Web Desk: Hybrid vehicle market faces higher prices and uncertainty after the government ended a reduced sales tax concession, shifting locally assembled hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) to the standard 25% sales tax regime from July 1.
The move followed the expiration of the previous tax relief package on June 30, 2026, leaving automakers and buyers awaiting clarity under the government’s upcoming auto policy.
Under the previous concession, locally assembled hybrid vehicles enjoyed lower sales tax rates depending on engine capacity. Vehicles with smaller engines were taxed at 8.5%, while larger hybrids faced a 12.75% rate.
However, after the concession expired, hybrid vehicles were moved into the regular sales tax structure applicable under existing tax rules.
According to officials, the change was implemented after hybrid vehicles were shifted to Schedule II of SRO 297(I)/2023, bringing them under the 25% sales tax category.
Previous and current sales tax rates
| Vehicle Category | Previous Sales Tax Rate | Current Sales Tax Rate |
|---|---|---|
| Hybrid vehicles up to 1800cc | 8.5% | 25% |
| Hybrid vehicles 1800cc and above | 12.75% | 25% |
Meanwhile, several automobile manufacturers have reportedly paused issuing invoices for hybrid models because of uncertainty over the applicable tax rate.
Industry sources said companies are waiting for the new auto policy, which is expected to clarify the future taxation structure for hybrid vehicles.
The delay has created uncertainty for customers who had planned to purchase hybrid models before the revised tax measures took effect.
If manufacturers fully transfer the additional tax burden to consumers, prices of hybrid vehicles could increase significantly, with some models expected to become more expensive by more than Rs 2.5 million.
Estimated impact on selected HEV models:
| Model | Current Ex-factory Price (Rs) | Expected Price at 25% GST (Rs) | Estimated Increase (Rs) |
|---|---|---|---|
| Haval H6 HEV | 11,523,015 | 13,275,000 | 1,751,985 |
| Haval Jolion | 9,116,216 | 10,503,000 | 1,386,784 |
| Toyota Corolla Cross 1.8 HEV | 8,535,000 | 9,833,000 | 1,298,000 |
| Honda HR-V e: HEV | 8,999,000 | 10,368,000 | 1,369,000 |
| MG HS Hybrid+ | 9,499,000 | 10,944,000 | 1,445,000 |
| Hyundai Tucson Hybrid Signature | 12,240,000 | 14,101,000 | 1,861,000 |
| Kia Sorento 1.6T HEV AWD | 16,699,000 | 19,238,000 | 2,539,000 |
| Hyundai Palisade Comfort | 22,999,000 | 25,498,000 | 2,499,000 |
Plug-in hybrid vehicles are expected to experience a similar price impact if manufacturers apply the full 25% sales tax increase.
Several popular PHEV models could see price jumps exceeding Rs 2 million.
Estimated impact on selected PHEV models
| Model | Current Ex-factory Price (Rs) | Expected Price at 25% GST (Rs) | Estimated Increase (Rs) |
|---|---|---|---|
| Jetour T2 | 12,795,000 | 14,741,000 | 1,946,000 |
| Haval H6 PHEV | 12,895,000 | 14,856,000 | 1,961,000 |
| MG HS Super Hybrid | 10,199,000 | 11,750,000 | 1,551,000 |
| Jaecoo J7 | 10,499,000 | 12,096,000 | 1,597,000 |
| Chery Tiggo 7 PHEV | 9,499,000 | 10,944,000 | 1,445,000 |
| Chery Tiggo 9 PHEV | 13,694,000 | 15,776,000 | 2,082,000 |
| GWM Tank 500 PHEV | 22,500,000 | 24,945,000 | 2,445,000 |
The tax adjustment comes as several incentives for the electric vehicle sector also expired at the end of the 2025-26 fiscal year.
The previous package included reduced taxes on imported components and completely knocked down (CKD) kits used by local electric vehicle manufacturers.
The concession covered certain electric cars and sport utility vehicles with battery capacities of up to 50 kilowatt-hours, along with light commercial vehicles using batteries of up to 150 kilowatt-hours.
Until June 30, locally manufactured or assembled four-wheel electric vehicles in these categories benefited from a reduced sales tax rate of 1%.
Earlier, government officials had suggested that locally manufactured hybrid vehicles could continue receiving preferential treatment, while imported electric vehicles would face higher taxes.
However, the final tax measures approved under the Finance Bill 2026-27 introduced the new 25% sales tax structure effective from July 1.
The automobile industry is now looking toward the upcoming auto policy for further guidance on taxation, incentives and long-term support for hybrid and electric vehicles in Pakistan.
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