Electric motorbikes are hot in Pakistan because of rising gas prices

A few days after Iran blocked the Strait of Hormuz, two electric motorbike shops in Pakistan 1,400 km away suddenly had a lot of customers. Haseeb Bhatti, who specializes in converting gasoline motorbikes into battery-powered vehicles in Rawalpindi city, said sales last month soared 70%.

Similarly, Ali Gohar Khan, owner of an electric motorbike store that has been operating for 7 years, saw a record increase in sales. “People are worried that they may not be able to buy gasoline in the near future,” he said.

The reason is that the Middle East conflict has pushed global fuel prices to skyrocket, exacerbating the inflation and post-pandemic economic recession in Pakistan. The country imports almost all of its oil through the Strait of Hormuz and has 30 million 2-3-wheeled gasoline vehicles, the dominant form of transportation.

Rumors of gasoline shortages spread, despite the government claiming to ensure supply. After last week’s 18% price hike, the average Pakistani household now pays 31% of their daily income for a liter of gasoline, according to data platforms Global Petrol Prices and Our World in Data.

“My monthly salary is 30,000 rupees (about $107), which is barely enough to cover expenses for a family of six. How can I fill the tank?, said Zahoor Ahmed, a security guard in Karachi.

From commuters to college students, more and more people are switching to electric vehicles. “With the current inflation and fuel prices, I bought the electric car myself,” said Ms. Mehvish Qureshi, a lawyer in Hyderabad.

Previously, last year, rising gasoline prices pushed electric vehicle sales in Pakistan up nearly three times, reaching 90,000 units, accounting for 5% of total two-wheeled vehicles sold, according to data from consulting firm Renewables First.

This year, electric vehicles accounted for more than 10% of monthly two-wheeler sales for the first time, according to Talha Khan, Orko CEO. He predicts sales will accelerate because refueling can cost 10 times more than charging.

A typical electric motorbike in the country costs about 250,000 rupees ($895) – more than half of Pakistan’s average annual income per capita and 56% more than the popular gasoline-powered Honda CD 70 model, which costs about 160,000 rupees ($570).

To stimulate demand, the government launched the Pakistan Vehicle Electrification (PAVE) scheme, effective from February, providing subsidies for 20% of the price of 2-3 wheeler electric vehicles and interest-free installments for the rest.

Finance Ministry advisor Adnan Pasha said there have been about 270,000 applications, nearly seven times the target of the first phase of PAVE, expected to end in June. In total, the government aims to subsidize 2 million electric vehicles within five years. “Electrifying just 2 million vehicles can save nearly half a billion USD per year on fuel imports,” Mr. Pasha pointed out.

Abundant solar energy is also a favorable factor. Many families rushed to install Chinese solar panels at home, after electricity prices increased in 2023. Now, the government wants to take advantage of this boom to promote electric vehicles. “Using solar energy can reduce electricity costs at charging stations and make charging at home more economical,” Mr. Pasha said.

Ammar Habib, advisor to Pakistan’s Energy Minister, said that electric vehicles are also “very good for the grid”, because the need to plug in and charge helps contribute to dealing with excess solar power during the day.

Chinese electric motorbike manufacturers such as Yadea, Jinpeng, and domestically assembled electric bicycles geomagnetic Batteries and components from AIMA and Sunra, are scrambling to meet demand. For cars, BYD has cooperated with Pakistan’s HUBCO Green to build charging stations. Mr. Pasha said the government plans to maintain the policy of reducing electricity prices by 45% for this infrastructure.

Ahtasam Ahmad, Head of Energy Finance at Renewables First, noted that a lack of charging station infrastructure and on-site technical expertise could hinder Pakistan’s electric vehicle transition.

This expert believes that brands selling electric vehicles in Pakistan need to strengthen their after-sales and maintenance networks, because the country’s roads are full of potholes. In neighboring India, electric motorbikes are damaged because of traveling on degraded roads and there is a lack of repair places.