As the global push for sustainable transportation gains momentum, Bangladesh is also heading towards an electric vehicle (EV) future. Given the Climate Change Mitigation Act, the government has been promoting the creation of framework conditions for the fast adoption of electric vehicles (EVs). Bangladesh intends to unconditionally reduce 3.39 million tonnes of carbon dioxide (CO2) emissions from road transport by 2030, as stated in its Nationally Determined Contributions (NDCs). The goal is to achieve 30% EV penetration by 2030.
Energy conversion from fossil fuels serves different purposes, primarily focusing on power plants, industrial applications, and household cooking. In the transportation sector, adapting to CNG has played a significant role in reducing fossil fuel usage. However, we still fall far behind the global practice of fossil fuel reduction. Electric vehicles or EVs, thereby, hold a significant potential to address the power overcapacity issue and comprise a sustainable solution. According to the Bangladesh Power Development Board, the country only consumes about 40% of its power generation capability. The deployment of electric and hybrid vehicles in the country has the potential to reduce demand for fossil fuels while boosting power generation prices.
The Dhaka North and South City Corporations have released a climate action plan envisioning a future in which 95% of private cars and 100% of public transportation are electric by 2050.
A deeper review of some SDG targets is required to see whether the government’s noble aim is accomplished. Bangladesh’s total energy consumption in FY 2019-20 was 42.0 MTOe, according to the Sustainable and Renewable Energy Development Authority (SREDA) statistics from publicly accessible national data. The transportation sector accounted for 4.3 MTOe of total energy consumption, with 80% coming from petroleum products and the remaining 20% from natural gas, mostly CNG. 7.80 million metric tonnes of petroleum oil were utilised in the fiscal year 2023-24, with 58.21% used for communication and transportation, according to the Bangladesh Petroleum Corporation’s (BPC) Annual Report 2022-23.
The transportation industry has been under pressure to rise due to a number of factors, including an increase in working populations in metropolitan areas, improved affordability as a result of the nation’s shift to middle-class status, and increased economic activity. Naturally, there is a sharp increase in demand for energy consumption. Unfortunately, demand has historically placed a great deal of reliance on fossil fuels, and this trend has continued to threaten our future and present. Furthermore, imported fossil fuels, such as diesel and petrol, can be costly due to fluctuating costs and the requirement to pay in foreign currency.
Dhaka North and South City Corporations (DNCC and DSCC) have released Dhaka’s first Paris Agreement-aligned climate action plans. The proposals will act as a road map for Dhaka North and Dhaka South to achieve carbon neutrality by 2050, in line with Bangladesh’s National Commitment to Reduce Conditional Emissions. Both city corporations intend to reduce emissions by 14.9% by 2030 and 33.8% by 2040, relative to the fiscal year 2021-22 baseline. The final goal is a 70.6% decrease by 2050. The action plan aims to electrify Dhaka’s public transport system by 2040. Private car ownership will shift dramatically, with 95% becoming electric by 2050. By 2030, 10% of private automobiles will be electric, rising to 50% by 2040. Furthermore, 80% of public transit will be electrified by 2030, increasing to 100% by 2040. Even if the roadmap is promising, it will be challenging to carry out the entire plan in the allotted 25 years.
However, automakers predict that as EV technology advances and government support increases, market adoption will rise dramatically.
Making the switch to electric vehicles is also a beneficial business and environmental initiative. The range of EVs will readily cover the commute distance given the geography of our nation.
Is Our Infrastructure Ready for an EV Ecosystem?
Despite the opportunities, the required infrastructure is absent in Bangladesh, particularly in the capital Dhaka. The market for electric cars in Bangladesh is relatively small. People’s delayed adoption of electric vehicles may be explained by a number of issues, such as high costs, a lack of incentives, and inadequate charging infrastructure. The lack of adequate infrastructure in Bangladesh is a major obstacle to the use of electric vehicles. Bangladesh currently has four designated EV charging stations. There are 34 EVs with government registration at the moment, and that number is rising. These solar-powered stations also need more time to charge and are not appropriate for heavy commercial use.
In order to create the “Enabling Electric Vehicle Adoption in the Framework of Sustainable Energy-Based Transportation” initiative, the Roads and Highways Department, BRTA, and BRTC worked together. It is possible that the original project scope included the installation of charging stations inside city limits. The amount of batteries needed for the charging stations will be established, and a system for recycling and getting rid of used batteries will be created. In addition to negotiating a $10 million project to construct charging stations with a Korean company, the BRTA is working on programs to purchase electric automobiles.
The proposal to transform Bangladesh into an energy-efficient automobile center includes incentives such as a 10-year tax break for investments in energy-efficient vehicle assembly, the elimination of subsidies, and the establishment of charging stations. Meanwhile, BRTC is pursuing five electric vehicle projects for BDT 3,450 crore. The proposals call for 100 double-decker AC buses, 200 single-decker AC buses, and 55 charging stations.
Fifteen solar charging stations for three-wheelers have already been constructed. The WALTON Automobile Project additionally supplied Bangladesh with its first electric bus. Within the 2.5 km bounds of the Walton Factory, employees will be bussed from the entrance to their designated locations. Additionally, there is a fast-charging bus station located within the electronics facility. Walton asserts that this would significantly improve Bangladesh’s public transportation infrastructure. The business indicated an interest in collaborating with government agencies and supporting initiatives like Dhaka’s Integrated Multimodal Transportation System.
The EV Market Overview
Four-Wheeler Hybrid: Hybrid car demand has surged recently as operating costs have decreased. Sales increased dramatically until the COVID-19 pandemic in 2020. In 2018, sales of hybrid four-wheelers increased by 900%. Toyota dominates the Bangladeshi four-wheeler hybrid vehicle industry with the Toyota Aqua (Toyota Prius-C), a cost-effective full-hybrid vehicle (FHV). Toyota Aqua can go 33-38 km per litre of fuel, outperforming petrol cars. According to one of Bangladesh’s central automotive importers/distributors and top automobile shops, a standard 1600cc gasoline-powered vehicle may go 7-8 kilometres per litre. However, a hybrid car with comparable specs can travel 15-16 kilometres per litre.
Four-Wheeler EVs: The four-wheeler electric vehicle market in Bangladesh is almost non-existent. However, the market will undoubtedly go up as the government anticipates significant expenditures. Nitol-Niloy’s ‘Suvare’ was supposed to be the first domestically built four-wheeler EV to join the market before being halted by the pandemic. The project, expected to cost BDT 3.5 billion, is being implemented in Pabna and Bogura. Furthermore, Bangladesh Auto Industries Ltd. (BDAuto) has spent $200 million in the nation to produce electric SUVs, sedans, hatchbacks, and two- and three-wheelers.
Three-Wheeler EVs: Although the four-wheeler EV business in Bangladesh has yet to blossom, EVs, together with motorised rickshaws and simple cycles, dominate the three-wheeler sector. The overall number of simple bikes and motorised rickshaws is 1 million and 0.24 million, respectively, providing transportation for 250 million people in the country. Given the country’s socioeconomic setting, these cars are a suitable means of transportation because of their low cost. Furthermore, sharing trips is a unique feature that increases the popularity of this mode of transportation by lowering per-person fee expenses. The popularity of three-wheelers in Bangladesh has drawn both international and indigenous investment. Furthermore, local automaker BDAuto will produce three-wheeler EVs for domestic and global markets.
Two-Wheeler EVs: Electric motorcycles, like three- and four-wheelers, are gaining popularity among Bangladeshi customers due to decreased fuel costs and increased convenience. Local powerhouse Walton just announced the launch of their e-bike portfolio. According to the company, the vehicles would be very cost-efficient, with running costs per km ranging from 10-15 paisa. Furthermore, the bikes are predicted to cost less than ordinary two-wheelers. It will only cost 7-8 Taka to charge the automobiles completely. Aside from Walton, various local manufacturers, including Runner, Akij, and Duranta, want to distribute domestically produced two-wheeler EVs in the Bangladesh market. The adoption of electric cars in Bangladesh is relatively modest, but there should be some progress with projects underway.
The Tax Situation
The government regulates the automotive sector in Bangladesh by levying hefty import duties on automobiles, which can exceed 827%. The tax rate is proportional to the vehicle’s cylinder capacity (CC). Compared to cars with comparable cylinder capacity, gasoline-powered Completely Built-Up (CBU) vehicles are taxed more significantly. CBU autos are pre-assembled and ready to sell. Gas-powered Completely Knocked Down (CKD) autos imported in parts and assembled are taxed less than CBU gasoline vehicles. The tax rates for hybrid and electric CBU vehicles are the lowest, making them a tempting option for customers by lowering the effective price.
Tariffs on electric use determined by the Bangladesh Energy Regulatory Commission are essential for the adoption of electric and hybrid vehicles in Bangladesh. These rates decide whether electric and hybrid vehicles are cost-effective. There are various EV charging methods; the key distinction is the input voltage level. The DC Fast Charging Stations are excellent for commercial charging using direct current. Commercial DC Fast Charging in Bangladesh is yet to be introduced. The present modest fleet of autos is now managed via residential charging arrangements. Although high-voltage electrical connections can be extended to homes for EV charging, users must bear the price of installation. Furthermore, electricity usage is taxed at commercial rates, which are much higher than residential rates.
The Slow Expansion of the EV Ecosystem
According to the Bangladesh Road Transport Authority (BRTA), 60,58,999 automobiles have been registered till April 2024. However, just 400 electric vehicles have been registered thus far. This is merely a tiny proportion of the total percentage. More EV penetration is required to meet the target of 30% adoption by 2030. Government action is required to minimise the initial cost of EVs. At the same time, policy adjustments are needed. The import tariff rate for electric cars is 89%, with a 20% extra charge. The NBR implemented a carbon tax or environmental penalty on automobile owners with multiple vehicles. The action requires a vehicle owner with an engine size of up to 1,500cc (75kW) to pay a Tk 25,000 ecological premium. For an automobile with an engine capacity of 1,501cc to 2,000cc, or more than 75kW to 100kW, the cost is doubled to Tk 50,000.
Additionally, Subsection 4.1.1 of the Electronic Vehicle Charging Guidelines (2022) requires EV owners to pay charging costs based on home retail tariff rates. Given the rapid advancement of EV technology and the global push for sustainable transportation, the transition to EVs could occur spontaneously by mid-century, with minimum assistance from local governments.
Plans for the Future
The Bangladeshi government has developed a new automotive strategy to introduce more energy-efficient vehicles into the ecosystem. The government plans to increase the percentage of EVs to at least 15% of all registered vehicles by 2030. The policy includes:
Promoting EEV Assembly Throughout the Country: The draft Automobile Industry Development Policy-2020 includes a tax break or holiday for investments in energy-efficient vehicle assembly plants.
Tax Breaks for stakeholders: Introduce a tax incentive scheme for assemblers and parts/components manufacturers to stimulate in-house or outsourced R&D activities and acquisition of new technologies in electric vehicles, high-efficiency batteries, power-charging stations, low emissions, and fuel-saving.
Environment and Safety: The government will allow EV imports with prior certification of the importer’s environmental protection and safety procedures for recycling and disposing of lithium-ion batteries used in vehicles that contain radioactive materials and certain elements that are hazardous to human health. In addition, the government will simplify the procedure of re-exporting lithium-ion batteries to a third country for recycling.
Fitness of Automobiles: The proposed policy also includes a strategy for strengthening vehicles and modernising BRTA inspection facilities so that fitness tests can properly determine if safety, quality, and pollution levels satisfy the required standards.
The Next Step for Bangladesh
The government of Bangladesh presented an automotive plan in 2020 that includes incentives for business partners in an effort to hasten the adoption of electric and hybrid vehicles in the country. The proposed strategy contains provisions to reduce import tariffs and indirect taxes like as VAT and AIT, as well as tax advantages that encourage local assembly and production of electric automobiles. Offering discounts or financial incentives at toll booths and charging stations is another way the government might persuade citizens to purchase electric and hybrid vehicles. As other developed countries have done, regulators can also apply green incentives to zero-emission vehicles.
The ecosystem for electric vehicles in Bangladesh is still in the stages of development. Rapid infrastructural development is necessary for Bangladesh to meet its 2030 goal of 15% electric car usage. Installing charging stations at the same level as petrol stations is required. Currently, 759 petrol stations in Bangladesh serve the nation’s fossil fuel-powered automobiles. These requirements must be met or exceeded for fossil fuel cars to be replaced by infrastructure.
Technological advancement is another key step for mainstream EV adoption in Bangladesh. Local manufacturing and assembly can further reduce vehicle costs. Lowering the cost of electric and hybrid vehicles may encourage customers to choose them over gas-powered automobiles. Bangladesh may increase its ability to produce high-quality autos domestically by transferring technology – information and skills, or hardware/machinery – from advanced countries, propelling the sector to new heights.
To accomplish SDG 7—Affordable and Clean Energy—the government’s procurement policies should transition away from purely diesel or petrol-powered cars and buses and toward green mobility. Incentives should be used to encourage individuals to buy environmentally friendly vehicles. Financial institutions should encourage innovation by investing in new technology to position the sector for long-term success.
Bangladesh stands at a pivotal juncture in its journey towards a sustainable transportation future. With ambitious goals and strategic initiatives, the nation is making significant strides toward reducing carbon emissions and adopting electric vehicles. However, the path ahead is laden with challenges, including the need for substantial infrastructure development, technological advancement, and policy support. By fostering a conducive environment for electric vehicle adoption and leveraging international expertise, Bangladesh can transform its automotive sector, ensuring it not only meets its environmental commitments but also positions itself as a leader in sustainable transportation in the region. The collective effort of government, industry, and consumers will be crucial in driving this bold leap towards an electric vehicle future, ultimately contributing to a cleaner, greener, and more sustainable Bangladesh.
