SBP warns NEV policy faces funding, infrastructure challenges

MG News August 19, 2026 (MLN): SBP has highlighted key funding, infrastructure and implementation challenges facing Pakistan's New Energy Vehicles (NEV) Policy 2025–30, warning that the success of the country's electric vehicle (EV) transition will depend on a sustainable financing model and coordinated policy execution, according to State Bank of Pakistan's (SBP) Half Year Economic Report. Driven by the critical imperatives of reducing greenhouse gas emissions with the transport sector accounting for nearly 10% of national carbon output and managing a staggering average annual oil import bill of $15.8bn, the policy represents a vital structural transition. Against the backdrop of ongoing Middle East volatility, SBP emphasize that accelerating EV adoption is a crucial buffer to cushion the national economy against future oil import shocks. The current framework builds directly on stakeholder consultations and the painful lessons of the 2019 EV policy, which faced severe implementation bottlenecks amid COVID-19 disruptions. Already, localized assembly of eco-friendly vehicles is gaining traction, with electric car production rising to 137 units in H1-FY26. To sustain this momentum, the new strategy coordinates interventions across four key pillars: pricing affordability, charging grid deployment, consumer demand-side incentives, and institutional alignment. Production and Sales of Automobiles Category Production: H1-FY25 Production: H1-FY26 Sales: H1-FY25 Sales: H1-FY26 Growth (%): Production Growth (%): Sales Cars 47,880 74,782 46,398 65,771 56.2 41.8 1300cc and above 21,172 36,716 20,491 35,404 73.4 72.8 1000cc 2,437 2,205 2,289 2,521 -9.5 10.1 < 1000cc 24,271 35,861 23,618 27,846 47.8 17.9 Electric cars 110 137 104 139 24.5 33.7 Jeeps and pickups 15,623 21,386 14,174 22,412 36.9 58.1 Trucks and buses 2,036 3,856 1,798 3,532 89.4 96.4 Tractors 16,621 13,366 17,397 12,929 -19.6 -25.7 Two and three wheelers 698,446 928,521 696,455 921,566 32.9 32.3 Source: SBP Half Year Economic Report However, SBP's half-yearly report highlights significant structural risks to this transition. The policy's Rs 122bn feebate funding mechanism relies entirely on conventional auto demand, funded via 1% to 3% levies applied on the invoice price of conventional internal combustion engine (ICE) vehicles. Any structural shortfall in conventional vehicle sales could immediately jeopardize the continuity of EV subsidies and infrastructure funding. International peer models, such as India's 20% to 40% upfront ex-factory price subsidies or Malaysia's RM 2,400 individual tax rebates, offer far more stable funding avenues than relying on restrictive domestic levies. Charging infrastructure also faces an uphill battle. Low initial EV adoption rates are depressing projected commercial returns, which in turn discourages private investment in charging grids. SBP recommends adopting state-led charger deployments in targeted urban centers, mirroring successful initiatives in Indonesia and Brazil, to build private sector confidence. Furthermore, while Pakistan's manufacturing localization currently favors two- and three-wheelers, China's experience suggests that the country must phase in coverage of heavy vehicles for a substantial environmental impact. Coordinated through the newly proposed National Energy Vehicles Centre (NEVC), streamlining regulatory overlaps and enhancing technical capacity will determine the policy's ultimate success in boosting industrial competitiveness Copyright Mettis Link News