Powering the Road Ahead: Decarbonizing Transport in CAREC

The study emphasized that EV adoption alone was insufficient and needed to be complemented by a broader "avoid-shift-improve" strategy. Measures such as compact urban planning, investments in public transport, and support for non-motorized mobility (e.g. walking, cycling) are critical to reducing overall transport demand and emissions, alongside long-term investments in zero-emission vehicle technologies.

A cohesive EV policy framework, combined with infrastructure investment and regional collaboration, was found to be necessary to address existing barriers and support EV adoption in the CAREC region.

The study used a mixed-method approach, combining quantitative data from the International Energy Agency, TradeMap, and Asian Transport Outlook with qualitative case studies and cross-country policy comparisons. It also included regional trade and lifecycle emission analyses to evaluate climate benefits and assess the potential effects of EV incentives.

While barriers to EV adoption exist globally, the study highlighted constraints that made transition more complex in CAREC countries.

Import dependence and limited local production
EVs are more expensive than conventional vehicles. Despite the global decline in lithium-ion battery costs, CAREC markets struggled to achieve price parity between EVs and internal combustion engine vehicles, primarily due to reliance on imported components and limited local production.

The People’s Republic of China (PRC) is the only country in the region providing purchase subsidies to reduce the price differential. Sustained fiscal and non-fiscal incentives—import duty exemptions, tax subsidies, and preferential loans—were key measures to improve EV affordability. PRC demonstrated the effectiveness of these policies, as its EV costs declined significantly in recent years.

Limited charging infrastructure
Limited charging infrastructure is a major bottleneck. EV infrastructure presented a chicken-and-egg challenge: private investors were hesitant to develop charging infrastructure due to low EV market share, while limited charging stations discouraged consumers from purchasing EVs.

This challenge was more pronounced in CAREC countries due to smaller markets and higher investment risks. Initial public investment or public–private partnerships are needed to initiate infrastructure deployment, starting with basic coverage and expanding as demand grows.

Carbon-intensive electricity grids
In several CAREC countries, carbon-intensive grids limited the environmental benefits of EV adoption. For example, in Turkmenistan, EV emissions (108.83 kg CO₂e per 500 kilometers) were only marginally lower than conventional internal combustion engine vehicles (115.18 kg CO₂e)— resulting in limited climate gains.

Countries such as Kazakhstan, Mongolia, Turkmenistan, and Uzbekistan need to prioritize the decarbonization of electricity grids to fully realize the climate benefits of EVs. Countries with cleaner grids, such as Georgia and Tajikistan, were better positioned to capture greater climate benefits from EV adoption.

Policy gaps and inconsistent incentives
Policy support varied significantly across the region. While PRC had implemented comprehensive incentives, including subsidies, import duty waivers, and tax breaks, other CAREC countries had limited or inconsistent support mechanisms.

The study found that EV adoption in CAREC countries was strongly influenced by the extent of policy support and economic development. Key enabling factors included policy support, declining global battery costs, charging infrastructure availability, and supply chain localization.

The research compared policy frameworks (Chart 1) to determine the most effective instruments promoting EV adoption.

Chart 1: Key Policy Incentives for Electric Vehicle Adoption in CAREC Member Countries

Note: Source compiled by author based on data from the EV Policy Database Explorer of the International Energy Agency and the Asian Transport Outlook.
Source: IEA EV Policy Data Explorer, CAREC Institute, Asia Transport.

Five policy instruments were highlighted:

National EV targets
National EV targets provided a clear, actionable framework for market growth, guiding both consumer behavior and industry development. PRC aims for 45% of new vehicle sales to be electric by 2027 and 60% by 2030. Other CAREC countries—Azerbaijan, Georgia, Pakistan, and Uzbekistan—have also set ambitious EV goals. However, Kazakhstan, the Kyrgyz Republic, and Tajikistan still lack formal EV targets.

Purchase subsidies
Purchase subsidies were among the most effective measures for increasing EV adoption. PRC introduced purchase subsidies since 2009, initially targeting consumers and later extending support to manufacturers. Within the CAREC region, it remained the only country to implement substantial purchase subsidies.

Import duty waivers
Import duty exemptions play a critical role in markets without significant local EV production. Countries such as Azerbaijan, Kazakhstan, Tajikistan, and Uzbekistan have waived import duties on EVs. With these waivers, EV adoption has seen exponential growth over the last couple of years.

In Pakistan, however, import duty exemptions apply only to local assembly of EVs through completely knocked-down units. Automotive assemblers are often hesitant to directly invest in local assembly of EVs, as they prefer to test the market by introducing completely built units first.

Tax subsidies
Tax exemptions, including value-added tax and excise tax relief, helped lower the overall cost of EV ownership. Most CAREC countries already offer some form of tax relief, making EVs more cost-competitive. Enhancing tax subsidies would make EV ownership more affordable while incentivizing a long-term shift towards zero-emission vehicles.

Preferential loans
Low-interest loans and preferential financing can make EVs accessible to a wider consumer base, especially in price-sensitive markets. Such mechanisms can support both consumers and commercial fleet users.

The study showed transition to electric mobility as a pathway to reduce transport emissions and fossil fuel dependence. However, several barriers—high upfront costs, limited infrastructure, and inconsistent policy frameworks—limited both adoption rates and climate benefits.

It highlighted policy measures that governments can apply across the region, including electrification of public transport fleets and ride-hailing services, time-of-use tariffs to manage electricity demand, and public investment or co-financing of charging infrastructure.

The study also noted the need to address the future disposal, recycling, and second-life applications as EV batteries are expected to reach end-of-life in the next 7–10 years.

^[1] The 11 CAREC member countries are Afghanistan, Azerbaijan, People's Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan..

Asian Transport Observatory. Knowledge Base on Transport in Asia-Pacific.

International Energy Agency. Global EV Policy Explorer.

International Trade Center. Trade Map: Trade Statistics for International Business Development.

K. Raza. 2025. Decarbonizing Road Transport: CAREC Countries’ Transition to Electric Mobility. CAREC Institute.

The Observatory of Economic Complexity.