Introduction of Evs: ECC to consider giving incentives today

The Economic Coordination Committee (ECC) is all set to consider incentives package for the companies which will launch Electric Vehicles on Thursday (today). The Ministry of Climate Change in its summary argued that the proposed package in the NEVP aims to introduce the EVs in the country, and make their prices affordable by focusing on local manufacturing.
The incentives package among others, proposes nominal import duty at one percent on the import of parts and components of various categories of EVs 2-3 wheelers, various categories of cars, buses and trucks. It further recommends nominal sales tax at one per cent on the sale of all EV categories to make these affordable for the buyers/general public.
The capital cost of the EVs is still high due to high battery costs, and as such without the proposed incentive structure it will be difficult to introduce EVs in the country. There are forecasts, which indicate, that the cost of Lithium batteries are falling rapidly.
The MoCC says that the NEVP revolves around the major objective of "Make in Pakistan" by incentivising import of parts and components for those companies that establish assembling/manufacturing units. It only recommends import of three year old cars for only two years, primarily with the aim to get EVs introduced and to get the charging infrastructure established in the country.
The Federal Board of Revenue (FBR) argues that import duties for all categories of vehicles should be at 10 per cent rather than the NEVP proposed one per cent.
Their view is that a nominal customs duty will impact potential revenue due to reduction in duties, and the GST will be more than offset by the benefits of EV introduction in a timely manner, local production and export potential.
These incentives do not violate the Auto Development Policy 2016-2021. The MoCC claims that these incentives and the EV targets become part of the next ADP. However, introduction of the EVs through the proposed incentive package is expected to usher multiple economic benefits.
The Sustainable Energy Project (SEP) of the USAID, which is assisting the Ministry of Energy and Ministry of Planning, Development and Special Initiatives on various aspects of integrated energy has developed an energy supply chain simulation based on Global Market Equilibrium Model (GCAM) and builds six possible scenarios revolving around high and low vehicles expansion and low, moderate and high EV penetration. These scenarios reflect net benefits in the range of $2.2 billion to $3.7 billion, on account of net saving to the country under various scenarios in the 2020 and 2030 time period.
Additionally, there are benefits on account of reduction in emissions and air pollution/smog, the associated health benefits and the larger/associated economic benefits of establishment of local manufacturing and assembling not included in the calculations. The EV transition has begun across the world, and many countries have set ambitious targets for EVs backed by subsidies and incentives.
With a view to facilitate a smoother transition in the country, the EVs targets have been planned in a phased manner, so that it does not create any disruption. The MoCC is of the view that it is the best time to give effect to the policy prepared by it with the technical support of the LUMS, the Energy Institute by providing a framework and an incentive regime to facilitate transition towards EVs.
The ministry further states that as a country Pakistan have an opportune 3-4 years to set up EV value chain manufacturing focused on right-hand drive vehicles. Delay in this will disallow Pakistan to ever be a major player in the EV value chain and will always remain a net importer.