LAHORE: The proposed New Energy Vehicle (NEV) policy has triggered concerns within the auto industry, with stakeholders warning that contradictions in the framework could weaken both its environmental and industrial goals.
The main controversy revolves around the government’s decision to place Plug-in Hybrid Electric Vehicles (PHEVs) in the same category as Battery Electric Vehicles (BEVs), despite major differences between the two technologies, Industry sources said.
It may be added that the draft five-year policy seeks to speed up Pakistan’s transition towards cleaner transport, reduce dependence on imported fuel and encourage investment in electric mobility. Under the framework, vehicles classified as “new energy vehicles” would receive incentives, including a one per cent sales tax and lower import duties. However, these concessions would apply not only to fully electric vehicles but also to plug-in hybrids that still rely partly on petrol engines.
Industry experts argue that the policy fails to clearly separate zero-emission technologies from hybrid systems that continue to use fossil fuels. They believe this could distort the market and discourage investment in fully electric vehicles. The contradiction is especially visible in the treatment of different vehicle categories.
According to the draft policy, only fully electric motorcycles and rickshaws would qualify for NEV incentives. In contrast, passenger and commercial vehicles equipped with both electric motors and petrol engines would also enjoy the same benefits as long as they can travel at least 50 kilometres on electric power alone.
Industry representatives say this creates a double standard. If two and three-wheelers must be fully electric to qualify for incentives, they question why larger vehicles powered partly by petrol should receive identical tax concessions.
Auto sector stakeholders also fear the proposed tax structure could damage local manufacturing and hurt Pakistan’s vendor industry. They warn that this could make local production financially unviable and increase dependence on imports.
Some experts have suggested a separate tax structure under which fully electric vehicles would continue receiving the one percent sales tax while plug-in hybrids would face a higher rate of around 8 percent to 9 percent instead of enjoying equal treatment.
The policy targets electric vehicles accounting for half of all new sales of motorcycles, rickshaws and buses by 2030, while electric cars and trucks are expected to make up 30 percent of new sales. By 2040, the government hopes EVs will account for 90 percent of all new vehicle sales, with a fully zero-emission transport sector envisioned by 2060.
Copyright Business Recorder, 2026
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