The Paris treaty is something that countries from all over the world are trying to honour, no doubt. One of their moves is to transition to electric cars so that the transport industry can reduce carbon emissions that are bad for the ozone layer and the climate. Oil import is also something that most states are trying to reduce at all costs. Some of the countries that are doing quite well in this endeavor include the U.S. and China. There is also a segment of European countries, precisely the western ones doing a tremendous job.
Others aren’t ahead, but neither are they far from the goal. Excellent examples are India and eastern European countries. Interestingly, every state is doing that its way probably since the end justifies the means. A good example is Pakistan that has an interesting approach towards this transition. In its Electric Vehicle policy 2021-2025 announced in June, electric cars are not their focus.
On the contrary, it will be all about other vehicles, including 2-3 wheelers, trucks, and buses. That’s understandable since, before that, the country has an EV policy for electric cars. Until 30th June 2026, the latter policy remains effective.
The two policies will work hand in hand to ensure that the transition is as easy as possible. They use methods such as eliminating import duty for EVs manufacturing machinery and FED subsidies. The toll tax will be relatively low as well. Controlling custom duty and offering tax breaks will also come in handy. Nevertheless, there are no subsidies for customers buying these electric vehicles. That part is quite impressive given the fact that it is the order of the day in almost every country.
It is no secret that these direct customer grants have played a considerable role in ensuring the transition is swift and easy. As a matter of fact, governments that have withdrawn them have seen sales drop after the move. A good example is Denmark that had such an occurrence in 2017-2018 following phasing out subsidies to customers. It was a government’s move to ensure that the sector stands on its own feet other than relying on the government.
It would explain why China and western European countries are also planning to eliminate direct consumer subsidies. As for their counterpart, the U.S., which is again doing quite well in the sector, Biden’s administration feels that it is not yet time to phase them out.
As good as it may be, it is not all a smooth ride. Its effect on the electric grid could be dire, ranging from unreliability, voltage stability, reduced reserve margins, and increased peak demand. Lack of charging stations is also a challenge.
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