The recent increase in general sales tax (GST) on hybrid vehicles to 25% has led to significant price hikes for electrified vehicles in Pakistan.Local assemblers like Indus Motor Company and Honda Atlas Cars Limited have raised prices by over Rs1.3 million, with some models now costing up to Rs10.3 million.This surge in costs may deter demand for hybrid vehicles, undermining the government's goal to promote fuel-efficient options.

The auto policy 2026-31, which was supposed to take effect on July 1, 2026, remains unannounced, leaving manufacturers uncertain about future regulations.

Despite extended incentives for electric vehicle imports until June 30, 2027, assemblers are hesitant to adjust pricing without clarity on the new policy.

The government's tariff rationalization plan has reduced customs duties, but local manufacturers argue these cuts do not benefit them due to existing concessionary rates.The situation highlights the tension between fiscal policy and the automotive industry's response to tax changes.