Pakistan is preparing to launch a $2.25 billion lithium-ion battery manufacturing project in Rawalpindi, with a factory owned by the military-run Margalla Heavy Industries Limited (MHIL) expected to begin production within six to eight months of the government approving a policy for the sector.

According to Arab News, the project brings together Chinese manufacturers and a local private sector investor, with construction and equipment installation already completed. Hamad Ali Mansoor, chief executive of the Engineering Development Board (EDB), said the facility was awaiting government approval before production could begin.

The proposed factory is located at Heavy Industries Taxila in Rawalpindi district, where MHIL manufactures defense equipment and other products, including unmanned drones, electric vehicle buses, two-wheelers and battery energy storage systems.

The project was signed in July with a Chinese company that Mansoor described as one of China’s leading manufacturers, alongside a local investor. He said the factory would manufacture lithium-ion cells, with an initial production capacity of 200 to 300 megawatts before gradually reaching its planned annual capacity of more than 1,000 megawatts.

Battery Demand Could Reach 100,000 MW

Pakistan is racing to build local battery manufacturing capacity as demand for energy storage and electric vehicles climbs. The EDB estimates that demand for battery energy storage systems could reach 100,000 megawatts by June 2030, depending on economic growth.

Mansoor said demand could touch 100,000 megawatts if the economy grows by 5 percent or more, while growth below 3 percent could hold demand to around 80,000 megawatts. The projected requirement spans households, commercial buildings, industrial facilities and electric vehicles, ranging from two-wheelers to buses and trucks.

Four to Five Gigafactories Planned

The EDB estimates that grid stabilization alone could require 3,000 to 5,000 megawatts of battery storage capacity. Meeting the country’s projected demand could take four to five gigafactories, each costing approximately $1 billion to $1.25 billion.

The government has prepared a lithium battery manufacturing policy that was submitted to the Ministry of Industries in March and is awaiting approval. The plan envisages four major factories — three in Punjab’s Lahore, Faisalabad and Rawalpindi divisions and another in Karachi.

Policy Awaits Approval

The proposed policy would require battery manufacturers to export a specified share of their production, though Mansoor declined to disclose the target before the policy is approved. He said the framework incorporates international safety and performance standards.

The development follows Prime Minister Shehbaz Sharif’s approval of the Automotive and Auto Parts Manufacturing Policy 2026–2031, which awaits International Monetary Fund approval over proposed tax incentives and their potential impact on government revenue. The EDB expects the new automotive policy to underpin demand for battery storage as Pakistan seeks to shift from imported fuel toward electric mobility.

Push to Replace Imported Components

Pakistan currently assembles around 3,000 to 4,000 megawatts of batteries and related components, including motors, controllers and chargers, according to Mansoor. But the country remains import-dependent and is looking to build domestic manufacturing capacity to cut costs and strengthen its engineering industry.

Mansoor said the government wanted to move toward manufacturing these components entirely within Pakistan by next year. The planned battery factories are expected to support local production for electric vehicles and energy storage while creating opportunities to export locally manufactured cells.