Assembly Without Industry: The Gap Between Policy and Production in Pakistan’s Electric Vehicle and Battery Sector

Summary

Pakistan is trying to convert a rapidly growing demand for imported batteries and electric vehicles into a domestic manufacturing industry. Lithium-ion storage imports reached 4.6 GWh in 2025, up 220% on the year before, and that single year accounted for about 60% of everything imported since 2018. At current petrol prices, running an electric car on public chargers costs roughly 38% to 83% less than a petrol equivalent, and about 92% less on rooftop solar. A country importing this much energy hardware has an obvious reason to want the factories rather than the shipments.

This report tests whether the industrial and policy base exists to support that conversion. It examines the six policy instruments governing the sector and the four incentive lines proposed for battery manufacturing, the market data, the supply chain and mineral base, six named Chinese engagements, and the competing offers of Bangladesh, Vietnam, Indonesia and Thailand. Two tests are applied throughout: whether a measure is notified, agreed in principle or only in draft, and whether a facility is assembling imported cells or manufacturing cells from active materials.

Key findings

1. The framework governing battery manufacturing is unfinished. Of the six instruments governing the sector, three are notified, two rest on agreement in principle and one exists only in draft. None of the three enforceable instruments governs battery manufacturing, and all four battery incentive lines exist only in an investment pitchbook.
2. The only track record shows 13% delivery against target. The PAVE subsidy pilot targeted 41,000 vehicles and delivered 5,409 despite a Rs. 9 billion allocation. The cause was a payment design that made buyers pay in full and reclaim afterwards, which the government reversed within roughly nine months.
3. Current Pakistani activity is assembly, not manufacturing. Pakistan has no documented cell production. Its first dedicated lithium battery plant, at Korangi, runs at roughly 4 MW, and every other facility described as battery manufacturing assembles imported cells into packs.
4. The mineral case is sound in geology, unproven in metallurgy. Pakistan has the iron and phosphate ore behind its chosen lithium iron phosphate chemistry, but no reviewed document shows that battery-grade processing of that ore has been proven, let alone scaled.
5. Chinese engagement is real but concentrated at assembly. The largest financially closed project is a USD 150 million knocked-down assembly plant at Gharo, with BYD licensing technology rather than taking equity. On the battery side there is a memorandum with a CATL-backed company, not a commitment to produce cells.
6. Headline statistics do not survive their own denominators. The widely reported 61% jump in electric vehicle sales was a move from 33 to 53 units, in a month when about 15,500 conventional vehicles were sold. The running cost advantage, by contrast, does hold up.
7. Pakistan offers large upside and the least certainty. Against Bangladesh, Vietnam, Indonesia and Thailand, Pakistan matches the largest comparator on market upside and has the thinnest competitive field, but scores lowest on policy certainty, pays industrial power prices well above India’s and China’s, and carries a recent record of import and repatriation controls.

What follows

The investable opportunities today are not cell gigafactories but the layers beneath them: pack and module assembly, battery management systems, thermal systems, testing and certification, recycling, charging infrastructure, and battery-grade processing of the iron and phosphate base. Investment should be phased against notified rather than announced policy, with renegotiation triggers built into anything signed before the pending instruments are gazetted. Where a choice exists, a tariff-based incentive is worth more than a disbursement-based one, because it operates automatically at the border.

For policymakers the report draws four implications: publish a transition schedule stating when tariff protection rises and against what observed localisation; add a sunset clause to component concessions, as Bangladesh has done; shift incentives toward border-operated instruments that do not depend on administrative delivery; and offer battery manufacturers a power price commitment that outlasts a cell line’s payback period. The report also names the five triggers, led by gazetting of the National Lithium-Ion Battery Manufacturing Policy, that would resolve its open questions.

Inside the Research Report

1. Research question and objectives
2. Methodology: sources, definitions and limitations
3. The policy architecture: which instruments bind, the PAVE record, the battery policy, tariffs and local content
4. The market: the 61% jump examined, prices, running costs and charging infrastructure
5. Supply chain and mineral reality: assembly against manufacturing, imports, minerals, power and workforce
6. The Chinese investment tracker: named engagements, entry structures and repatriation risk
7. Pakistan against Bangladesh, Vietnam, Indonesia and Thailand
8. Findings
9. Discussion and implications: the triggers to watch and what follows for policy
10. Conclusion, appendices, glossary, references and about the author

About the author

How to cite

Khan, R. (2026). Assembly Without Industry: The Gap Between Policy and Production in Pakistan’s Electric Vehicle and Battery Sector. Ardent Research Solutions. https://arspakistan.pk/research-reports/assembly-without-industry.html

Related research

• ARS Policy BriefBeyond the Car Factory: Where Pakistan’s EV Opportunity Really Lies
• ARS Policy BriefPakistan as China’s Next Manufacturing Base
• ARS Special ReportIdle Currents: Turning Pakistan’s Underused Power into a Global Data Centre Hub

This summary is drawn from the full publication, which should be read for the sources, qualifications and method behind each finding. It reflects the views of the author and not necessarily those of ARS or its affiliates. This report is research and analysis, not investment, legal or tax advice.