Big news about hybrid and electric vehicle prices under new auto policy

New tax relief proposed for electric vehicles

The government has approved the initial draft of the new auto policy for 2026 to 2031, with several proposed changes in taxes and duties for hybrid and electric vehicles. Prime Minister Shehbaz Sharif has directed officials to focus on technology transfer and create more job opportunities for skilled Pakistanis.

The draft proposes further tax cuts for small electric vehicles. It also suggests a 1 percent sales tax on parts used to manufacture electric vehicles locally.

Electric vehicles may get major tax exemptions

The proposed policy recommends keeping electric vehicles exempt from federal excise duty, capital value tax and advance income tax. The government has also proposed ending the existing sales tax relief available on vehicles.

A 1 percent concessional customs duty has also been proposed on raw materials and parts used for charging stations. The move could support the development of charging infrastructure and encourage more investment in the electric vehicle sector.

Hybrid vehicle duties may be reduced

The new auto policy also recommends gradually reducing duties on imported hybrid vehicles. The proposed duty on hybrid vehicles could fall from 50 percent to 30 percent, while duties on hybrid trucks and buses could drop from 30 percent to 15 percent.

For hybrid light commercial vehicles, the proposed duty could be reduced from 60 percent to 30 percent. These changes are aimed at encouraging cleaner vehicles while supporting the local auto industry.

IMF consultation before final approval

The proposed auto policy will not be finalised immediately, as the government plans to consult the International Monetary Fund (IMF) in October. The final tax and duty structure will become clear only after these consultations and approval of the policy.

The proposed changes could create room for some hybrid and electric vehicles to become cheaper. However, any actual reduction in vehicle prices will depend on the final policy and other tax and duty measures.

The proposed policy could give a boost to electric and hybrid vehicles in Pakistan. Lower duties and taxes may also encourage local production, but the final impact will depend on the government’s decisions after IMF consultations.

Also read: Customs seizes smuggled cars worth over Rs113,500,000 in Islamabad crackdown

Also read: 2,000+ electric cars arrive in Pakistan - How RoRo shipping benefits buyers?