by Ju Ran

 

Battery is a major part of electric vehicle(EV)'s production cost, and its main raw material is lithium. "Since Pakistan and its surrounding areas have abundant lithium and copper resources, its EV battery industry has great potential," said Jian Peng, Pakistan's Honorary Investment Counselor in China, who is also an expert on automobile industry in the Research Association of the China World Trade Organization.

 

In the Automotive Industry Development and Export Plan (AIDEP 2021-26) in the Finance Act 2021 in Pakistan, sales tax on local EVs has been reduced from 17% to 1%. Custom duty on specific parts of the EV has been fixed at 1%. The main purpose of the policy is to overcome climate change issues and reduce oil import bills to save precious foreign exchange.

 

"As the government started to support the EV industry, more companies would invest in this field and make better quality products," said Mian Muhammad Hafeez, general secretary of Lahore Car Dealers Federation, who also believes that locally produced EV battery is important for the development of EV industry. "If local batteries are made, the cost of battery replacement will be cheaper, which can help extend the guarantee period of the EV products and get better feedback from the customers."

 

"Chinese government has given a lot of support to the EV battery industry in its early stage of development. The industry grew very fast, which lead to excess production capacity. At present, the market of EV batteries in China is occupied by the leading enterprises, a winner-take-all situation. Many second-tier EV battery factories with sophisticated technology started to turn to the foreign market to transfer their technologies and relocate their production lines. I think Pakistan can be one of their best choices."

 

"China's leading EV battery companies, like Contemporary Amperex Technology Co., Limited(CATL), are now extending their business to a wider range. On the one hand, they are actively searching for more mineral resources. On the other hand, they are cooperating with automobile assembly plants in form of stock replacement or joint ventures, establishing battery production enterprises together. It can help allocate the resources within the industry more reasonably and strengthen the technology improvement." Jian Peng believes that such experience can be referred by Pakistan’s EV companies.