Sapphire’s EV Ambitions

Finally, electric bus has made its debut in Pakistan. Yesterday, there was a soft launch of first electric bus by Sapphire Group in Karachi. The project does not aim to receive any operational subsidy from the Sindh government, yet still aims to be affordable for consumers. Moreover, the real benefit is in the form of reductions achieved in carbon emission.

The world is moving towards cleaner transportation solutions. Battery electric vehicles (BEV) are the top choice as it is more efficient in terms of running and is practical anywhere in the world where electricity is available. It is best to have these for intra-city transport, as for inter-city the range-anxiety kicks in. In order to cross that bridge, the improvement in technology efficiency and scaled charging infrastructure is the key.

Right now, it is a no brainer to shift intra-city public transport and intra-city light weight vehicles (LCVs) to BEV from internal combustion engines (ICE). And for Karachi, electric buses can come quickly as the city has no existing mass transit system to speak of.

Sapphire Group plans to venture into BEV in partnership with BYD of China. They have plans to launch buses, LCVs, and cars in Pakistan. There are plans to import buses and run these in partnership with existing players for urban transportation. For LCVs and cars, the plan is to set up an assembly plant in Lahore. The company will start importing units this year for testing purposes. By late 2022, it will start working on building its assembly line.

The first EV bus was imported in Oct 2020 and yesterday, the bus started operations in Karachi. Sapphire is running this bus in partnership on a 36 km two-way existing route, on a trial run. The idea is to scale up the number of EV buses to 100 in Karachi.

The key is that it does not need any operational subsidy. As per the company, the operational cost is going to be lower than half of the routine buses running in Karachi. The bus has an improved capacity of 324 Kwh (kilowatt hours) and the company claims to have a range of 250 km in one charge with full load under regular city traffic. At a cost of Rs20/Kwh, the running cost will come at Rs26/km and will do six rounds in full charge.

The existing diesel buses run around 2.5km/liter, in addition to which there cost of oil and filter change, and other mechanical costs – the per unit cost is estimated at Rs7,000/day. There is no such cost associated with EV bus as there is no engine in it. Hence, zero mechanical maintenance. Thus, due to half the cost, EV buses can be competitive without any operational subsidy.

The only expensive part is the initial fixed investment. The BYD bus costs Rs35 million (including 17 percent GST and 1 percent import duty). The diesel bus costs around Rs20 million. But with low operational cost, the breakeven may be reached much more quickly. If the GST on imports of EV buses is abolished, the uptick will even be sooner. Providing them refinance facility from SBP could prove to be a cherry on top.

This is just the start; greater synergies exist if companies operate in intra-city supply chain transport (mainly LCVs) on BEVs. This will not only be more cost efficient but will save companies from administrative headache (and leakages), and from managing vehicles maintenance.

Sapphire has plans to launch these in Pakistan. The group want to sync it with its cars launch. The company is planning to import several units for market testing in 2021. Once the charging infrastructure builds up, and battery technology improves to reduce range-anxiety, the company may also establish a plant. This could well be the first EV only assembling automobile plant in Pakistan. And this may only be the start.

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