Chinese automotive giant BYD has confirmed plans of establishing its first factor in South Asia and it is not where you may have thought it will be at. While India is the largest car market in the region - third-largest in the world, in terms of sales, BYD has reportedly chosen to establish a plant in Pakistan.

Bloomberg recently reported that BYD will construct a manufacturing facility in partnership with a local player. While BYD has not commented on plans for a plant as yet, company officials have confirmed BYD models will be offered in the local market here. Sources are also cited as saying that BYD is looking at tapping into the potential for battery-powered cars in Pakistan. 

BYD entering the Pakistani automotive market significant but possibly establishing a factory may be rather perplexing. Significant because BYD has been on an aggressive expansionist path and as the world's fifth-most populated country, Pakistan could offer an enticing market. The country already has several Chinese auto players like Great Wall Motor, SIAC Group and Chongqing Changan Automobile. But car sales volumes are low, lower still for EVs.

A plant in Pakistan may help BYD offer its models at affordable prices but the country could also be used as a base for exports. Although still speculative, BYD's reported plans of a factory is likely to be located in Karachi’s Port Qasim area which may also signal plans of exports in the future.

But what about domestic sales?

Pakistan's EV journey so far

The automobile industry in Pakistan has been going through a torrid time in recent years with sales a paltry shadow of what these were before, specifically prior to Covid years. The EV movement does exist but is currently crawling - in 2022, just 8,000 EVs were sold in the country and this includes two, three and four-wheelers combined. This is as per a column published in Pakistan-based Dawn.

It is widely agreed within Pakistan that while the need for EVs is comprehended, the focus of the existing EV policy is to rely on imported options rather than local manufacturing or local assembly. What this essentially means is that an individual has to pay a lot more for an EV than what he or she may have had to for a locally-assembled model.

But there is a catch.

The focus on imported models and the consequent pricing means Chinese players can not only enter the local Pakistan market but flood it with cheap options galore. And BYD in particular is capable of doing just that - whether from a base in Pakistan in  the future or continuing with using the import route. Company officials have, in fact, predicted that half of all cars sold in Pakistan by 2030 will be powered by battery. And based on this prediction, perhaps, the company wants to be ready and raring.

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