Budget 2026-27 is expected this Friday, June 12, and one major concern for car buyers is the possible price increase on cars.
We have already covered that all electrified vehicles, including HEVs and PHEVs, will become more expensive because the government plans to increase the sales tax on them.
However, there is still a question of how much EV prices could increase after the budget.
EV prices will indeed rise; there’s no exception, but the impact will not be the same for every EV. It will depend on whether the vehicle is locally assembled or imported.
We’ll clarify this matter below:
Two Different Tax Categories for EVs
The tax treatment of EVs is divided into two categories.
These categories are:
- Locally assembled EVs
- Imported CBU EVs
Both categories have different sales tax treatments, so the expected price impact will differ.
Tax on Locally Assembled EVs
At the moment, all locally assembled EVs are charged a 1% sales tax, while the standard sales tax rate on vehicles is 18%.
If this concession is removed in Budget 2026-27, the sales tax on locally assembled EVs will rise from 1% to 18%.
That means an additional 17% tax.
Therefore, locally assembled EVs will see the largest price increase compared to other powertrains, such as HEVs and PHEVs.
No company is likely to absorb such a large increase from its own margin, so most of this cost will be passed on to buyers.
Tax on Imported EVs
The tax on imported EVs is further divided into two categories, depending on the vehicle’s battery capacity.
Tax on Imported EVs Under 50 kWh
Imported EVs with a battery capacity of less than 50 kWh currently get 12.5% sales tax.
If the government moves these vehicles to the standard 18% sales tax rate, their tax will increase by 5.5%.
This category includes many mainstream EVs being sold in Pakistan, such as the BYD Atto 3, Dongfeng Vigo, MG Binguo EV, MG4, GuGo GiGi, and JMEV Elight.
So yes, these imported EVs will also become more expensive, but the increase will not be as sharp as locally assembled EVs.
Tax on Imported EVs Above 50 kWh
Imported EVs with a battery capacity of more than 50 kWh already fall under the standard 18% sales tax rate.
Since they are not receiving the lower 12.5% concession, they are not expected to see an additional increase in sales tax under this specific change.
As a conclusion, if an EV has a battery capacity of above 50 kwh, its price will not increase; they are exempted from this price hike.
Here’s the short conclusion table for quick reading:
| Vehicle Type | Current Tax | Proposed Tax in the Budget 2026-27 |
| Local EV | 1% | 18% |
| Imported EV <50 kWh | 12.5% | 18% |
| Imported EV >50 kWh | 18% | 18% |
REEVs to Follow Same Tax Treatment as EVs
In the government’s view, REEVs fall under the EV category, so the same sales tax changes will apply to them.
Currently, there are two REEVs in the market:
- Deepal S05
- Forthing Friday
The Deepal S05 is the only locally assembled REEV in Pakistan. Since it currently benefits from the 1% sales tax concession, its tax could also rise from 1% to 18%, resulting in a 17% tax increase.
On the other hand, the Forthing Friday, which is an imported CBU REEV, currently falls under the 12.5% sales tax category because its battery capacity is less than 50 kwh. Its sales tax will also increase to 18%, meaning a 5.5% increase.
One More Thing to Note
All EVs being sold in Pakistan are imported, except the Honri Ve, which is the only locally assembled EV available in the country.
So, for imported EVs, the price increase depends on battery size. If an EV has a battery capacity below 50 kWh, it will see a price increase because its current concession will end, and sales tax will rise from 12.5% to the standard 18%.
However, imported EVs with batteries larger than 50 kWh are not expected to see a price increase because they are already subject to an 18% sales tax.
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