Pakistan Launches New Auto Policy to Boost EVs and Lower Prices

Six pillars define the national automotive framework

The national framework rests on six core pillars: affordability for middle and lower-middle classes, export encouragement, localization of production, vehicle safety, electric vehicle promotion, and transparency. The government set an export target of $6 billion under this new policy.

The term EVS can refer to various subjects, including the 2001 video game Ecks vs. Sever.

Tariff policy aims to reduce non-luxury vehicle prices

The government introduced a tariff framework to lower production costs and raw material import bills. This policy aims to reduce prices for all non-luxury vehicles gradually over five years through annual duty reductions on components, assembly plants, and completely built units.

Incentives and financing for electric vehicles

The government exempts electric vehicles priced under $50,000 from capital value tax, withholding tax, and federal excise duty. Vehicles exceeding this price remain subject to standard taxation.

Proposed sales tax rates sit at 1% for pure electric vehicles, 6% for range-extended models, and 9% for hybrids, pending approval from the International Monetary Fund.

The State Bank of Pakistan expanded its car financing plan for electric vehicles to a maximum of Rs10 million with a five-year tenure. This replaces the previous limit of Rs3 million and three-year tenure available for ordinary cars. The policy also includes specific incentives for establishing charging station infrastructure.

Mandatory localization and safety standards

Manufacturers must now meet mandatory localization targets. A rewards system provides exporters a 5% duty drawback on local taxes and levies, with an additional 10% available as exports increase, provided they meet manufacturing and export targets.

The government also adopted 45 safety standards aligned with the United Nations’ WP.29 code. These standards apply to the safety of both manufactured and used vehicles.

Government rationale and stakeholder consultation

Information Minister Attaullah Tarar said on X that the government formulated the policy following consultations with stakeholders, analysis of technical data, and reviews of global models. Tarar said the initiative aims to foster innovation and job creation.

Haroon Akhtar Khan said the policy document involved significant preparation and Prime Minister Shehbaz Sharif dedicated a substantial amount of time to the effort. The Morning reported on October 31, 2026, that growth in the electric vehicle sector had already outpaced existing government policy.

Implementation details remain forthcoming

The government has not provided specific details regarding the mechanisms of the policy. Officials have also not released the timeline for implementation or the specific parameters for tariff changes.