ISLAMABAD — In a decisive push toward green mobility, the federal government has resolved to implement an Automotive Development Levy (ADL) ranging between 2% and 10% on both imported and locally assembled internal combustion engine (ICE) vehicles, according to reporting by The Express Tribune.
Under the newly outlined framework, conventional petrol and diesel vehicles will bear the brunt of the tax, with the minimum levy specifically reserved for public service transport and motor vehicles up to 2000cc. However, dispatches from The Express Tribune confirm that tractors, two- and three-wheelers, and smaller vehicles with engine capacities up to 1000cc will remain completely exempt from the surcharge, which also features a built-in sunset clause for the duration of the policy period.
The policy builds upon a remarkable surge in eco-friendly transport manufacturing. Production numbers cited by The Express Tribune reveal that output for electric bikes and rickshaws climbed from 21,656 units in fiscal year 2024 to 226,106 units by fiscal year 2026, while New Energy Vehicle (NEV) cars and SUVs jumped from a meager 42 units to 16,126 units. This growth was largely supported by a preferential 1% sales tax under the preceding framework, which kept NEV prices accessible to consumers.
Moving forward, the state intends to maintain the 1% sales tax exclusively for Battery Electric Vehicles (BEVs), whereas Range Extended Electric Vehicles (REEVs) and Plug-in Hybrid Electric Vehicles (PHEVs) will attract adjusted sales tax rates of 6% and 9% respectively. To qualify for these incentives under the NEV Policy 2025-30, vehicles must feature an external charging source and deliver a minimum pure battery range of 50 kilometers on a single charge, ensuring a structured phase-out of traditional hydrocarbon dependence.