Pakistan’s tax incentives for New Energy Vehicles (NEVs) could result in around Rs. 150 billion in annual government revenue forgone if sales reach projected levels, according to Abdul Rehman, former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM).
Rehman estimated that annual NEV sales in Pakistan could reach 50,000 vehicles. Based on an average tax and duty concession of approximately Rs. 3 million per vehicle, the total value of the incentives would approach Rs. 150 billion each year.
He questioned whether the scale of the incentive was justified by the number of people likely to benefit from it. The government is providing favorable treatment to NEVs, including a flat 1 percent sales tax regime, while simultaneously seeking additional revenue from other areas of the economy, he said.
Rehman said the transition to electric mobility remained important for Pakistan because it could reduce fuel imports and emissions while supporting development of a domestic EV industry. However, he argued that government support should be structured to deliver broader economic and social benefits.
He suggested that greater emphasis could instead be placed on electric buses, motorcycles and rickshaws, charging infrastructure, public transportation and local production of batteries and components.
Such measures, he said, could extend the benefits of the electric vehicle transition beyond buyers of relatively expensive private cars.
The scale of the proposed concession is also significant when compared with allocations for other sectors. Rehman pointed to the Higher Education Commission’s approximately Rs. 35 billion allocation for fiscal year 2025 26, saying the estimated annual NEV tax concession would be more than four times that amount.
Rehman argued that the government should attach clear conditions to electric vehicle incentives if the policy objective is to promote industrial development.
He said incentives could be linked to measurable commitments from manufacturers, including greater local production, new investment and employment generation. Such requirements, he argued, would help ensure that public support contributes to the development of Pakistan’s domestic automotive industry.
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