Govt projects over Rs730 billion net economic benefit from NEV transition by 2030
Policy targets 30% NEV share in new vehicle sales by 2030 and Rs537.86 billion in fuel savings; former PAAPAM chairman estimates tax concessions could cost Rs150 billion annually
The government projects Pakistan’s transition to New Energy Vehicles (NEVs) will generate a net economic benefit of Rs732.8 billion by 2030, as it targets NEVs accounting for 30% of new vehicle sales while offering tax incentives and subsidies to accelerate adoption,
The News reported.
The NEV Policy 2025-30, which is being integrated with the Automobile Policy 2026-31 and is likely to be discussed with the International Monetary Fund (IMF) during planned meetings this month, is aimed at reducing dependence on imported fuel and increasing utilisation of surplus electricity generation capacity.
According to a government briefing, the transition is projected to save $0.95 billion in fuel costs, equivalent to 1.823 million tonnes of oil equivalent, over the policy period, with cumulative fuel-cost savings estimated at Rs537.86 billion.
Pakistan spent more than $16 billion on petroleum imports in 2024, while transport accounts for up to 79% of total oil demand. Transport oil consumption is projected to reach 18 million tonnes by 2030 unless the country shifts towards alternative energy sources.
The government estimates total socio-economic savings from the NEV transition at Rs833.16 billion by 2030, comprising Rs537.86 billion in fuel savings, Rs174.63 billion from utilisation of surplus electricity, Rs105.46 billion in health and productivity gains from cleaner air and Rs15.21 billion from international carbon credits.
Under the proposed framework, local NEV manufacturing will retain a concessionary 1% customs duty on EV-specific assembly kits and localised components until June 30, 2027, while locally assembled NEVs will remain exempt from Federal Excise Duty (FED).
Imported mass-market EVs priced below Rs20 million will face zero FED, while premium electric vehicles will attract FED ranging from 30-40%.
Local assemblers will also be required to increase localisation to 30% by 2028 and 50% by 2031, aimed at encouraging domestic component production and developing the local EV supply chain.
However, former Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) chairman Abdul Rehman has questioned the fiscal cost of the concessions, including what he described as a flat 1% sales tax regime for NEVs.
Based on estimated annual NEV sales of around 50,000 units and an average reduction in duties and taxes of approximately Rs3 million per vehicle, Rehman estimated the implied revenue concession at around Rs150 billion annually.
He argued that while cleaner transport, lower fuel imports and development of a domestic EV industry were legitimate policy objectives, the opportunity cost of the concessions needed to be considered.
Rehman said fiscal support of this scale could alternatively be directed towards electric buses, charging infrastructure, electric motorcycles and rickshaws, public transport systems and local battery and component manufacturing.
Under the government's framework, consumer incentives are intended to be financed through a revenue-neutral mechanism funded by a 1-3% levy on conventional internal-combustion-engine (ICE) vehicle sales. The levy is projected to generate Rs122 billion against a five-year subsidy allocation of Rs100.36 billion. The government's final NEV policy also estimates levy revenue at about Rs121.97 billion over the policy period.
Support will primarily target two- and three-wheelers and commercial four-wheelers rather than private cars. Two-wheelers will receive reference cash support of Rs65,000, while three-wheelers will qualify for Rs400,000. These subsidy amounts are also reflected in government announcements on the policy.
Taxis and ride-hailing vehicles will be eligible for Rs15,000 per kWh of battery capacity or 5% of the invoice value, whichever is lower.
The State Bank of Pakistan is also introducing green auto financing to address NEVs' higher upfront costs, which the briefing estimates at 20-65% above conventional vehicles. Financing for locally assembled NEVs will allow tenures of up to seven years, with a minimum 15% down payment, subject to borrowers' creditworthiness.
On charging infrastructure, the National Highway Authority is expected to install 40 Level 3 DC fast chargers along motorways and the N-5 within six months as the first phase of a wider programme. The government plans to establish 3,000 public charging stations by 2030 and has proposed a commercial charging tariff of Rs39.7 per kWh.
The policy also includes workforce development, with the Ministry of Industries and Production and National Vocational and Technical Training Commission (NAVTTC) planning to train 10,000 apprentices through the New Energy Apprenticeship Programme (NEAP) and certify another 5,000 technicians under the New Energy Skills Programme (NESP).
Training will cover battery assembly, electric traction motors, power electronics and high-voltage charging infrastructure and is intended to help manufacturers meet localisation targets and international standards.
The government briefing said NEAP would also support PAAPAM members, which employ more than 200,000 manufacturing workers, by reducing retraining costs for vendors and supporting original equipment manufacturers in meeting localisation requirements.
