In a move that has sent shockwaves through Pakistan’s nascent electric vehicle (EV) sector, local electric vehicle and motor bike manufacturers have urgently appealed to the government to reconsider its decision to drastically increase the sales tax on EV bikes. The tax has been raised from a promotional 1% to a crippling 18%, a change the industry warns could stall the nation’s clean mobility transition before it even leaves the starting block.

The Sudden U-Turn: 1% to 18%
The industry’s plea comes after the recent tax adjustment, which reverses a core incentive of Pakistan’s original National Electric Vehicle Policy (NEVP). This policy was designed to offer significant tax relief—including the minimal 1% sales tax—to encourage the shift towards electric two-wheelers. The goal was dual: to combat severe environmental pollution and reduce the country’s massive oil import bill.

On Tuesday, local manufacturers voiced their “serious concerns” over the hike, which they argue directly contravenes the government’s own stated objectives.

“This abrupt 17% increase will inevitably be passed on to the end consumer, making EV bikes significantly more expensive and less affordable than their traditional petrol counterparts,” stated a representative from the local EV bike manufacturing industry.

Why the Tax Hike Is a Threat
The increase is seen as a major threat to the viability and growth of the local electric two-wheeler market for several key reasons:

Affordability Crisis: The core attraction of EV bikes for the average Pakistani commuter is their low running cost and, initially, their relatively competitive upfront price thanks to tax incentives. The 18% tax eliminates this crucial price advantage, pushing EV bikes out of reach for middle and low-income buyers.

Stalling the Green Agenda: By making electric options expensive, the government risks discouraging the very technology needed to meet its climate goals and international commitments, such as the Nationally Determined Contributions (NDCs) aimed at reducing carbon emissions.

Discouraging Local Investment: Local manufacturers have invested capital based on the policy promise of a sustained 1% tax rate. This sudden regulatory uncertainty threatens current investments and will deter future foreign and local players from setting up large-scale assembly and manufacturing units.

Higher Import Bill: Ironically, slowing the adoption of EV bikes keeps the country reliant on fuel-powered vehicles, which will ultimately increase the foreign exchange expenditure on imported petroleum products—the very problem the NEVP was meant to solve.

The Industry’s Appeal: A Path Forward
The manufacturers are not simply asking for a reversal; they are demanding a commitment to the long-term vision. They urge the government to:

Restore the 1% Sales Tax: Revert to the original incentive structure outlined in the EV policy to ensure affordability and market development.

Ensure Policy Consistency: Provide a stable, long-term policy framework to build investor confidence and facilitate local production.

Promote Localization: Continue to offer targeted incentives that specifically support the local manufacturing of key EV components, such as batteries and motors, which will create jobs and truly benefit the economy.

The success of the EV transition in Pakistan hinges on making the technology accessible to the masses. The current tax hike risks turning a promising start into a full stop. The government must heed the industry’s call to ensure that the dream of a green, energy-independent Pakistan remains on the road.