Pakistan's New Auto Policy Aims for Cheaper Cars and EV Incentives

Nov 8, 2026

70 min

Nov 8, 2026 02:31

Pakistan’s new auto policy: Will cars get cheaper? EV tax cuts, Rs10m loans explained

## Overview of the New Auto Policy

Pakistan has introduced a new automobile policy for 2026-31, aiming to make cars more affordable and boost the electric vehicle (EV) market. The policy includes tax cuts for EVs, increased financing options, and a focus on local manufacturing and exports.

## Tax Reductions and Financing

The government plans to reduce import duties on cars and components over the next five years, which is expected to lower vehicle prices. For EVs, a new tax structure proposes a 1% sales tax on fully electric vehicles, with higher rates for hybrids. Additionally, the financing limit for EVs could rise to Rs10 million, with extended repayment terms.

## Encouraging Local Manufacturing and Exports

The policy targets $6 billion in auto exports by 2031, with incentives for local manufacturing and export growth. Automakers will face new localization and export targets, with penalties for non-compliance.

## Infrastructure and Consumer Protections

To support EV adoption, the government plans to reduce taxes on charging equipment and provide financial support for charging stations. New rules will also limit advance payments on car bookings to 20% of the vehicle's price, aiming to protect consumers from unfair practices.

## Implementation and Challenges

While the policy outlines ambitious goals, it requires formal approvals, including from the IMF. The timeline for implementation and the impact on car prices remain uncertain, as the government works to finalize the details.

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