Pakistan’s tax incentives for New Energy Vehicles could result in about Rs. 150 billion in annual revenue forgone by the government as NEV sales increase, according to Abdul Rehman, former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers.
Rehman estimated that annual sales could reach 50,000 NEVs, with tax and duty concessions averaging about Rs. 3 million per vehicle. Based on those assumptions, the value of the revenue concession would approach Rs. 150 billion a 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.
He argued that the government should attach clear requirements to EV incentives if industrial development is the objective. These could include commitments related to localization, investment and employment. If wider adoption of electric mobility is the priority, incentives should also target consumers who rely on motorcycles, rickshaws and public transportation.
Rehman said the issue was not whether Pakistan should support electric vehicles, but how public resources should be allocated to achieve the greatest economic and social return. In his view, the scale and design of the current incentives warranted a broader review of the costs and benefits of the policy.
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