Banks Reject 91% E-Bike Applications, Govt Revises Policy
Pakistan’s government has revised its electric bike (e-bike) subsidy policy following a significant rejection rate of financing applications by commercial banks. The initial scheme, aimed at promoting electric vehicles under the Pakistan Accelerated Vehicle Electrification Program (PAVE), faced major hurdles as nearly 91% of e-bike financing applications were denied by banks.
Out of 44,689 applications submitted under the government-backed electric bike financing scheme, banks processed only 9,889 and approved just 4,075. This sluggish approval rate has considerably slowed down the program, which had a target of disbursing subsidies for over 119,000 electric bikes and rickshaws in the current fiscal year. With the year ending on June 30, only 5,409 electric vehicles had been approved, representing just 4.5% of the goal.
The government’s original subsidy scheme was designed to reduce the price gap between electric vehicles and traditional petrol-powered alternatives. However, the banks’ reluctance to approve applications has hampered progress, pushing the government to rethink its approach. In response, the Economic Coordination Committee has approved policy revisions to reduce dependence on bank financing.
Under the revised policy, the government intends to promote self-finance and supplier-led purchase options. Applicants may be allowed to obtain an electric bike or rickshaw directly from the supplier after paying the sale price minus the applicable subsidy amount, eliminating the need for full upfront payment followed by reimbursement waits. Additionally, a dedicated self-financing scheme has been introduced for federal government employees in grades BS-16 and below. For these buyers, an upfront payment of Rs 10,000 is required for electric bikes, while rickshaws and loaders require Rs 100,000.
Data supports this change: while only 9% of bank-financed applications were approved, the self-finance route yielded much better results. Out of 1,339 self-finance applicants, 1,334 successfully received electric bikes, and 1,033 received subsidies credited to their accounts. This confirms that demand is strong and the financing model, rather than lack of interest, is the bottleneck.
Furthermore, the government is considering a rapid deployment of 100,000 electric bikes over the next three months, utilizing existing Completely Knocked Down (CKD) kits available in the country. Manufacturers would receive subsidies of Rs 80,000 per bike based on delivery and registration proof. This ambitious initiative could save an estimated 8.6 million liters of petrol in just three months and approximately $222 million over five years.
The electric bike subsidy program is funded through a climate support levy on petrol and diesel prices, currently Rs 2.5 per liter and expected to double in July 2026. This has led to increasing scrutiny on the effectiveness of the program in delivering actual electric vehicles, not just applications. The success of Pakistan’s EV adoption will require coordinated efforts across financing, delivery, verification, registration, and after-sales service.
This development holds importance for daily motorcycle commuters, delivery personnel, low-income buyers, EV manufacturers, dealers, and financial institutions. Stakeholders and applicants are advised to stay informed about the revised PAVE policy options and confirm eligibility and registration details before making payments.
Pakistan’s electric vehicle ambitions remain clear, but the implementation framework demands strengthening to translate policy goals into widespread EV adoption.