image sourceGetty Images
- author, Omeer Salimi
- position, BBC Urdu
With the brand launch of BYD, a Chinese company selling electric vehicles worldwide, in Pakistan, while its global network seems to be getting stronger, new opportunities have arisen for Pakistan’s auto sector.
Hub Co, BYD’s local partners in Pakistan, says its new manufacturing plant in Karachi will be operational by 2026.
Although they plan to have ‘one in three Pakistanis own a BYD car in the next five years’, observers say the cars showcased so far seem to suggest that the company is the ‘elite class’ in Pakistan. It wants to make ‘premium SUVs’ and electric cars.
The company also said that through BYD, Pakistan could become an ‘export hub’ for electric vehicles.
This also reflects the company’s recent expansion outside of China.
By the end of 2026, BYD has announced to establish a manufacturing plant in Turkey at a cost of one billion dollars, where up to 150,000 vehicles will be made annually.
BYD vehicles manufactured in Turkey will not be subject to the additional tariffs and imports imposed by the European Union on Chinese vehicles. This is because Turkey is part of the Customs Union of the European Union. While in May, the US also raised tariffs on Chinese vehicles.
This indicates that BYD has decided to expand its production outside China to avoid European and American strictures.
At the end of last year, BYD also announced to build a plant in the EU state of Hungary. It will be BYD’s first car factory in Europe and Hungary hopes it will create thousands of jobs.
By now, BYD’s EV plant set up in Thailand has become operational with the capacity to manufacture 1.5 million vehicles per year and is likely to create 10,000 jobs.
The company is also in talks to set up a plant in Mexico.
image sourceGetty Images
What are BYD’s plans in Pakistan?
BYD has partnered with Mega Motors in Pakistan which is part of Hub Power, one of the largest energy companies in Pakistan.
Kamran Kamal, head of Hub Power, says that initially BYD’s brand launch and local partnerships have been announced in Pakistan, after which sales of these vehicles will begin in late 2024. According to him, the booking and delivery details will be disclosed in the next phase.
Talking to BBC, he says that BYD has a wide range of vehicles with more than two dozen vehicles being sold globally, but according to him, only three BYD models are available in Pakistan. Otto Three, Cell and Cellion Six are showcased. “There will be a consultative process as far as final products and pricing are concerned.”
Kamran Kamal explains that through a major investment, a plant is being built in Karachi to manufacture BYD’s new energy vehicles, which will be operational by 2026.
Initially, BYD also plans to set up three flagship stores in Karachi, Lahore and Islamabad, while 20 to 25 dealerships will be set up in the first three years.
Kamran Kamal believes that Pakistan can be made an ‘export hub’ for new energy vehicles. “BYD chose Pakistan instead of India for collaboration and now it is our responsibility to take advantage of this opportunity.”
They say that this opportunity will create jobs, increase economic output and increase the skills of the people.
An opportunity for Pakistan to become an ‘Export Hub’
While it is likely that the same three showcased vehicles will be launched and sold in Pakistan, Hubco chief Kamran emphasizes that long-term plans for the Pakistani market will have to take into account consumer purchasing power.
He says that BYD wants to become the world’s largest car company by 2030.
‘We will definitely see the purchasing power in Pakistan. For a brand to be premium, it is also important to be accessible to as many people as possible.’
The head of Hub Power said that Chinese companies are ahead in electric vehicles, while there may be a trend towards plug-in hybrids and hybrid vehicles in the future, but the most important thing is to reach a standard that is affordable for people.
“Everyone wants me to showcase my best products, which are not too expensive but still showcase my talent,” he says.
Our long-term plan is that every third Pakistani citizen owns a BYD vehicle in the next five years. How will it be possible without him because Pakistan is not a very rich country.’
Speaking on this topic, he referred to the additional duty on the import of vehicle parts in Pakistan and said that currently the duty structure for plug-in hybrid vehicles in the country is not suitable.
It is worth mentioning here that BYD currently wants to introduce new energy vehicles i.e. electric and hybrid vehicles in Pakistan, but the current vehicle industry in the country is slow in terms of production.
image sourceBYD PAKISTAN
Sunny Kamran, Deputy Head of Research, Topline Securities, says that these vehicles are more expensive than conventional cars, so the price range of 1.5 to 2 crores will target the rich class.
Under the EV policy in Pakistan, the company will initially have 100 imported vehicles (CBUs) manufactured in China and after their testing and sale, an assembly plant will be required to be set up within two years.
Sunny Kamran tells the BBC that because the company has a global image, there is likely to be a high demand initially despite the high prices.
But the situation will be clearer when the company starts bookings and the reviews of the CBU units will also determine whether the company fulfills its promises on things like range, price, delivery.
The company will also face a shortage of charging stations and infrastructure that is yet to be worked out.
If we look at the car sales data in Pakistan, small and cheap cars are sold more and purchasing power may be more important than features in the decision to buy a car.
This is the reason why, according to auto sector expert Mashhood Ali Khan, there is an ‘elite’ market of expensive cars including SUVs, which has nothing to do with the middle class, in Pakistan annually.
However, if we look at BYD in terms of buying and selling vehicles in China, it is well received due to its low prices.
Third Bridge analyst Rosalie Shin told Reuters that BYD has ‘pricing power’ in China for vehicles priced below $21,000 (about 5.851 million Pakistani rupees). It’s hard to beat on price because it ‘makes almost all the parts in-house except the glass and tires.’
But Pakistan continues to face problems like changes in auto policies and economic crisis due to which, according to the famous Ali Khan, the local auto industry does not thrive.
He says that in the current situation, apart from the reduction in purchasing power, the avenues for car leasing have also become narrow, but he hopes that as Japanese companies have made some other countries, including Thailand and Indonesia, export hubs, Chinese companies will do the same. Pakistan’s resources can be used.
In his opinion, this could be a good opportunity for Pakistan, provided that the right policies are formulated in this regard.
But technology transfer is a big question for him. Mashhood says that improvement in the quality and efficiency of vehicle assemblers in the country can only be possible in this case.
