Automark

Small and Medium Enterprises (SMEs) form the backbone of Pakistan’s economy, with over 5 million operating nationwide — 60% of them based in Punjab. Representing more than 90% of all businesses, including 72% of manufacturing companies, SMEs employ nearly 80% of the non-agricultural workforce. These enterprises contribute approximately 40% to the country’s GDP, 25% to export earnings, and provide livelihoods to over 25 million people.

Despite their significant role, SMEs face serious challenges. Majority of them operate outside the formal economy, limiting their access to institutional support. Only 6% of private sector credit is extended to SMEs, and they remain excluded from formal financial mechanisms. Outdated infrastructure, complex loan and tax procedures, poor awareness of Islamic banking products, and weak linkages with large firms and financial institutions further hinder their growth.

To unlock the full potential of SMEs, a series of incentive-driven reforms are needed. These include establishing an SME Council or Foundation in private sector with the back of government, recognizing successful formal SMEs as role models, and allocating 25% of government procurement quotas to SMEs. A centralized portal for tax payments, intermediary firms for accounting support, and subsidized energy policies can reduce bureaucratic burdens. Partnerships with universities for capacity building, development of Common Facility Centers, and the setup of industrial clusters — such as those in Rachna Industrial Park (Lahore), running under Federal Ministry  of  industries & Production — will promote sustainable growth.

To improve financial access, the creation of an SME Credit Information Bureau and a dedicated SME Credit Rating Agency (like India’s SMERA) is recommended. Promoting subcontracting relationships between SMEs and large firms, introducing SME-focused banks or low-interest loan windows in all banks, and training bank staff to promote Islamic banking in simple Urdu will support financial inclusion. Lastly, redefining SME classifications — with “Small” set at sales up to PKR 600 million and “Medium” up to PKR 2 billion — will help align policy support with business realities.

With focused policy interventions and coordinated support, Pakistan’s SMEs can transform into a dynamic engine of inclusive economic growth.

Engr. Iftikhar Ahmad,
EC Member LCCI (2024 – 2026)
Advisor – PAAPAM Skill Development Center (PSDC)
Former Chairman PAAPAM

This exclusive article has been published in Automark Magazine’s September-2025 printed and digital edition.

Learning from the Past – Earning from the Present – Growing from the Future

Episode: 6

Summary of the Last Articles

Countries that have economically developed through the auto industry, like America, Europe, Japan, Korea, and nowadays China, are a living example of this, while Pakistan’s development is also inseparable from the auto industry.

We also reviewed the auto market trend in Pakistan and the rest of the world. SUVs are liked for many reasons. Then, we reviewed the HEV business and the related business potential that can be started.

Then we had looked at the past of EV and found that the auto industry started with EV vehicles, maintained their place until the end of World War II, then IC engine vehicles made progress and left the EV industry behind.

After that, we had discussed the real journey of EV, from starting to mass production and the reasons for the rebirth of EV, and the marketed brands of EVs, including Electric Buses, started in different cities as a public transport within Pakistan.

In the last article, we discussed the growth of batteries from the early days to the present, a continuous journey of batteries. We discussed the battery’s history and growing journey, including market analysis in Pakistan.

Now Read On….

The World of Lithium

Global lithium demand is experiencing a significant surge, primarily driven by the widespread adoption of electric vehicles and the expansion of lithium-ion battery technology. This increased demand is creating a “race” to secure lithium supplies, with various countries and companies exploring new extraction methods and locations. While current production is increasing, projections indicate a potential supply shortfall in the coming years, highlighting the urgency of developing sustainable and efficient lithium extraction technologies. 

Factors Contributing to Increased Demand:

• Electric Vehicle (EV) Adoption:

The transition from traditional combustion engines to electric vehicles is a major driver of lithium demand. As more countries implement policies to phase out gasoline-powered vehicles, the need for lithium-ion batteries in EVs continues to rise. 

• Renewable Energy Storage:

Lithium-ion batteries are also crucial for storing energy generated from renewable sources like solar and wind power. As the world shifts towards cleaner energy solutions, the demand for these batteries, and thus lithium, is expected to increase further. 

• Consumer Electronics:

Lithium-ion batteries are widely used in various consumer electronic devices, including mobile phones, laptops, and other gadgets. 

The Race for Lithium:

• Exploration and Development:

With the looming supply gap, there is a global push to explore new lithium deposits and develop innovative extraction methods. 

• Africa’s Potential:

Africa is emerging as a region with significant lithium resources, with projects underway in countries like Zimbabwe, Namibia, and Ghana. 

• Technological Advancements:

Research and development are focused on improving lithium extraction techniques, including direct lithium extraction (DLE) and recycling of lithium-ion batteries. 

• Regional Imbalances:

While global demand is increasing, regional demand is also unevenly distributed, with China, Europe, and the USA being major consumers of lithium. 

Challenges and Concerns:

• Supply Shortfalls:

Projections indicate that global lithium demand could outpace supply by 2029, potentially hindering the transition to electric vehicles and renewable energy. 

• Environmental Impacts:

Lithium mining and extraction can have significant environmental impacts, including water usage, land disturbance, and potential pollution. 

• Ethical Concerns:

The race for lithium has raised concerns about human rights and the potential for exploitation in mining regions. 

The Future of Lithium:

• Sustained Demand Growth:

Despite the challenges, the demand for lithium is expected to continue growing in the coming years, driven by the ongoing transition to EVs and renewable energy. 

• Technological Innovation:

Advancements in lithium extraction and battery technology will be crucial for meeting this demand sustainably and efficiently. 

• Geopolitical Implications:

The competition for lithium resources is likely to have geopolitical implications, with countries seeking to secure their own supplies and influence the global market.

• Lithium Battery:

A lithium-ion battery, or Li-ion battery, is a type of rechargeable battery that uses to store energy. Li-ion batteries are characterized by higher specific energy, energy density, and energy efficiency and a longer cycle life and calendar life than other types of rechargeable batteries.

Noteworthy is a dramatic improvement in lithium-ion battery properties after their market introduction in 1991; over the following 30 years, their volumetric energy density increased threefold while their cost dropped tenfold. In late 2024 global demand passed 1 terawatt-hour per year, while production capacity was more than twice that.

Usage of Lithium Batteries

The invention and commercialization of Li-ion batteries has had a large impact on technology, as recognized by the 2019 Nobel Prize in Chemistry. Li-ion batteries have enabled portable consumer electronics, laptop computers, cellular phones, and electric cars. Li-ion batteries also see significant use for grid-scale energy storage as well as military and aerospace applications.

• Developments of Lithium Batteries

M. Stanley Whittingham conceived intercalation electrodes in the 1970s and created the first rechargeable lithium-ion battery, based on a titanium disulfide cathode and a lithium-aluminium anode, although it suffered from safety problems and was never commercialized.^[12] John Goodenough expanded on this work in 1980 by using lithium cobalt oxide as a cathode.^[13] The first prototype of the modern Li-ion battery, which uses a carbonaceous anode rather than lithium metal, was developed by Akira Yoshino in 1985 and commercialized by a Sony and Asahi Kasei team led by Yoshio Nishi in 1991.^[14] Whittingham, Goodenough, and Yoshino were awarded the 2019 Nobel Prize in Chemistry for their contributions to the development of lithium-ion batteries.

• The growing demand

For safer, more energy-dense, and longer-lasting batteries is driving innovation beyond conventional lithium-ion chemistries. According to a market analysis report by Business Intelligence, next-generation battery technologies—including lithium-sulfur, solid-state, and lithium-metal variants are projected to see significant commercial adoption due to improvements in performance and increasing investment in R&D worldwide. These advancements aim to overcome limitations of traditional lithium-ion systems in areas such as electric vehicles, consumer electronics, and grid storage. ^[24]

• History of Lithium Batteries

1. Research on rechargeable Li-ion batteries dates to the 1960s; one of the earliest examples is a CuF/Li battery developed by NASA in 1965.

• The breakthrough that produced the earliest form of the modern Li-ion battery was made by British chemist M. Stanley Whittingham in 1974, who first used titanium disulfide as a cathode material, which has a layered structure that can take in lithium ions without significant changes to its crystal structure.

• Exxon tried to commercialize this battery in the late 1970s, but found the synthesis expensive and complex, as is sensitive to moisture and releases toxic gas on contact with water. For this, and other reasons, Exxon discontinued the development of Whittingham’s lithium-titanium disulfide battery.

• In 1980, working in separate groups Ned A. Godshall et al.,^[26][27][28] and, shortly thereafter, Koichi Mizushima and John B. Goodenough, after testing a range of alternative materials, replaced TiS₂ with lithium cobalt oxide (LiCoO₂, or LCO), which has a similar layered structure but offers a higher voltage and is much more stable in air. This material would later be used in the first commercial Li-ion battery, although it did not, on its own, resolve the persistent issue of flammability.^[25]

• These early attempts to develop rechargeable Li-ion batteries used lithium metal anodes, which were ultimately abandoned due to safety concerns, as lithium metal is unstable and prone to dendrite formation, which can cause short-circuiting. The eventual solution was to use an intercalation anode, similar to that used for the cathode, which prevents the formation of lithium metal during battery charging. The first to demonstrate lithium ion reversible intercalation into graphite anodes was Jürgen Otto Besenhard in 1974. Besenhard used organic solvents such as carbonates, however these solvents decomposed rapidly providing short battery cycle life. Later, in 1980, Rachid Yazami used a solid organic electrolyte, polyethylene oxide, which was more stable.^[31][32]

• In 1985, Akira Yoshino at Asahi Kasei Corporation discovered that petroleum coke, a less graphitized form of carbon, can reversibly intercalate Li-ions at a low potential of ~0.5 V relative to Li+ /Li without structural degradation. Its structural stability originates from its amorphous carbon regions, which serving as covalent joints to pin the layers together.

• In 1987, Yoshino patented what would become the first commercial lithium-ion battery using this anode. He used Goodenough’s previously reported LiCoO₂ as the cathode and a carbonate ester-based electrolyte. The battery was assembled in the discharged state, which made it safer and cheaper to manufacture.

• In 1991, using Yoshino’s design, Sony began producing and selling the world’s first rechargeable lithium-ion batteries. The following year, a joint venture between Toshiba and Asahi Kasei Co. also released a lithium-ion battery.^[25]

• Significant improvements in energy density were achieved in the 1990s by replacing Yoshino’s soft carbon anode first with hard carbon and later with graphite. In 1990, Jeff Dahn and two colleagues at Dalhousie University (Canada) reported reversible intercalation of lithium ions into graphite in the presence of ethylene carbonate solvent (which is solid at room temperature and is mixed with other solvents to make a liquid). This represented the final innovation of the era that created the basic design of the modern lithium-ion battery.

1. In 2010, global lithium-ion battery production capacity was 20 gigawatt-hours. By 2016, it was 28 GWh, with 16.4 GWh in China. Global production capacity was 767 GWh in 2020, with China accounting for 75%. Production in 2021 is estimated by various sources to be between 200 and 600 GWh, and predictions for 2023 range from 400 to 1,100 GWh.

1. In 2012, John B. Goodenough, Rachid Yazami and Akira Yoshino received the 2012 IEEE Medal for Environmental and Safety Technologies for developing the lithium-ion battery; Goodenough, Whittingham, and Yoshino were awarded the 2019 Nobel Prize in Chemistry “for the development of lithium-ion batteries”. Jeff Dahn received the ECS Battery Division Technology Award (2011) and the Yeager award from the International Battery Materials Association (2016).

1. In April 2023, CATL announced that it would begin scaled-up production of its semi-solid condensed matter battery that produces a then record 500 Wh/kg. They use electrodes made from a gelled material, requiring fewer binding agents. This in turn shortens the manufacturing cycle. One potential application is in battery-powered airplanes. Another new development of lithium-ion batteries are flow batteries with redox-targeted solids that use no binders or electron-conducting additives, and allow for completely independent scaling of energy and power.

Pakistan’s Future with Lithium

With the brand launch in Pakistan of BYD, a Chinese company that sells electric vehicles worldwide, while its global network seems to be strengthening, new opportunities have emerged for Pakistan’s auto sector.

Wait for World of Lithium and Future of Pakistan’s with Lithium and Lithium Batteries, by staying connected with Monthly AUTOMARK, then say together Grow Automotive Grow Pakistan, INSHALLAH. ‏

This exclusive article has been published in Automark Magazine’s September-2025 printed and digital edition. Written by Mumtaz Hussain

The Punjab government has taken a major step toward promoting sustainable mobility and reducing carbon emissions by launching the CM Punjab Green Credit Program. As part of this initiative, motorcyclists who convert their petrol bikes into electric vehicles—or purchase brand-new electric bikes—will be rewarded with up to Rs. 100,000.
The announcement was made by Senior Provincial Minister Marriyum Aurangzeb in August 2025. The program aims to encourage citizens to shift from fossil fuel-based transportation to environmentally friendly alternatives, aligning with Pakistan’s broader climate goals.
How the Incentive Works
The Rs. 100,000 reward is disbursed in two stages:

1. Initial Verification: A portion of the incentive is released once the bike (converted or newly purchased) is verified under the program.
2. Mileage Completion: The remaining amount is credited after the rider achieves a defined mileage target, tracked through the Green Credit App.
   This ensures that the subsidy benefits genuine users who actively contribute to lowering emissions, rather than one-time claimants.
   Beyond Electric Bikes – A Broader Green Vision
   The Green Credit Program is not limited to e-bikes. It allows citizens to earn credits—and financial rewards—for various eco-friendly activities, including:
   Converting petrol motorcycles to EVs
   Purchasing new electric bikes
   Planting trees
   Transitioning to LED lighting and energy-efficient practices
   By broadening the scope, the government is aiming to in still a culture of environmental responsibility across multiple aspects of daily life.
   Why This Matters
   With motorcycles being the most widely used mode of transport in Punjab, their fuel consumption and emissions significantly impact urban air quality. Encouraging a shift to EVs will not only help cut carbon emissions but also reduce dependence on costly fuel imports.
   Moreover, the financial reward acts as a strong incentive for the masses, especially for students, delivery riders, and low-income groups who rely heavily on two-wheelers for mobility and livelihood.
   Looking Ahead
   The launch of the Green Credit Program signals Punjab’s commitment to building a cleaner, greener, and more affordable transportation system. By linking cash incentives with measurable eco-friendly actions, the government is creating a results-driven approach to sustainability.
   If successfully implemented, this program could accelerate EV adoption in Pakistan, set a benchmark for other provinces, and contribute meaningfully to the country’s fight against climate change.

This exclusive article has been published in Automark Magazine’s September-2025 printed and digital edition. Written by @asif-mehmood

August 25, 2025 Karachi, Pakistan – Wafi Energy Pakistan, the exclusive licensee of Shell fuels and lubricants in the country, announced the launch of the new and improved Shell V-Power, marking a major milestone in premium fuel innovation for Pakistan’s motorists. With Shell’s century-long legacy of technical leadership, the enhanced Shell V-Power is a fuel designed with cutting-edge technology to deliver more power and better engine performance for our customers.

This launch is a continuation of Shell’s 78-year legacy in Pakistan, a journey that began in 1947 as Burmah Shell. Over the decades, Shell has played a foundational role in shaping the country’s energy landscape — from powering some of Pakistan’s first major industries, to contributing to national infrastructure projects. Shell has also pioneered innovations in Pakistan, including constructing the country’s first retail station using recycled plastic.

In 1970, Burmah Shell became Pakistan Burmah Shell, and in 1993 it evolved into Shell Pakistan Limited. Today, as Wafi Energy Pakistan, the company brings together Shell’s global expertise with Wafi Energy’s vision to be a long-term energy partner for Pakistan. Wafi Energy, a Middle Eastern company and Shell’s exclusive licensee in Saudi Arabia, is committed to driving economic growth, fostering innovation, and delivering advanced energy solutions tailored to local needs.

A representative from the Royal Embassy of Saudi Arabia in Pakistan shared:

“The entry of Wafi Energy into Pakistan reflects the deepening bond between Saudi Arabia and Pakistan. We congratulate Wafi Energy for bringing an innovative premium fuel to the market. And we wish the company success in upholding Shell’s legacy and becoming a shining example for other foreign companies hoping to enter Pakistani market.”

Javaid Akhtar, Director on the Board of Wafi Energy Pakistan, added:

“The introduction of the new Shell V-Power is a testament to our promise of delivering the best in performance, efficiency, and innovation to our customers in Pakistan. This is more than just a fuel launch — it is an investment in the country’s mobility future.”

Looking ahead, Wafi Energy sees Pakistan as a country of immense potential — with its young population, growing industries, and strategic importance in the region. Wafi Energy will continue to invest and innovate in the energy sector, support communities through sustainable initiatives, and help shape a future-ready energy landscape that meets the evolving needs of the nation.

—xxx—-

About Wafi Energy Pakistan Limited

Wafi Energy Pakistan Limited (formerly Shell Pakistan Limited) is a licensee for Shell in Pakistan. Wafi Energy Pakistan is majority owned by Wafi Energy Holding Limited (“Wafi Holding”).

In 2024, Wafi Holding acquired an 87.78% stake in Shell Pakistan Limited, marking its entry into the Pakistani market. This transition represents more than just a change in ownership; it signals a strategic foreign GCC investment aimed at expanding the country’s energy and fuel retail industry infrastructure. It is important to note that an associated company to Wafi Holding has an agreement with Shell Brands International AG to be the sole representative of the Shell brand for fuel stations in Saudi Arabia. The strategic acquisition in Pakistan allows Wafi Holding to expand its energy business and strengthen its presence in the country, where Shell has a 77+ year history.

Wafi Energy Pakistan stands as one of the oldest and established energy partners in the industry and a leading player in the lubricants market in Pakistan. The company has a network of 600+ Shell retail sites, countrywide oil terminal facilities, Lubricants oil blending plant, and a broad portfolio of global Shell Lubricant brands including Helix, Rimula and Advance lubricants. The company is the largest private investor in the strategic White Oil Pipeline operated by Pak-Arab Pipeline Company (PAPCO). With a legacy since 1947 in the country, developing and distributing energy by land, air and sea, the company has endeavored to support Pakistan’s developmental priorities.

The investment by Wafi Holding, an Arabian Gulf company, marks a significant milestone in Pakistan’s energy sector. Wafi Holding’s entry into Pakistan’s oil marketing industry is poised to advance the competitive landscape, bringing in growth, expertise, innovative solutions, and a long-term commitment to sustainable energy development.

The Cabinet Committee on State-Owned Enterprises (CCoSOEs) has approved

The Cabinet Committee on State-Owned Enterprises (CCoSOEs) has approved a series of significant board appointments across major public sector organizations, including the Trading Corporation of Pakistan (TCP), Pakistan Reinsurance Company Limited (PRCL), and the Small and Medium Enterprises Development Authority (SMEDA). The committee also reviewed reforms in the Scientific and Technological Development Corporation and called for improvements in the board appointment process of state-owned enterprises.
Chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb via video link, the meeting was held at the Ministry of Finance. It was attended by Federal Ministers Mian Riaz Hussain Pirzada (Housing and Works) and Jam Kamal Khan (Commerce), along with the SECP Chairman, federal secretaries, and senior officials from relevant ministries and institutions.
The committee reviewed and approved the Ministry of Commerce’s proposal to fill vacant positions on the board of TCP. Asim Aziz Siddiqui was endorsed as Chairman of the TCP Board, Ayesha Aziz was appointed as an Independent Director, and Shoaib Mir Memon was confirmed as Chairman of the PRCL Board.
Further, the committee directed all relevant ministries, including the Ministry of Finance, to review and improve the process of board appointments. It emphasized that the selection process must begin well in advance of any upcoming vacancies to avoid administrative gaps and ensure organizational continuity.
On the recommendation of the Ministry of Communications, the committee also approved the appointment of three ex-officio members to the Board of Directors of Postal Life Insurance Company Limited. It instructed the ministry to propose one of the independent directors as chairman to enhance the board’s effectiveness and advance decisions regarding the company’s restructuring and potential privatization.
In another development, the committee evaluated and approved the Ministry of Industries and Production’s proposal to reconstitute SMEDA’s board. Six independent directors from the private sector were appointed, representing all provinces and key sectors: Saif Ali Rustgar (Punjab), Mashhood Khan (Sindh), Usman Saifullah Khan (Khyber Pakhtunkhwa), Israr Khan Kakar (Balochistan), Asiya Sahil Khan (women’s representation), and Dr. Syed Zahoor Hassan (development sector).
Additionally, the committee was briefed on the restructuring of the Scientific and Technological Development Corporation of Pakistan, which will now operate under the new name “Institution for Research and Development in Applied Areas” (IRADA), in line with a previous committee decision.
Chairing the session, Senator Aurangzeb appreciated the reform initiative, stating that it aims to enhance the efficiency of the institution. He expressed confidence that IRADA will fulfill its mandate and play a meaningful role in advancing the national innovation system.

Source: PTV

REEV introduces a smarter electric experience, one where performance meets confidence, and every mile is powered with ease.

Range-Extended Electric Vehicle (REEV), also known as an Extended-Range Electric Vehicle (EREV), is a type of electric vehicle that primarily runs on electricity stored in a battery pack. To extend the driving range, it incorporates a range extender, typically a small gasoline engine that acts as a generator to recharge the battery while driving. Unlike plug-in hybrid electric vehicles (PHEVs), the range extender in a REEV does not directly power the wheels; it only charges the battery.

Here’s a more detailed breakdown:

How it works:

Electric Propulsion:

The vehicle’s wheels are solely driven by an electric motor, powered by a battery pack.

Range Extender:

When the battery charge is low, a smaller, fuel-powered engine (often gasoline) starts up and acts as a generator, replenishing the battery’s charge.

No Direct Wheel Drive:

The range extender engine does not directly power the wheels; it only generates electricity to recharge the battery.

Grid Charging:

REEVs can also be plugged in and charged from the electrical grid, just like battery electric vehicles.

Key Characteristics:

Extended Electric Range:

The primary benefit is the ability to drive a significant distance using only electric power before the range extender is needed.

Reduced Emissions:

When operating in electric-only mode, REEVs produce zero tailpipe emissions.

Flexibility:

The range extender allows for longer trips without the range anxiety associated with pure battery electric vehicles.

Series Hybrid Configuration:

The architecture of a REEV is often referred to as a “series hybrid” because the engine is only used to generate electricity for the electric motor.

Lower Maintenance (potentially):

Since the range extender engine doesn’t need to handle high power demands during acceleration, it can be smaller and potentially more efficient, leading to lower maintenance requirements.

Cost:

REEVs may have a higher initial cost compared to traditional gasoline vehicles or even some PHEVs.

Examples:

BMW i3 REx: One of the most well-known examples of a REEV, though no longer available as a new car, according to Green Car Guide.

Chevrolet Volt: Another popular REEV, also discontinued, according to GuangcaiAuto.

Ram 1500 Ramcharger: A more recent example of a range-extended electric pickup truck.

About the source

This overview was generated with the help of AI. It’s supported by info from across the web and Google’s Knowledge Graph, a collection of info about people, places and things. Generative AI is a work in progress and info quality may vary.

The Automark April 2025, my article gets to the point: Pakistan’s journey toward localization of the automobile industry is beset with challenges, but the inherent advantages, lower prices for automobiles, additional employment, and less reliance on imports for a more robust economy make it a necessary pursuit. The takeaway from the last article highlights that although top-class strategies, policy consistency, and industry engagement are essential beginnings, realizing sustainable localization involves resolving deeper systemic challenges. Although the path to complete localization is recognized as being challenging, the article is optimistic. With the right push, interventions at the right moments, and a combined effort by all stakeholders, Pakistan can fully localize its auto industry, which would flow into tangible rewards for its economy and buyers, and allow it to become an important player in the regional auto industry. The challenge, “So, what do you think, can Pakistan localize to the fullest?” necessarily invites the reader to adopt this positive but challenging vision.

The Pakistan automotive local industry’s quest for complete independence and emergence as a key regional participant rest directly on the large-scale enactment of technology transfer and localized component production. It is not simply an economic desire but a survival need for local suppliers and a strategic requirement for the country’s economic primacy. Today, the industry is confronted with major challenges: varying government policies, a lack of technological capabilities among the local vendor base, high dependency on foreign raw materials, and difficulty in attaining economies of scale. These contribute to the increased cost of production and disallow the local players to compete fairly, which consequently affects the affordability of the vehicle at the consumer level.

Localization within Pakistan’s automotive industry is challenging but critical. Although development has been held back by policy instability, technology deficiencies, import-substituting inputs, a shallow vendor base, and high cost of production, the potential is revolutionary: reduced vehicle prices to consumers, local job generation, capability building in industry, diminished dependency on imports, and enhanced macroeconomic strength. The way ahead is conditional upon concerted action among the government, OEMs/assemblers, tiered vendors, financial institutions, and academia/technical training institutions. With proper incentives, project approvals, and skills pipeline, Pakistan can shift from SKD/CKD dependence to genuine localization and regional value chain significance. The journey is arduous, but the destination is worth the travel. The article insists that good coordination between the government, industry stakeholders, and educational institutions is essential for overcoming the obstacles and unleashing the full potential of Pakistan’s automotive localization.

Here are further specifics on what each of these partnerships involves. Essentially, the article contends that a coordinated effort, wherein every stakeholder does their part actively and in tandem, is the only way Pakistan can transcend its present constraints and build an auto industry that is actually localized, competitive, and sustainable and serves the national interest at large.

Government: Offering stable, long-term policies with incentives towards localization, R&D, and investment in raw material sectors. Refocusing on zeroing high import duties on CKD units and encouraging local production. Rather than constant policy changes, the government should make sure to create stable, predictable, and long-term automobile policies. This gives a well-defined roadmap for investment and lets manufacturers plan for the future confidently. Some of the examples are the Automotive Development Policy (ADP) 2016-21 and its follow-up, AIDEP 2021-26, which were aimed at creating a stable business environment. Targeted tax relief, subsidies, and other incentives should be offered by the government to stimulate local manufacturing, R&D investment, and domestic production of raw materials. These include importing machinery and equipment, duty and tax-free, for testing, designing, and producing molds and dies. Re-thinking and possibly lowering excessive customs duties on Completely Knocked Down (CKD) units can render local assembly competitive. At the same time, an overhauled tariff system that encourages local parts production is essential.

Development and investment in and building a solid industrial infrastructure with a solid foundation for primary industries such as steel, plastics, and rubber are essential to minimize dependence on imported raw materials. Government support in the form of duty rebates and a smooth export system can make a big difference to Pakistan’s potential as an automotive export hub. Enforcing and implementing international safety standards and quality for vehicles produced domestically, as well as a system of consumer protection.

Industry Actors (OEMs and Suppliers: For speeding up localization in Pakistan’s automotive industry and minimizing reliance on imports, the industry needs focused, coordinated efforts by the government, original equipment manufacturers (OEMs), suppliers, and academia. These actions seek to overcome structural flaws, develop vendor capabilities, and construct a viable industrial ecosystem. Technology transfer investment, local suppliers’ capacity building, promotion of joint development programs, and authentic technology sharing. Original Equipment Manufacturers (OEMs) and local suppliers must be willing to make large investments in domestic manufacturing facilities and capabilities, going beyond assembly.

OEMs must actively participate in technology transfer and exchange with local suppliers, upgrading their manufacturing processes, enhancing quality, and becoming able to produce more sophisticated components. Joint development schemes may lead to indigenous capabilities. OEMs need to collaborate closely with domestic suppliers to leverage their capacity, quality, and technology expertise. This involves imparting mentorship schemes, financing facilities, and granting a captive, high-volume order for locally manufactured parts to render their manufacturing viable. Players in the industry need to invest in R&D to create new products, enhance current ones, and keep themselves updated with advancing technologies such as electric vehicles (EVs) and enhanced safety systems. Though difficult in a small market, industry players must seek ways to expand output to lower per-unit costs and be more competitive.

The cornerstone of automotive localization is a robust and competent vendor base. In Pakistan, though there are few Tier-1 suppliers serving the OEMs, numerous Tier-2 and Tier-3 vendors are not technically competent, quality certified, or financially strong enough to achieve global standards. Vendor capability building and financial access are essential to have significant localization. Without the support of sound vendor development and provision of finance, localization will be cosmetic in nature, confined to low-value components. Organized programs in finance, technology, training, and infrastructure will make vendors competitive suppliers, allowing Pakistan’s auto industry to attain true localization, cost competitiveness, and regional export potential. Vendor development and strong financial support are keystone constituents for the attainment of deep and sustainable auto localization in Pakistan.

Though localization holds out the prospect of great national dividends—from lower bills of imports and added jobs to cheaper cars—it is greatly disabled by certain fundamental challenges, most notably local suppliers’ inadequate access to funds for technological improvements, capacity shortages, and the lack of economies of scale. Financial assistance, thus, is vital. This goes beyond outright grants to include subsidized loans, tax relief for R&D and investment, and tariff policies facilitating local production of components. Yet, financial assistance is not enough by itself. It has to be supplemented with a strategic partnership where OEMs give technical support, ensure long-term volume commitment, and facilitate joint development. At the same time, the government needs to provide consistent, accommodating policies, and academia needs to create the trained human resources required to enable domestic vendors to manufacture quality, affordable components. With these economic and development challenges addressed by concerted, multi-stakeholder action, Pakistan can finally realize its potential to emerge as an important contributor to the regional automotive value chain.

Academia/Schools: Creating curricula to address changing skill requirements in the automotive sector, specifically in advanced manufacturing and EV technology. The curriculum of educational institutions such as universities and vocational schools must match changing needs in the automotive sector. This involves emphasizing skills for contemporary manufacturing, engineering, design, and emerging technologies such as EV servicing and production. Universities can work with industry on R&D projects, driving innovation and the creation of indigenous solutions for automotive components and technologies. Developing programs that offer a qualified workforce poised to assist in advanced manufacturing processes and address the demand of the industry for specialized expertise.

Takeaway from this article:

Essentially, if Pakistan’s auto industry is ever going to survive and flourish, the emphasis needs to become aggressively innovation-driven localization, where a collective drive for high-technology transfer and mass-scale indigenous parts production enables local suppliers to become players on the global stage and yields big economic dividends to the country. This “tough ride” requires unprecedented partnership and long-term investment.

This exclusive article has been published in Automark’s August-2025 printed edition. Written by Muhammad Rafique, Head of Production and maintenance, Foton JW Park (Pvt) Ltd.,

Procurement | Strategic Sourcing | Supplier Development | Contracts Management | Risk Management | Project Management | Budgeting | ESG | HRDD | SAP

Pakistan’s automobile industry, despite its strategic importance and market potential, continues to underperform. In 2025, the sector posted a 40% rebound in sales, driven by macroeconomic stabilization and interest rate cuts. However, this recovery masks deeper structural issues that threaten long-term sustainability especially in light of upcoming tariff reforms and the evolving electric vehicle (EV) landscape.

The 2026–2030 Tariff Reform: A Policy Inflection Point

The Government of Pakistan’s decision to reduce import duties on used vehicles to a maximum of 15% by 2030 is a pivotal policy shift. While this aims to democratize vehicle ownership and stimulate competition, it also risks undermining domestic manufacturing.

Local assemblers, already burdened by high input costs and limited localization, may struggle to compete with a surge of cheaper imports. Without a parallel industrial support framework, this liberalization could lead to:

Plant closures and job losses in the local auto and parts manufacturing sectors.

Reduced investor confidence due to policy unpredictability.

Increased trade deficit, as local production is replaced by imports.

EVs in Pakistan: A Market with Promise, Not Yet Prepared

Pakistan’s EV policy targets 30% of new vehicle sales to be electric by 2030. However, the current trajectory suggests this goal may be overly ambitious without significant policy and infrastructure support.

Key challenges include:

Brand Credibility: Most EVs launched in Pakistan are Chinese brands with limited global presence. Except for BYD, these brands are often backed by local partners with weak aftersales capabilities & raised concerns about long-term service and parts availability.

Infrastructure Gaps: Charging infrastructure remains sparse, especially outside major urban centers

High Electricity Costs: With electricity tariffs among the highest in the region, EVs may not offer meaningful cost savings to consumers.

These factors could delay mass adoption and erode public trust in EV technology.

Global Lessons: What Policymakers Should Note

Countries that have successfully liberalized their auto sectors did so with strategic foresight:

India: Gradual tariff reductions were paired with incentives for local manufacturing and exports. Today, India is a global hub for small car production.

Mexico: Leveraged NAFTA to integrate into global supply chains, becoming a top auto exporter.

Thailand: Offered consistent policies and localization incentives, earning the title “Detroit of Asia.”

The common thread? Tariff liberalization was never standalone, it was always part of a broader industrial strategy which we don’t observe in Pakistan’s case.

Current Policy Landscape: Mixed Signals

The 2025-26 federal budget introduced a Green Levy on internal combustion engine (ICE) vehicles, ranging from 1% to 3% based on engine size. While this is a step toward environmental sustainability, it coincides with:

Increased GST on small cars (e.g., Suzuki Alto), raising prices by up to Rs. 190,000.

Carbon levies on fuel, increasing operational costs for transporters and consumers.

These measures, though well-intentioned, may inadvertently reduce affordability for low and middle income buyers unless offset by targeted subsidies or financing schemes.

Structural Challenges That Persist

Even without the tariff shift, the industry faces systemic issues:

Import Dependency: Almost 40% of the components are imported, exposing the sector to currency volatility.

Policy Volatility: Frequent changes in tax and trade policy deter long-term investment.

Affordability Crisis: With average car prices exceeding Rs. 3 million, new vehicles remain out of reach for most Pakistanis.

Innovation Deficit: Local R&D and EV development remain minimal.

Policy Recommendations: A Strategic Realignment

To ensure the auto sector contributes to industrial growth, employment, and environmental goals, policymakers should consider:

1. Phased Tariff Reduction: Gradually lowering duties (10-~15 years) while supporting local capacity building.

2. Localization Incentives: Offer tax breaks and grants for increasing local parts manufacturing to 80%~90% in existing vehicles and/or initiating EV assembly.

3. EV Ecosystem Development: Highly incentivizing the investments in charging infrastructure, battery recycling, and grid integration.

4. Consumer Financing: Expand access to affordable auto loans, especially subsidized for EVs and hybrids.

5. Stable Policy Framework: Ensure consistency in auto policy to attract long-term investment.

Conclusion: From Protection to Progress

Pakistan’s auto industry stands at a critical juncture. The upcoming tariff reforms and EV transition could either catalyze transformation or deepen structural vulnerabilities. Policymakers must act decisively to align trade liberalization with industrial development, infrastructure investment, and environmental sustainability.

The road ahead is challenging but with the right policy mix, Pakistan can shift gears from stagnation to sustainable growth.

This exclusive article has been published in Automark’s August-2025 printed edition. Written by Syed Arsalan Ali