Pakistan proposes new auto policy to boost EV and hybrid vehicle adoption

The Pakistani government has prepared a draft of the Auto Mobile and Auto Parts Manufacturing Policy 2026-2031, which has been submitted to the Prime Minister and sent to the International Monetary Fund (IMF). The policy aims to lower vehicle prices, promote electric vehicles (EVs), and integrate the domestic auto industry into the global supply chain.

Key proposals for electric vehicles include reducing sales tax to just 1%, eliminating federal excise duty, capital value tax, and withholding tax. To improve affordability, the policy suggests increasing the financing limit for New Energy Vehicles from PKR 3 million to PKR 10 million and extending loan tenures from three to five years.

Regarding hybrid vehicles, the draft proposes a gradual reduction in import duties over the next five years. For hybrid vehicles above 1800cc, duties could drop from 50% to 30%. Similar reductions are proposed for smaller hybrid models, hybrid trucks, commercial vehicles, and buses. The overarching goal is to reduce dependence on imported petroleum, lower mobility costs, and encourage local manufacturing and technological advancement.