Amidst the International Monetary Fund’s concerns about the government’s incentivising policy to promote environment-friendly automobiles, manufacturers seemingly compete to produce hybrid electric vehicles (HEVs) and plug-in hybrids (PHEVs), diverging from the global trend towards pure electric vehicles. Auto stakeholders appear concerned over reservations shown by the IMF on tax relief proposed in the New Electric Vehicle Policy (NEVP) 2025-30 when Pakistan gears up for an EV revolution to come on a par with developing countries. The IMF reportedly asked the government not to incentivise the EV revolution by reducing taxes and tariffs. Sources said that the Fund believes that the EV sector should be given some subsidy separately instead of reducing taxes and duties on EVs to avoid any policy distortion. Uncertainty has gripped the auto sector after the IMF expressed reservations over huge incentives offered in the NEVP and recommended a tariff rationalisation plan. However, the NEVP draft has ignored HEVs and mainly focused on incentivising battery electric vehicles (BEVs) and PHEVs. After IMF’s reservations, it is not clear whether the NEVP draft is still intact or held in abeyance. Besides, according to the draft of the National Tariff Policy (NTP) 2025-30 and subsequent discussion with the IMF, the overall tariff structure will gradually be rationalised to 20 per cent on the end product. The policy also proposes phasing out additional customs duties and regulatory duties. Some assemblers express surprise that discussions with the IMF on tariff rationalisation are going on despite the Auto Industry Development and Export Plan (AIDEP) 2021-2026, which will expire in June 2026. Dewan Farooqui Motors Ltd Chief Executive Waseemul Haq Ansari said as long as the charging infrastructure is in the developing stage and not supportive, assemblers will be introducing PHEV/HEV and EVs with slow charging options. As soon as the fast-charging stations are built, battery electric vehicle volumes will significantly increase. As the world, especially China and Europe, are aggressively shifting towards EVs, the government is also focusing on adapting a complete eco-system, including the local manufacturing of solar panels, battery energy storage systems (BESS) and battery electric vehicles. He said the government is expected to announce the comprehensive EV policy soon. Globally, the market share for Internal Combustion Engine (ICE) vehicles is shifting towards PHEV and EV and BEV will gradually capture significant volume. Waseem hopes those who are buying HEVs and PHEVs will finally shift to pure EV in future. However, he said the under-discussion tariff rationalisation plan to finalise the EV policy has caused anxiety among the assemblers, and a lot of careful study is required to follow their future projects as the new tariff structure will come into force from July 2026 as there is no clear information about it. Auto sector players must see whether the new tariff plan will maintain the current difference between the completely knocked-down kits (CKD) and completely built-up (CBU) units. Reduced duty on CKD will encourage assemblers to bring new models, but in case CBU duty is also reduced it will be difficult for the assemblers to survive as the market will be flooded with new and old imported models, thus putting the local assembly of vehicles in danger, CEO DFML said. After the highest-ever US tariffs on China, he said Pakistan needs to immediately establish a lithium-ion battery manufacturing facility to lead towards exporting locally assembled electric vehicles to other countries. As the electrical components cost around 50pc of the total vehicle, he added that Chinese companies are studying the possibility of transferring their manufacturing facility to Pakistan to export their products globally subject to the attractive tariff structure. On the expectation that more Chinese EV assemblers will move to other countries, including Pakistan, he said, “It appears that in the current uncertain conditions, Chinese companies will only prefer CBU operations in Pakistan subject to the attractive tariff structure.” Auto part marker and exporter Mashood Ali Khan believed that the NEVP policy is continuing, and some OEMs have resumed manufacturing operations for Hybrids and EVs. Japanese automakers in Pakistan are bringing HEVs, while Chinese companies only focus on EVs. Under the present economic scenario, HEVs and EVs in local assembly operations may lead towards localisation and affordable prices for the broad population, he hoped. Mashood said more Chinese EVs assemblers may move to other countries like Pakistan to avoid disruption in export after the highest tariff imposed on China by the USA. Pakistan’s EV market is still in its infancy, constituting a negligible portion of the country’s total vehicle population due to several challenges, including high upfront costs, limited charging infrastructure, and a lack of consumer awareness, he said. Sohail Usman, director at Regal Automobiles, which assembles the SERES EV SUV, said consumers’ confidence in pure EVs is missing due to a lack of charging stations and infrastructure. As a result, they rely on HEVs and PHEVs. “The future is only EVs and PHEVs. Sales of fossil fuel vehicles will go down automatically when charging stations will fully develop,” he said. He believed the NEVP 2025-30 is being fine-tuned and may be unveiled in the budget 2025-26. He said after the imposition of high import tariffs by the US, more Chinese EV assemblers would go to other countries, inc-l-uding Pakistan, to keep their production and exports active. Published in Dawn, April 27th, 2025