Pakistan's EV Levy Funds the Right Vehicles. Two-Wheelers, Not Cars, Are Where the Oil Bill Is Won

In early August 2025 Pakistan's Economic Coordination Committee approved a five-year subsidy scheme to support the rollout of 116,000 electric motorcycles and 3,170 electric rickshaws and loaders, at an estimated cost of around Rs100 billion. It is funded by a New Energy Vehicle Adoption Levy on conventional vehicles, charged at 1 per cent of the value of local and imported vehicles up to 1,300cc, 2 per cent between 1,300cc and 1,800cc, and 3 per cent above 1,800cc.

The levy is expected to raise around Rs122 billion and, according to Dawn, also meets a condition of the IMF's USD 1.4 billion Resilience and Sustainability Facility. Both sit within the New Energy Vehicles Policy 2025-30, which aims for electric vehicles to make up 30 per cent of new vehicle sales by 2030. Interest-free loans of up to Rs200,000 for an e-bike and Rs880,000 for an e-rickshaw or loader, with the government contributing up to Rs50,000 and Rs200,000 respectively and covering the full markup.

Millions of workers, delivery riders and small traders depend on them, and they account for a large share of petrol consumption. A rider who travels several dozen kilometres a day spends a large share of daily income on petrol. The levy falls on new conventional vehicles, with higher rates for larger engines. The levy also raises the cost of conventional cars slightly relative to electric ones, nudging higher-income buyers towards hybrids and electric vehicles over time.

The ECC explicitly noted that electric vehicles could help utilise excess power for productive purposes. A dedicated, lower tariff for EV charging at certain hours would improve user economics and help the grid. Quotas for rickshaws and loaders are distributed by provincial population, with 10 per cent reserved for Balochistan, and applications are processed through a digital platform with electronic balloting if demand exceeds supply. The first phase is modest, at 40,000 e-bikes and 1,000 rickshaws and loaders.