Amir Khan

 The anticipated investment by the Chinese electric vehicle manufacturer BYD in Pakistan is expected to greatly accelerate the growth of the automotive industry.

Talking to WealthPK, Syed Sibt-e-Abbas Zaidi, Joint Secretary of Large Enterprises Development, at the Ministry of Industries and Production, expressed the hope that the investment would contribute to growth through private sector investment and export-driven development. Moreover, he added that BYD’s decision to invest in Pakistan marked a major milestone for the country's efforts to attract foreign direct Investment. BYD has revealed plans to set up a manufacturing facility in Karachi through a partnership with Mega Motor Company, a subsidiary of Hubco, Pakistan's first Independent Power Producer.

“The new factory in Karachi reflects the confidence of international companies in the potential of Pakistan's market, driven by a vibrant consumer base, lower labour costs, and favourable tax conditions. It also underscores Pakistan’s strategic importance as a manufacturing hub for EVs, potentially reducing production costs and enhancing domestic and international competitiveness,” Zaidi observed. The entry of BYD into Pakistan is seen as a testament to the government’s success in creating a conducive environment for foreign investment, particularly in the burgeoning EV sector. The plant is expected to commence operations in 2026, with plans to produce BYD's cutting-edge new energy vehicles.

In addition, BYD’s decision is also influenced by Pakistan’s current GSP Plus status with the European Union, which provides zero-rated or preferential tariffs on nearly 66% of tariff lines. Additionally, this investment is part of BYD’s broader strategy to expand its global footprint. The company has recently opened a factory in Thailand and signed deals to begin manufacturing in Hungary, Turkey, and Brazil.

At the launch event in Lahore, BYD’s Asia Pacific General Manager Xueliang highlighted the company’s commitment to introducing advanced vehicles to the Pakistani market and driving a broader vision of environmental responsibility and technological innovation. Furthermore, BYD plans to open three flagship stores and experience centres in Pakistan, with the launch of two SUV models and a sedan planned for late 2024.

Talking to WealthPK, Muhammad Khaleeq Siddiqui, Business Development Manager at Hubco, highlighted the company's plans to establish a network of fast-charging stations across Pakistan's major cities, motorways, and highways. However, he noted that these ambitious plans were hampered by the challenges within the country's power sector, which is plagued by high tariffs, an overreliance on imported fuel, and a substantial circular debt of Rs2.4 trillion. Siddiqui pointed out that the power sector was a crucial factor in the success of the EV industry.

“BYD’s plan to establish a factory in Karachi represents a significant step towards fostering a vigorous EV market in Pakistan and attracting further foreign investment. However, the success of this initiative will depend on the government’s ability to implement necessary reforms in the power sector and create a stable economic environment that supports sustainable growth.” As Pakistan navigates these challenges, strategic partnerships like the one with BYD could play a crucial role in shaping the country's economic future.

Credit: INP-WealthPk