Amid the ornately painted trucks bellowing smoke and the green and yellow tuk-tuks, the Chinese-made Haval Hybrid Electric Vehicle has become a ubiquitous sight on the streets of Islamabad.
But you won’t find it on Route 66 or the Autobahn.
China careened toward EV domination in 2024, producing a record-breaking 12 million hybrid and electric vehicles. But it also faced new barriers in getting these cars into foreign markets, especially in Europe and North America, where leaders have placed prohibitive tariffs on China’s low-cost EVs to protect the local auto industry. U.S. President Donald Trump has promised to escalate the trade war with China, and in 2025, Chinese automakers predict export growth to slow.
Why We Wrote This
Electric Vehicles have become a new battleground for the power struggle between China and the West. Could Pakistan become Beijing’s most important ally?
Some are looking to neighboring Pakistan, a country of 240 million which has so far welcomed Chinese automakers, to buoy sales – and possibly bypass tariffs. In recent months, several Chinese automakers have either doubled down on their Pakistan projects or made their first foray into the market.
As EVs become an increasingly important geopolitical battleground, former Pakistan finance minister Miftah Ismail says that, at least in the short-term, Pakistan could serve as a sort of pressure release valve for Beijing. But he predicts the West will eventually catch up.
“The West will say that EV components have to be made in certain countries, or that 70% of the value addition has to be done in the country that exports,” he says. “It’s a cat and mouse game. The West will find other ways of placing restrictions on the Chinese.
Courtesy of BYD-Mega Motors
An alliance on the rocks
In October, Chinese battery giant Build Your Dreams (BYD) formally entered the Pakistani market with two electric vehicles, partnering with the country’s largest private electricity producer to facilitate the expansion. The move came after the U.S. and Canada both decided to impose a 100% tariff on Chinese electric vehicle imports, and the European Commission voted to raise its own tariffs by 35%.
Its expansion represents a boost to the business relationship between China and Pakistan at a time when both seem to be running out of friends – and when their own alliance has grown fraught.
Though China has long considered Pakistan a key part of its ambitious Belt and Road Initiative, a series of recent attacks on Chinese nationals working in Pakistan has injected the relationship with tension. After an explosion at Karachi’s Jinnah International Airport in October claimed the lives of two Chinese citizens, Chinese Ambassador Jiang Zaidong called the attacks “unacceptable.”
Still, there is a sense that neither side can afford to downgrade their relationship.
Pakistan has fraught relations with all three of its other neighbors, while China has been accused of an increasingly hostile approach towards foreign businesses, driving down foreign direct investment.
“It’s an important and close partnership, albeit one that has stumbled in recent months,” says Michael Kugelman, who directs the Wilson Center’s South Asia Institute. “In that regard, this EV plan could be not just an economic win, but also a confidence building measure.”
Economic win for who?
For China, Pakistan could be the key to tapping into the U.S. market, says Usman Qadir, senior research economist at the Pakistan Institute of Development Economics.
“If they are able to assemble their vehicles in Pakistan or a third country, then they can bypass tariffs and get into the market with their lower prices,” he says.
Pakistanis could benefit, too.
BYD and its local partner announced plans to build an assembly plant in Karachi by early 2026. They estimate that as many as half of the vehicles sold in Pakistan by 2030 will be electrified – by which time BYD hopes that its vehicles will make up a quarter of all sales.
This could be a boon for consumers, who’ve struggled with rising costs of gas. However, Pakistan’s ongoing economic crisis, combined with the country’s electricity woes, also makes these goals a “mighty heavy lift,” says Mr. Kugelman.
“Most consumers won’t be able to afford EVs,” he says. “Not to mention, the infrastructure of EVs – from battery storage capacity to filling stations – is wholly lacking in Pakistan, and it’s not easy to get foreign investors to come in and fill those gaps.”
So far, the Chinese EVs launched in Pakistan have largely targeted the luxury market.
But whatever their long-term motive, it is clear that Chinese EV makers are having an impact; Japanese automakers, which have historically dominated the Pakistani market, have begun slashing their prices out of concern that they might lose ground.
