Colombo, July 29, 2025
Sri Lanka Customs has detained nearly 1,000 Chinese-made BYD Atto 3 electric vehicles across six consignments amid a dispute over the declared motor capacity. The vehicles were documented as having a 100 kilowatt (kW) motor, attracting an excise duty of around Rs. 2.4 million per unit. However, Customs suspects the actual motor output is 150 kW, which would mean a much higher duty of approximately Rs. 5.4 million per vehicle. This discrepancy suggests a potential tax shortfall of Rs. 3 to 4 million per car.
More than 1,000 units cleared under the 100 kW classification have already been sold to customers before the detainment. The issue has sparked parliamentary scrutiny, with opposition MP Mujibur Rahman pointing out the inconsistency where brand-new vehicles are taxed as 100 kW models while used ones are taxed at the higher 150 kW rate, despite BYD’s global website listing only the 150 kW variant. The Committee on Public Finance has called for testing by an internationally accredited laboratory to settle the dispute, as Customs awaits the importer’s cooperation to carry out detailed motor testing.
This controversy centers on whether software-based de-rating of motor capacity to 100 kW is valid under Sri Lanka’s excise duty rules, which were revised in February 2025 to tax EVs strictly based on motor output. John Keells CG Auto, BYD’s local agent, maintains that these vehicles are factory-rated 100 kW models intended for markets like Singapore and Nepal. Industry experts warn that Customs’ position risks setting a harmful precedent by redefining international standards, which could discourage investor confidence.
Buyers awaiting delivery are experiencing delays with no clear timeline, and if Customs rules the declarations inaccurate, importers may face retroactive duties and penalties, potentially passing costs to customers. This incident highlights gaps in Sri Lanka’s EV import regulations and the urgent need for clear, internationally aligned technical standards. The resolution of this case will be crucial for the stability and growth of Sri Lanka’s electric vehicle market.
