LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers has expressed concern over a proposed policy that would extend tax incentives currently available to fully electric vehicles to hybrid models, warning the move could damage local industry and result in significant revenue losses.
The association opposed provisions in the draft Auto Policy 2026-31 seeking to grant Plug-in Hybrid Electric Vehicles (PHEVs) and Range Extended Electric Vehicles (REEVs) the same incentives as Battery Electric Vehicles (BEVs).
According to PAAPAM, PHEVs and REEVs continue to rely on internal combustion engines and fossil fuels and therefore should not qualify for the reduced one percent sales tax rate currently applicable to zero-emission BEVs.
The association noted that the standard sales tax rate stands at 18 percent and cautioned that the proposed reduction could lead to billions of rupees in revenue losses for the Federal Board of Revenue.
The PAAPAM further stated that most hybrid and range-extended vehicles are imported into Pakistan as fully built units with minimal local content, which could undermine decades of investment in domestic manufacturing and threaten thousands of jobs linked to the local auto parts industry.
Copyright Business Recorder, 2026
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