Pakistan’s Auto Vendors Fear New EV Policy Could Hurt Local Manufacturing Industry

Pakistan’s proposed New Energy Vehicle (NEV) policy is triggering concern among local auto parts manufacturers, who warn that broad incentives for imported plug-in hybrid vehicles could damage the country’s domestic automotive industry and undermine localization efforts.

Under the draft framework, the government is considering major fiscal concessions for both fully electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), including a proposed 1% sales tax, lower import duties, and relaxed taxation on certain components.

Industry stakeholders argue that placing hybrids and fully electric vehicles in the same preferential category could create a major price advantage for imported PHEVs, potentially making them significantly cheaper than conventional petrol-powered vehicles as well as locally assembled electric cars.

Industry representatives say the current policy framework may distort the market by encouraging consumers to shift rapidly toward imported hybrid vehicles instead of fully electric or locally manufactured alternatives.

Manufacturers fear that if plug-in hybrids become substantially cheaper than conventional petrol vehicles, consumers may rapidly shift toward imported models, reducing demand for locally produced parts and traditional vehicle platforms.

Vendor representatives argue that Pakistan’s automotive supply chain, built over decades through billions of rupees in investment, could face severe disruption if localization requirements are not strengthened alongside EV incentives.

The concerns come as Pakistan attempts to position itself for a broader electric mobility transition aimed at reducing oil imports and promoting sustainable transportation.

The government’s draft policy outlines ambitious electrification targets, including EVs accounting for 50% of new sales in two- and three-wheelers by 2030 and a largely zero-emission transport fleet by 2060.

Industry experts say the challenge for policymakers lies in balancing rapid EV adoption with protection of local manufacturing, employment, and long-term industrial investment.

The debate is expected to remain central to upcoming discussions on Pakistan’s Auto Policy 2026-31 and the future direction of the country’s automotive sector.

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