Efforts to accelerate the transition towards cleaner mobility have entered a new phase in Pakistan, although the proposed New Energy Vehicle (NEV) policy has raised concerns within the automotive industry, with stakeholders warning that contradictions within the framework could weaken both its environmental and industrial objectives.

The main controversy centres on the government's decision to place Plug-in Hybrid Electric Vehicles (PHEVs) in the same category as Battery Electric Vehicles (BEVs), despite significant differences between the two technologies, according to industry sources.

The draft five-year policy aims to accelerate Pakistan's transition towards cleaner transport, reduce dependence on imported fuel, and encourage investment in electric mobility. Under the framework, vehicles classified as "new energy vehicles" would receive incentives, including a one% sales tax and lower import duties. However, these concessions would apply not only to fully electric vehicles but also to plug-in hybrids that continue to rely partly on petrol engines.

Industry experts argue that the policy fails to clearly distinguish zero-emission technologies from hybrid systems that continue to use fossil fuels. They believe this could distort the market and discourage investment in fully electric vehicles. The contradiction is particularly evident in the treatment of different vehicle categories.

According to the draft policy, only fully electric motorcycles and rickshaws would qualify for NEV incentives. In contrast, passenger and commercial vehicles equipped with both electric motors and petrol engines would also receive the same benefits, provided they can travel at least 50 km on electric power alone.

Industry representatives state that this creates a double standard. If two- and three-wheelers must be fully electric to qualify for incentives, they question why larger vehicles powered partly by petrol should receive identical tax concessions.

Automotive sector stakeholders also fear that the proposed tax structure could damage local manufacturing and negatively affect Pakistan's vendor industry. They warn that this could make local production financially unviable and increase dependence on imports.

Some experts have suggested a separate tax structure under which fully electric vehicles would continue receiving the one% sales tax, while plug-in hybrids would face a higher rate of around 8% to 9% instead of receiving equal treatment.

The policy targets electric vehicles accounting for half of all new sales of motorcycles, rickshaws, and buses by 2030, while electric cars and trucks are expected to account for 30% of new sales. By 2040, the government aims for EVs to account for 90% of all new vehicle sales, with a fully zero-emission transport sector envisioned by 2060.