KARACHI: A long-standing dispute over how to classify a new generation of electric vehicles with petrol generators has been resolved, with Pakistani customs authorities ruling that these vehicles should be treated as electric vehicles rather than hybrids.
The Classification Committee of the Collectorate of Customs Appraisement (East), Karachi issued Public Notice No. 02/2026 on February 2, 2026, determining the correct classification for Range-Extended Electric Vehicles (REEVs) imported by companies like Master Changan Motors and Capital Smart Motors.
Range-Extended Electric Vehicles are a relatively new technology. Unlike conventional hybrids, these vehicles are always driven by an electric motor. They come with a small petrol engine, but that engine never powers the wheels directly. Instead, the petrol engine only acts as a generator, kicking in when the battery runs low to recharge it, much like carrying a small generator in your car. The wheels are turned exclusively by electricity at all times.
The controversy arose because these vehicles contain both an electric motor and a petrol engine. Some argued they should be classified as plug-in hybrid electric vehicles, while others said they qualified as vehicles with only electric motor for propulsion. This distinction matters because different tariff treatments and tax concessions apply to different classifications.
After examining technical specifications and consulting international practices, the Classification Committee determined that since the petrol engine cannot mechanically drive the wheels, having no physical connection to the transmission or axles, it does not qualify as a motor for propulsion. Therefore, these vehicles fall under the subheading that covers vehicles propelled exclusively by electric motors.
The decision drew support from rulings in other countries. The United States classified the Nissan Kicks E-Power, which uses identical technology, under its electric vehicle tariff code in 2021. France and Hungary issued similar rulings in 2024 and 2025 for vehicles with range-extender technology, and the European Union issued implementing regulations confirming this approach.
Pakistan’s customs authorities referred the matter to the World Customs Organization in Brussels for guidance. The WCO confirmed that under the current Harmonized System, such vehicles belong under the electric vehicle classification. Interestingly, the WCO noted that the 2028 amendment package to the Harmonized System, effective from January 1, 2028, will introduce a new dedicated subheading specifically for vehicles with an internal combustion engine used solely for charging batteries. This confirms the current interpretation while creating more detailed categories in the future.
For now, Range-Extended Electric Vehicles imported into Pakistan will be classified alongside fully electric vehicles rather than hybrids. The Committee emphasized that this ruling applies specifically to vehicles matching the described technical specifications where the internal combustion engine has no mechanical linkage to the wheels and serves only to charge the battery.
The notice clarifies that questions about tax concessions or incentives associated with particular tariff codes fall outside the Committee’s jurisdiction, as their mandate is strictly limited to determining correct tariff classification. All customs field formations have been directed to follow this ruling for uniform assessment, with any appeals to be filed with the Federal Board of Revenue.
The Public Notice was issued by Muzaffar Rizvi, Manager at the Federation of Pakistan Chambers of Commerce and Industry, for information to trade bodies and stakeholders.