Military owned MHIL signs a $2.25 billion deal for a lithium ion battery plant near Rawalpindi
The Engineering Development Board says the building is ready and the machines are installed, but production waits on a battery manufacturing policy the government has not yet approved.
Margalla Heavy Industries Limited (MHIL), a military owned manufacturer, has signed a $2.25 billion agreement with a Chinese partner and a local private investor to build a lithium ion battery plant at Heavy Industries Taxila in Rawalpindi district. The deal was signed in July. Hamad Ali Mansoor, chief executive of the Engineering Development Board (EDB), disclosed it in an interview published on 26 October.
Mansoor described the Chinese partner as a top tier manufacturer and declined to name it or the local investor. Feasibility studies are complete. MHIL makes defence equipment, compact battery energy storage systems, electric buses and two wheelers.
“The building is ready, the machines are installed.”
The plant would make lithium ion cells for electric vehicles and energy storage. Initial output is planned at 200 to 300 megawatts, rising to more than 1,000 megawatts a year at full capacity. Mansoor said production would start within six to eight months of the government approving the sector policy. The six to eight month clock starts only after approval, so cells cannot reach the market before mid 2027 at the earliest.
The policy still waiting
A lithium battery manufacturing policy went to the Ministry of Industries in March and has not been approved. It proposes four major factories, three in the Lahore, Faisalabad and Rawalpindi divisions of Punjab and one in Karachi, and it would require manufacturers to export a set share of their output. Mansoor would not give the percentage before approval. In August the power minister said a national battery storage framework was being drafted.
Separately, Prime Minister Shehbaz Sharif has approved the Automotive and Auto Parts Manufacturing Policy 2026 to 2031. It still needs further clearances, including talks with the International Monetary Fund over proposed tax incentives for electric vehicles and what they would cost in revenue.
Demand the board expects
The EDB estimates demand for battery energy storage could reach 100,000 megawatts by June 2030 if the economy grows 5 percent or more, and 80,000 megawatts if growth falls below 3 percent. Grid stabilisation alone could need 3,000 to 5,000 megawatts. Households, commercial buildings, industry and electric vehicles, from two and three wheelers to cars, buses and trucks, would all draw on that storage.
Meeting it would take four to five gigafactories, each costing about $1 billion to $1.25 billion, Mansoor said. Pakistan currently assembles roughly 3,000 to 4,000 megawatts of batteries, along with motors, controllers and chargers, and he said local manufacture of those parts would reach 100 percent next year.
