Pakistan’s auto industry sits at the intersection of two volatile supply chains. The auto industry doesn’t just run on fuel – it’s built on it. From plastic dashboards derived from petrochemicals, to lubricants, to the diesel that powers freight trucks delivering parts, the oil & gas supply chain is woven through every vehicle on the road. Since 85% of petroleum products are imported, any refinery outage in the Middle East or shipping choke point hits PSO, Shell, and Hascol within weeks. 60-70% of auto parts by value are either imported or oil-derived – plastics, synthetic rubber, paints, and lubricants; hence, a global resin shortage causes Suzuki, Toyota,and Honda lines to slow down. So when global oil & gas stumbles, Pakistan’s auto sector feels double jeopardy: at the pump and on the assembly line. Any supply chain disruption is a major hit on the auto industry in the form of delayed car purchases, logistics paralysis and petrochemical shortages.
A similar crisis was observed during 2022-24 when global crude prices jumped. Monthly car sales fell 45% YoY in months when petrol crossed PKR 300. Indus Motor shut plants for 10-15 days/month in 2023 due to a drop in demand and parts shortages. Ride-hailing and logistics players saw 20% rise in operating costs in 2023. TCS and Bykea publicly announced EV pilot fleets after the 2023 diesel crisis. When polymer prices rose 35% globally, local vendors like Thal and Agriauto passed on costs. Pakistan’s auto parts are moved by truck from Karachi port to Punjab plants. Diesel at PKR 320/L added PKR 25,000-40,000 logistics cost per container in 2023. OEMs cut single-shift production to manage costs. Oil bill drives PKR depreciation. USD/PKR from 180 to 280 meant CKD kits and fuel surcharge together strangled margins. Several Chinese brands delayed launches in 2023-24.
Every oil import spike worsens Pakistan’s current account. The immediate government response was the launch of the 2025 EV Policy,which proposed a cut in duties on EVs to 1% versus 30% plus 1% sales tax. SBP’s subsidized financing for EVs up to PKR 3 million was launched right after the 2023 oil crisis. Consumer sentiments also change with spike in oil prices when google searches trend for EVs increases by 140% within weeks and showroom walk-ins jump by 30% in a month causing MG, BYD, Dewan EV bookings to jump although the waiting list is 4 to 6 months. EV share of total car sales in Pakistan went from less than 0.5% in 2022 to around 4% in 2025, with projections of 10% plus by 2027. If gas shortages raise K-Electric/LESCO tariffs above PKR 60/kWh, the EV advantage narrows. But still it will be cheaper per km than petrol. The need of the hour is to bridge the charging gap, as there are only 3,000 public chargers in 2026 vs 9,000 plus fuel stations. The demand for solar due to oil price shocks will create an early mover advantage.
There are certain risks and policy loopholes in EV adoption that may cause hindrances. If oil shocks drive gas/coal prices up, grid power gets expensive too. But EVs still win 3:1 on per-km energy cost in most markets. Minerals used in batteries like lithium, cobalt, and nickel have their own geopolitical risks. An oil shock plus a mineral shock together could literally stall the entire auto industry. Fuel panic may create EV demand faster than chargers are built, leading to customer dissatisfaction. Having said that, in a country where fuel imports drive inflation, PKR depreciation, and plant shutdowns, every global oil disruption is a free marketing campaign for EVs.