A major step towards cleaner, more inclusive urban transport in Pakistan
The Mitigation Action Facility is pleased to announce that the Pakistan – Battery Swapping Network project has been approved for implementation, backed by a funding volume of EUR 8 million. Over the next five years, the project will demonstrate and expand a battery-swapping ecosystem for Electric Three-Wheelers (E3Ws) across Punjab Province, helping to unlock commercial investment in the sector.
Led by the Lahore University of Management Sciences (LUMS) Energy Institute, the project moves from its Detailed Project Preparation (DPP) phase into implementation, building on extensive groundwork in technical design, financial structuring, and gender equality and social inclusion (GESI). This early progress was supported by the NDC Partnership, which, through its in-country facilitator in Pakistan, helped facilitate engagement with the Government and guided the project through the approval process.
“Battery swapping has significant potential to make electric mobility more accessible for low-income drivers, but its commercial viability still needs to be demonstrated. This project will test the battery-as-a-service business model under real operating conditions while generating evidence on battery performance in Pakistan’s high-temperature climate.”
– Alexandra Neubert, Transport Sector Lead
The challenge
Pakistan is one of the most climate-vulnerable countries in the world, with a rapidly growing population and mounting pressure on its energy and transport systems. Heavy reliance on imported fossil fuels, combined with rising urbanisation and individual vehicle ownership, contributes to air pollution, energy insecurity, and greenhouse gas emissions.
The country’s three-wheeler segment alone comprises approximately 2 million vehicles. Despite new regulations to ease the registration of Electric Three-Wheelers and accelerate manufacturing licences for EV producers, adoption in this segment remains minimal, held back by high upfront costs, limited charging stations, battery risk and lack of formal financing for small operators and SMEs.
A new approach to Electric Three-Wheelers
The project introduces an integrated electric mobility ecosystem built around swappable batteries, solar-powered charging infrastructure, and a dedicated first loss guarantee fund to unlock commercial lending for SME franchisees and private investors.
By separating the battery from the vehicle, the swapping model addresses key barriers that have constrained uptake of E3Ws in Pakistan. Mitigation Action Facility funding will de-risk commercial lending by partner banks, enabling SMEs to invest in battery-swapping infrastructure while making Electric Three-Wheelers affordable for low-income drivers. This approach significantly reduces upfront costs for drivers, eliminates long charging times through battery exchanges in just a few minutes, and removes driver’s concerns related to battery range, maintenance and resale value. Integrating solar photovoltaic (PV) systems further reduces charging costs, lowers emissions, and strengthens energy resilience.
Over the five-year implementation period, the project aims to deploy:
- 9,614 swappable Electric Three-Wheelers
- 137 battery swap stations
- 12.3 MWp of solar PV capacity
across three cities in the Punjab region, Faisalabad, Lahore, and Multan, with support from the Mitigation Action Facility.
” This grant will enable the country to reach its target of 30% electric vehicles by 2030″
– Spokesperson from Ministry of Industries and Production
How the financing works
The project pairs technical assistance with a blended finance structure designed to crowd in private capital. The Financial Cooperation (FC) component follows a phased approach:
- A EUR 3 million MAF-grant-funded demonstration facility will pilot and operate the battery swapping model in each partner city, in cooperation with LUMS and selected private sector partners.
- Building on this proof of concept, a EUR 3 million first loss guarantee is expected to leverage up to EUR 18.6 million in commercial lending from the project’s two partner banks, Habib Bank Limited and Meezan Bank, enabling private investors to scale up infrastructure under a franchisee-based model.
In parallel, the Technical Cooperation (TC) component will strengthen the enabling environment for electric mobility through policy and regulatory and knowledge sharing. It will help improve EV regulation and standards, electricity supply planning and EV tariff design, and sustainable battery and solar PV recycling.
Embedding inclusion from the outset
Recognising the barriers faced by women and other underrepresented groups in Pakistan’s transport sector, the project also aims to make the transition to electric mobility more inclusive by promoting the participation of female drivers and marginalised groups. Planned measures include gender-responsive battery-swapping stations, training targeted at women, and actions to address gender-related barriers identified through a dedicated gender-action plan (GAP).
Expected impact
The project is estimated to directly reduce 65,839 tCO₂e during its implementation timeline and 404,068 tCO₂e over the lifetime of the supported technologies.
“Pakistan has set forth ambitious NDC targets and achieving those targets requires out-of-box solutions. This funding provides a catalyst to achieve the country’s mitigation commitments from the transport sector”
– Ms Aisha Moriani – Secretary of Ministry of Climate Change and Environmental Coordination
Beyond reducing GHG emissions, the project is expected to increase the visibility and commercial viability of the battery swapping value chain, catalyse wider adoption of electric 3Ws and strengthen Pakistan’s domestic E3Ws manufacturing capacity.
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