and government should only allow EVs if they are manufactured in Pakistan instead of allowing big names to assemble EVs in Pakistan. Manufactures ask for volumes for installation of a manufacturing facility, Pakistan auto market can provide volume therefore, there should not be any further concession in this regard.

[box type=”note” align=”” class=”” width=””]Author is an infrastructure investment advisor based out of Islamabad, Pakistan[/box]

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