Pakistan is preparing major incentives for people who want to switch to electric and new energy vehicles. The plan sits inside the draft Automotive and Auto Parts Manufacturing Policy 2026-31. The policy also proposes electric vehicle financing of up to Rs. 10 million for new energy vehicle (NEV) buyers over five years. This proposal could reshape how Pakistanis think about buying their next car.
Furthermore, the draft aims to expand charging infrastructure alongside battery-swapping and battery-as-a-service facilities. Charging access often shapes whether buyers consider an electric car. Locally produced NEVs would receive preferential GST rates. Moreover, qualifying vehicles would be exempt from Federal Excise Duty (FED), Capital Value Tax (CVT) and Withholding Tax (WHT). However, a $75,000 price threshold would apply to these exemptions.
The government also plans to cut customs duty on completely built battery electric vehicles (BEVs) priced up to $15,000. The proposed rate is 5 percent. Meanwhile, it would apply during FY2026-27 and FY2027-28. Lower upfront costs often decide whether buyers try a new type of vehicle. Therefore, cheaper imports could widen the market for entry-level models.
The draft also targets the shift away from internal combustion engine (ICE) vehicles. Instead of leaving the transition to chance, it proposes an Auto Development Levy on ICE vehicles. The levy would help finance the move toward NEVs, research and development, and vendor development. Additionally, the policy aims to increase local manufacturing and value addition of electric vehicles and their components. Local production could also support jobs and supply chains.
The draft is still under consideration. It has gone through several government committees since June. Still, nothing is final yet. Buyers should therefore watch for changes before the policy takes effect. Industry players will likely follow the discussions closely. The government has not yet announced a final decision. Finally, the final shape of electric vehicle financing will show how serious Pakistan is about electric mobility.
