KARACHI: A quiet tug-of-war is going on in the auto sector as a Chinese assembler and a local importer, who presents himself as an “automaker” despite having no production facility, is reportedly lobbying the Customs Classification Committee to reclassify Range-Extended Electric Vehicles (REEVs) as pure Battery Electric Vehicles (BEVs).

Industry insiders warn that the move seeks to secure zero-emission tax benefits for vehicles that still rely on internal combustion engines (ICE), a step that could distort market competition and drain billions of rupees from the national exchequer.

While REEVs use electric motors to drive the wheels, they carry an on-board petrol engine that acts as a generator to recharge the battery. Critics argue that because these vehicles consume fuel, produce tailpipe emissions and require traditional engine maintenance, they cannot be classified alongside genuine zero-emission BEVs.

Sources in the auto sector noted that global customs standards, including World Customs Organisation (WCO) explanatory notes, are clear and consistent that any vehicle equipped with an internal combustion engine is classified as a hybrid rather than a pure electric vehicle.

Auto industry warns of billion-rupee revenue loss if Range-Extended Electric Vehicles are reclassified as pure EVs

“The current lobbying is particularly surprising given that China — the world’s leader in electric mobility — strictly classifies REEVs as hybrids,” a source familiar with the matter said. “Chinese Customs documentation and goods declarations place these models firmly in the hybrid category. If the country of origin does not recognise them as BEVs, there is no technical basis for Pakistan to do so.” The Pakistan Automotive Man­ufacturers Association (PAMA) has formally raised the issue with the relevant authority, highlighting that misclassifying plug-in hybrids or REEVs as electric vehicles would result in significant losses to the exchequer.

Under current policy, BEVs enjoy significantly lower duties and taxes to encourage a shift away from fossil fuels. If REEVs are granted the same status, they would gain an artificial cost advantage over companies investing in true EV technology and charging infrastructure.

“Pakistan stands at a pivotal moment in its shift towards clean mobility,” said an assembler. “We cannot afford to derail that progress by bending internationally recognised rules for short-term commercial gain. REEVs may offer practical benefits to some consumers, but they are not zero-emission vehicles, and no global authority treats them as such.”

Experts warn that opening this loophole would lead to a surge in REEV imports purely for tax exploitation, undermining the New Energy Vehicle (NEV) policy’s goals of reducing oil dependency and cutting emissions.

Published in Dawn, December 31st, 2025