Pakistan must adopt electric motorcycles as soon as possible since petroleum prices have reached Rs277 per litre. The result has been an increase in fuel costs for motorcycle owners, particularly lower-middle and middle-class households. This transition requires the government to promote market-driven approaches and to act as a facilitator.
Motorcycle users will now spend between Rs5,000 and Rs10,000 per month on fuel costs based on an average consumption of one litre per day. This translates to about $5 billion in yearly refined petroleum imports, or about 16% of Pakistan’s total CO2 emissions.
It is estimated that electric motorcycles could reduce monthly fuel costs by Rs4,600 to Rs8,500 with battery charging costs ranging from Rs15 to Rs25 per KWh for home charging rates. Additionally, each electric motorcycle could cut CO2 emissions by 600kg annually. However, the high price of lithium-based batteries, which make up 30–40% of the total cost of electric motorcycles, restricts their market uptake.
To ease the burden of upfront costs for consumers, the government is considering subsidies. Although expensive (costing up to Rs90,000 per motorcycle), these subsidies only cover 0.7% of the market. Instead, the government should concentrate on generating market demand so that private companies can handle the rest.
The quick conversion of motorcycles to electric vehicles could be facilitated, for example, by starting a three- to five-year term loan programme. Only the additional cost of the battery for a new motorcycle or the battery plus conversion kit for a converted used motorcycle should be covered by loans. To lower consumer costs, the government can waive import taxes on lithium-ion battery packs and electric motors.
The government should aim for at least 2 million initial adoptions of electric motorcycles over the course of two years by retrofitting both new motorcycles (20%) and existing motorcycles (80%). This could reduce import costs by at least Rs130 billion ($500 million). Loans for a new motorcycle’s 1.0-2.0Kwh (30-60km daily use) battery and a five-year term for a retrofit plus battery should be made available.
To offset the cost of retrofits and a high interest rate of 19%, the government may contribute up to Rs1,000 per month towards loan payments, with a cap of Rs10 billion outlay annually. The Engineering Development Board should prepare specifications and a list of authorised suppliers for motors, controllers, and LFP batteries with a minimum one-year warranty on the motor and a three-year warranty on the battery to guarantee consumer protection and quality.
If these steps are taken successfully, there could be a 50% adoption rate (15 million motorcycles) in five years, saving the nation more than $2.5 billion annually and significantly lowering CO2 emissions. Motorcycle manufacturers would have more incentive to produce electric models, and private companies would have an incentive to offer high-quality conversion kits and batteries.