ISLAMABAD — According to dispatches from The Express Tribune, the federal government has resolved to implement an Automotive Development Levy (ADL) ranging from 2% to 10% on both imported and locally assembled internal combustion engine (ICE) vehicles. This policy shift is engineered to accelerate the national adoption of electric vehicles, utilizing clear vehicle classifications while ensuring that the minimum levy burden falls on public service vehicles and engine capacities up to 2000cc.
The regulatory framework outlines specific exemptions to protect smaller transport segments. Reporting indicates that the ADL will not affect imported or locally manufactured two- and three-wheelers, tractors, and conventional automobiles with engine displacements up to 1000cc. Furthermore, the levy is designed with a formal sunset clause to remain active strictly for the duration of the designated policy period.
This strategic policy initiative arrives on the heels of notable growth within the domestic green manufacturing sector. Data highlights that the production of electric bikes and rickshaws surged from 21,656 units in fiscal year 2024 to 226,106 units by fiscal year 2026, while New Energy Vehicle (NEV) cars and SUVs expanded from a mere 42 units to 16,126 units. Because NEV pricing remained accessible largely due to a reduced 1% sales tax under the preceding automotive policy, authorities intend to preserve this momentum.
Looking ahead, the preferential tax structure will adapt according to vehicle propulsion types under the NEV Policy 2025-30. Battery electric vehicles (BEVs) will continue to benefit from a 1% sales tax, whereas range-extended electric vehicles (REEVs) and plug-in hybrid electric vehicles (PHEVs) will be subjected to 6% and 9% sales tax rates, respectively. To qualify for these incentives, NEVs must feature an external charging capability and guarantee a minimum operational range of 50 kilometers on a single battery charge under standard conditions, thereby facilitating a structured transition toward pure battery-powered mobility.