The federal government has finalized the implementation of the Climate Support Levy (CSL) as part of Budget 2025–26, replacing the previously proposed NEV Adoption Levy. This policy directly targets internal combustion engine (ICE) and hybrid electric vehicles (HEVs), aiming to accelerate the adoption of cleaner transport technologies. The levy has yet to be notified via SRO by the Federal Board of Revenue, but it will be done soon. The CSL imposes a one-time tax on vehicles that produce tailpipe emissions. It applies to all new ICE and hybrid vehicles, while fully electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) that can travel over 50 kilometers on battery power are exempt. The levy rates are as follows: Revenue collected from the CSL will support the country’s New Energy Vehicle (NEV) policy, helping fund the transition to cleaner transportation systems. The government clarified that HEVs do not qualify for exemption as NEVs because they are not fully electric and cannot operate for long distances solely on battery power. As a result, popular hybrid models like the Toyota Corolla Cross HEV, Haval H6 HEV, and Kia Sportage Hybrid will also incur the new levy. Every major automaker in Pakistan—Suzuki, Toyota, Honda, Hyundai, Kia, Changan, and more—will see price hikes across various models based on engine size. For instance: These estimates assume the entire CSL cost is passed on to consumers. However, automakers may choose to absorb a portion of the increase. Imported ICE vehicles such as the Toyota Land Cruiser Prado and Land Cruiser 300 are also affected. The Prado’s price will rise by Rs. 1.998 million, and the Land Cruiser 300 will see a Rs. 3.6 million hike under the 3 percent levy rate. While the CSL is positioned as an environmental move, it increases the upfront cost of owning conventional vehicles in Pakistan. Consumers considering a new vehicle purchase may now be pushed toward EVs and PHEVs, which logically remain exempt from this new levy.