Pakistan's tax incentives for New Energy Vehicles (NEVs) could result in approximately PKR 150 billion (US$ 542 million) in annual revenue forgone by the government as NEV sales increase, according to Abdul Rehman, former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers.

Rehman estimated that annual NEV sales could reach 50,000 units, with tax and duty concessions averaging approximately PKR 3 million per vehicle. Based on these assumptions, the value of the revenue concession would approach PKR 150 billion annually.

He questioned whether the scale of the incentive was proportionate to the number of people likely to benefit from it. The government is providing tax concessions to NEVs, including a flat 1% sales tax regime, while also seeking additional revenue from other areas of the economy, he said.

Rehman said the transition to electric mobility remained relevant for Pakistan because it could reduce fuel imports and emissions while supporting the development of a domestic EV industry. He said government support should also consider broader economic and social outcomes.

He suggested placing greater emphasis on electric buses, motorcycles and rickshaws, charging infrastructure, public transport, and local production of batteries and components. Such measures, he said, could extend the benefits of the electric vehicle transition beyond buyers of relatively expensive private cars.

The estimated value of the concession can also be compared with allocations for other sectors. Rehman pointed to the Higher Education Commission's approximately PKR 35 billion allocation for fiscal year 2025-26, saying the estimated annual NEV tax concession would be more than four times that amount.

He said the government should attach clear requirements to EV incentives if industrial development is an objective. These could include commitments related to localisation, investment and employment. If wider adoption of electric mobility is a priority, incentives could also target consumers who rely on motorcycles, rickshaws and public transport.

Rehman said the issue was not whether Pakistan should support electric vehicles, but how public resources should be allocated to achieve economic and social returns. He said the scale and design of the current incentives warranted a broader assessment of the policy's costs and benefits.