A dispute has emerged in Pakistan’s auto sector over reported efforts to have Range-Extended Electric Vehicles (REEVs) classified as pure Battery Electric Vehicles (BEVs), a move industry stakeholders warn would allow vehicles with petrol engines to qualify for zero-emission tax incentives, potentially distorting competition and causing significant revenue losses.
Dawn reported, citing industry sources as saying that a Chinese assembler and a local importer have approached the Customs Classification Committee to seek a reclassification of REEVs, which use electric motors for propulsion but rely on an onboard petrol engine to recharge the battery.
Auto sector representatives argue that granting BEV status to REEVs would allow vehicles that consume fuel and produce emissions to benefit from tax incentives reserved for zero-emission cars. They warned that such a change could result in significant revenue losses for the exchequer and create an uneven playing field for companies investing in fully electric technology.
REEVs differ from BEVs in that they retain an internal combustion engine, which functions as a generator. Industry experts say this places them in the hybrid category rather than among pure electric vehicles.
According to sector sources, international customs standards, including explanatory notes issued by the World Customs Organisation, classify any vehicle equipped with an internal combustion engine as a hybrid, regardless of how the wheels are driven.
The issue has been formally taken up by the Pakistan Automotive Manufacturers Association, which has cautioned authorities that misclassifying REEVs or plug-in hybrids as BEVs could lead to substantial tax leakage.
Industry representatives also pointed to practices in China, where customs authorities classify REEVs as hybrids rather than electric vehicles. They said this weakens the case for treating such models differently in Pakistan.
Under current policy, BEVs benefit from lower duties and taxes aimed at promoting a transition away from fossil fuels. Industry participants argue that extending the same incentives to REEVs would give them a cost advantage over fully electric vehicles and dilute the objectives of the government’s New Energy Vehicle policy.
Analysts warn that if the classification is altered, imports of REEVs could increase primarily to exploit tax concessions, potentially slowing progress toward reducing oil dependence and emissions.