ISLAMABAD: The government is set to unveil its new five-year New Electric Vehicles (NEVs) Policy for 2025-30, aimed at promoting electric vehicles in Pakistan and reducing greenhouse gas emissions. Nearly 43% of the country’s 200 million metric tons of carbon dioxide (CO₂) emissions are produced by the transport sector.
The revised “New Energy Vehicles Policy” will encompass emerging mobility technologies for road transportation, including electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and hydrogen vehicles (HVs). The policy covers key areas such as manufacturing, supply chain development, infrastructure expansion, fiscal incentives, and life-cycle management, including raw materials and electricity. Additionally, it will provide institutional support, including the establishment of research and development centers, standards and certification labs, and related facilities. The policy also outlines the roles and responsibilities of federal and provincial entities to ensure coordinated implementation.
Sources tell NewzShewz that Pakistan aims to accelerate sustainable mobility through NEVs. The policy targets 30% NEV sales of new vehicles by 2030, 90% by 2040, and 100% by 2050, with an ambitious goal of achieving a 100% zero-emission vehicle fleet by 2060.
Minister for Industries and Production, Rana Tanveer Hussain, will unveil the new NEVs Policy, which includes several fiscal incentives for manufacturers. Currently, Chinese and Korean auto industries have shown interest in NEVs, with Japanese companies expected to follow.
The sales tax on import of NEV CBUs will be 10 %. . The government will re-cast the HS Codes specific to NEV industry by adding two additional digits so that tariffs and duties are applied in specificity of parts that have multiple uses outside the NEV industry.
Tariff based incentives are proposed, in the new energy vehicle policy, for each category of NEVs as follow: (i) EV specific parts to attract I % CD for the policy period ;(ii) non-localized parts @ 15 % CD for conventional shaped 2&3-Wheelers ;(iii) for New shaped 2&3-Wheelers (scooty, scooter, e-bicycle, tricycle etc.) for first year 5% , for second year 10 % , third year 15% . Localized parts @ 46 % CD for conventional shaped 2&3-Wheelers . For New shaped 2&3-Wheelers (scooty, scooter, e-bicycle, tricycle etc.) , first year 15% , second year 30% , third year 46%.
Incentives for four wheelers ;(i) EV specific parts to attract l % CD . Non-localized parts , first year 5% , second year 10 . Localized parts , for first year 15% , second year 25%.
Incentives for NEV 4-Wheelers ( cars/ SUVs/Vans/ LCVs, CKD, entire CKD allowed at l% CD. The sales tax on import of NEV specific parts in CKD will be 0% . The sales tax on the supply/sale of locally manufactured NEV will be l%. . The ACD and RD on CKD kit of NEVs will be 0%.
The government will streamline regulatory approval processes to install the manufacturing plant of batteries. Battery cells, battery packs with active cell balancer will be imported at l% customs duty and l% sales tax. Fundamental electrical components for battery development will also be allowed to import at l7o customs duty and l% sales tax.
Battery manufacturing unit machinery and related set-up equipments should also be imported at 0% customs duty and 1% sales tax. Standardization and testing machine for battery testing will be imported at 0% customs duty and 1 % sales tax. The ACD and RD on battery components for local manufacturing will be 0 %. The sales tax on locally manufactured battery will be 1%. for new heavy commercial vehicles entire CKD will be allowed at 1 % CD.
The import of chargers/swapping stations/charging stations in CBU form will be allowed at I% customs duty till June 30, 2027. After that the customs duty will be 5%.
The import of NEV chargers/swapping stations/charging stations in CKD form will be allowed at 0 % till June 30,2027. After that the customs duty will be 2% . All input materials, components, modules, and charging cables & associated plugs required to develop NEV chargers will be allowed to import at 0% customs duty. The swappable battery based charging vending machines will be allowed to import at l% customs duty and 1% sales tax. Fuses, circuit breakers, liquid cooling modules, thermal management systems module will be allowed to import at l% customs duty an l% sales tax. The manufacturers must provide a valid testing certificate of the locally made or imported chargers and battery vending machine in order to sell product into the Pakistani market. Standardization and testing machine for battery chargers will be imported at 0% customs duty and l% sales tax. The ACD and RD on charger components for local manufacturing will be 0%. The sales tax on locally manufactured chargers/swapping stations/charging stations will be l%. Other components such as NEV specific sensors, actuators, wiring harnesses, connector, fuses, controller, that are not manufactured locally, will be allowed to import at l% customs duty and 1% sales tax. Standardization and testing machine for components will be imported at l% customs duty and l% sales tax. The ACD and RD on components for local manufacturing will be 0%. The sales tax on locally manufactured electrical and electronics modules will be1%.
In phase l, the deployment of charging stations at 40 locations (mostly on motorway and N5) will be completed in 6 months. For next phase spanning one year, the charging stations deployment on N5 (G T Road), N55 (Indus Highway) and other major highways will be completed. Within 3 years, the deployment of charging stations within the distance of 50 km on selected highways and all motorways will be completed. OMCs must ensure 10 % of their locations must have a level 3 charging station at their sites in each province where they have a license to operate. For level 2 charging, subsidized rate will also get an incentive rate along with smart metering. Private bus operators, having their own charging stations, will also benefit from a subsidized rate of electricity. Charging infrastructure will be installed at different points in all major cities initially and will be expanded to all secondary cities. DC Chargers (Below 50 kW): Capital subsidy of 50% of the value of the charging station equipment/ machinery for first 300 charging stations upto a maximum subsidy of Rs 50.000.
The government to encourage the development of NEV specific technologies and software will allocate a minimum 2O7o quota in the upcoming new Special Technology Zones (STZs) for companies working on NEV technologies. This preferential access will be made available on a 20% reduced cost for a period of five years against agreed performance targets. After the expiry of the s-yea r period the government will either extend the use of space by another s-years or will support in transitioning to a more suitable location.
The government will allocate a minimum quota of 20% in existing STZS for the manufacturing of NEVs and associated parts. The government will advocate with relevant provincial authorities that land may be either leased out for 3O years, or a deferred payment plan is provided to reduce the entry cost. In the case of Mega Integrated Projects with total investments exceeding Rs billion in first 5-years of the project, the government will allocate suitable land on low cost lease for upto 50 years.
The lease will only cover the use of the land for the defined purpose of NEV manufacturing and any change in the use of land will render a penalty and cancellation of the lease. ln these cases, the government will provide all external infrastructure such as power supply, water supply, roads, and public services such as waste management, etc., at the doorstep of the industrial unit. ‘ 100 of the stamp duty and transfer duty paid by the manufacturing unit on the purchase or lease of land for the use of NEV manufacturing will be reimbursed if the project starts to make sales within 3 years of land acquisition. The government will facilitate green loans for new manufacturing units putting up green-energy generation (solar, etc.) to cover 100 % of the requirement.
The government through the State Bank of Pakistan will initiate green financing for manufacturing industries in NEVs and associated segments. The financing, however, will be linked to performance based targets and penalty interest rates will be charged for industries failing to meet the targets. The government will work with the SECP to develop a fast track pathway for large NEV manufacturing to go public which will ensure greater financial investments and also a shared ownership on the NEVs. The government will allow for accelerated depreciation to mega-units investing more than Rs 3bn over five years. The accelerated depreciation will be on technology components only. The overall tariff policy is customized to fit the objectives of the policy. The policy proposes the reduction or elimination of tariffs and local sales tax on essential components that, due to scale economies or technical limitations, cannot be produced locally.
The following guiding principles are being promoted through the policy: . The tariff and tax structures for import of CBUs will be reviewed f rom time to time as deemed appropriate. . . For NEV category two and three-wheelers the duty and tax structure will support localization and ondigenous production of vehicles and parts. All NEV two & three-wheelers imported CBUS will attract 50% customs duty. . The NEV category passenger vehicles (Cars, SUVS, Vans) and light commercial vehicles imported in completely built condition (CBU) will be subject to incentivized 25% customs duty till June 30, 2027. The customs duty will be 50% with effect from July 1, 2027. The NEV heay commercial vehicles including trucks, buses, prime movers, and dumpers imported in completely built condition (CBU) will be incentivized at 1% customs duty. Upon local manufacturing of NEV heavy commercial vehicles the customs duty on the respective category will be revised to l5% .
The initial electric vehicle (EV) policy was announced in 2019, with detailed incentives introduced in 2021. These incentives were later integrated into the Auto Industry Development and Export Plan (AIDEP) by the Ministry of industries and Production. However, the global outbreak of COVID-19 in 2020 severely impacted progress, particularly as the pandemic led to widespread travel restrictions. These restrictions, which lasted until 2022, significantly hampered the supply side of the EV industry and posed major challenges for investors and industrialists, resulting in a delay of two to three years in the execution of the EV policy
With Business as Usual (BAU), Pakistan expects to increase its oil import bill to $64 Billions by 2060. However, through the policy targets of 30% new sales of NEVs by 2030, 90% new sales of NEV by 2040, 100 new sales of NEVs by 2050 and an ambition of 100 % zero emission vehicle fleet by 2060 the fuel import bill will gradually reduce and will eliminate by 2060. The NEV penetration assumes a gradual phase out of fossil fuel vehicles at a rate of around 5% starting in 2040.
Moreover, promoting NEVs can enhance energy security by reducing dependence on fossil fuels and increasing the use of domestically generated electricity from renewable and sustainable sources. Especially, due to the growing installation of local rooftop solar PV and excessive installed capacity of power generation in Pakistan poses a significant issue for the local power sector as it creates a serious supply-demand mismatch, especially in the daytime. For FY 2024, total electricity generation capacity stood at 253 TWh against a demand of 126 TWh for the same period. These challenges pose significant issues for underdeveloped economies like Pakistan in terms of growing financial deficits.
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