In line with the global trend of improving fuel economy and reducing emissions, Bangladesh is planning to switch over to plug-in electric vehicles with both policy support and state initiatives.
While the state-run transport company BRTC has planned to procure 50 battery-electric buses for its fleet, at least two private automobile companies are in the process of manufacturing or assembling EVs at home in partnership with global automakers, sources at the Economic Relations Division (ERD) said.
The United Nations Development Programme has also offered support for infrastructure such as charging stations for an increased penetration of 4-wheeled EVs in Dhaka's public transport.
The Automobile Industry Development Policy 2021, okayed by the Cabinet in June this year, stipulates policy support, including tax holiday and fiscal incentives, for local assembly of electric vehicles and development of technologies and infrastructures for energy efficient vehicles.
The proposed policy projects that at least 15% of registered vehicles will be powered by environment-friendly electricity in 2030.
On 12 September, Prime Minister Sheikh Hasina, while launching new power plants, envisioned an electricity-run transport system – electric trains, buses and cars – as the country now has more capacity to generate power than demand.
However, the country's journey towards an electricity-driven public transport system faces barriers such as high taxation and lack of bus charging stations.
Private operators and the UNDP point out that import taxes and duties are too high making four-wheeled EVs simply prohibitively expensive for the Bangladesh market.
The UN body, while offering $1.78 crore support to enhance policy institutional framework for EVs and EV charging stations and tailored capacity building, has identified a number of roadblocks, which, it has stressed, must be removed to pave the way for a smooth transition.
The Road Transport and Highways Division will implement the project entitled "Enabling Electric Vehicles Adoption in the framework Energy-based Transport (EV Bangladesh)" by 2026.
Amal Krishna Mandal, joint secretary of the ERD, said the UNDP is holding meetings with the ministries and government agencies concerned to expand EV transport.
"They have already drafted a project document. The project proposal is now waiting for approval by the planning minister. But before that, the government will sign a grant agreement with the UN body," he said.
Steps towards EV era
The state-owned transport company is taking the lead with its venture to introduce e-buses in the public transport system for the first time in Bangladesh.
BRTC's 50 battery-electric buses will be introduced on long-haul routes such as Dhaka-Chattogram. Discussions are going on with the Asian Development Bank, South Korea and other donors for funds.
The electric buses, each having 50 seats, will have two ways of recharging – on-route while operating and overnight at bus depots.
Md Abu Bakar Siddique, deputy general manager (Planning) of BRTC, said the BRTC will buy the e-buses as part of the government's first ever electric vehicle initiative, aimed at lessening carbon footprint.
"The government is negotiating with development partners. Those who will finance the project will decide on the funding through their own surveys. When these buses will be purchased can be confirmed only after the finance is ensured. And if the e-buses are purchased with government funding, then a study will be done under a government agency."
Surveys are very important in this project of buying e-buses, he said, adding, "The Power Division will have to be engaged to know whether they will be able to supply adequate electricity.
"Again, setting up of charging stations, registration and other issues should also be included in the survey. A final decision will be taken after the survey, if it is found beneficial for the government."
Local auto companies to join the race
Several private companies also have plans either to manufacture or assemble EVs at home.
Bangladesh Auto industries, a local automobile company working with Toyota, is keen to produce electric vehicles in the country with an initial investment of $200 million.
The plant will manufacture almost 60% of the components of the vehicles, including lithium battery, motor, controller, software platform, chassis and body.
The electric cars would sell at Tk12-15 lakh. Car battery capacity use will be 50 kilowatts that would give a 400 km driving range on one charge.
Another local company, Nitol Motors, plans to invest Tk350 crore to roll out 20,000 locally-assembled EVs annually.
The sedan model, Suvare, would cost Tk10-12 lakh and will come with a 25KWh battery that would allow a 200 km travel per battery charge.
At the current tariff, charging would cost Tk170 per charge, as estimated in the UNDP document.
Mir Masud Kabir, managing director of Bangladesh Auto Industry, emphasised the need for an industrialisation-friendly policy.
"We want tariffs to remain in place in the case of EVs. This will help the domestic industry expand. The country of 17 crore people is a big market.
The whole world is now moving towards transformation in the field of transportation, he mentioned, adding, "At present, there are one billion cars in the world. These cars will be converted to EVs within the next 30 years. If Bangladesh also can take this opportunity, it will be a great achievement for us."
He said the electric car factory they are going to build at Bangabandhu Industrial Park in Mirsarai will first manufacture components of four-wheelers, three-wheelers and two-wheelers.
Cars to hit the market next year
Cars manufactured in the factory are expected to hit the market in the second quarter of next year.
The factory will produce 25,000 four-wheelers, 50,000 three-wheelers and 100,000 motorbikes a year, said Mir Masud Kabir, adding the factory will go for manufacturing buses and trucks later.
Explaining reasons for not manufacturing buses and trucks in the first place, he said, "Large batteries are required for buses and the charging station also needs to be a little different compared to smaller vehicles.
"The charging process is much easier in the case of other four wheelers (cars, bikes, microbuses, mini trucks) as the batteries used in them are smaller in size. As a result, the potential of such EVs is greater."
Highlighting the environment-friendly nature of EVs, Masud recommended offering discounts on registration fees and route permit costs to encourage people to buy electric cars. "Registration fees should be waived, especially for those who make cars in the country," he said.
The future of transportation
Earlier this year, US automobile giant General Motors announced it would stop selling petrol and diesel cars by 2035.
Audi also is planning to stop production of petrol and diesel vehicles by 2033.
Many other car manufacturers have taken up such roadmaps.
Therefore, it can be said that in the next two or three decades, petrol and diesel vehicles will be a thing of the past in the world.
Worldwide, the use of electric vehicles is increasing at an impressive rate. By 2035, half of the world's passenger cars will be electricity-run.
The key reasons for the global shift are: EVs have lower fuel costs than similar conventional vehicles. They produce zero tailpipe emissions. A 2020 Toyota Corolla Hybrid can run 52 miles per gallon (MPG), while the estimate for a conventional, four-cylinder automatic 2020 Corolla is 34 MPG.
But, battery price, though declining massively from the 1990 level, still remains a concern, prompting manufacturers to spend billions in devising ways to recycle and reuse precious metals.
It is expected that the average cost of a lithium-ion battery pack will drop by around 20% from the current rate to come down below $100 per kilowatt hour by 2023.
Barriers are there
Despite a rapid growth in power generation, the four-wheeler battery-only EV market is still virtually non-existent in Bangladesh.
Quite a few hybrid cars are imported at high prices. Of those, only 10% are plug-in-hybrids and these are charged at home as there are no public EV charging facilities in the country at present.
Roughly, 1.5 million electric motorbikes and unauthorised three-wheelers are operating in the country along with about a thousand plug-in hybrid vehicles, UNDP estimates.
The draft project document of the UNDP says that in Bangladesh there is no explicit clarity on the institutional mandates when it comes to the EV integration on the public transport system and the promotion of private-sector EVs.
The absence of an effective coordination mechanism among government agencies on the issues related to EVs is a serious barrier to stabilising the enabling policy and regulatory environment for this new market.
The tariff setting for electric usage set by Bangladesh Energy Regulatory Commission is a key factor to determine cost-effectiveness of EV adoption in Bangladesh.
Other factors that frustrate potential buyers of electric cars include lack of charging infrastructure, concerns about battery life, cost and maintenance as well as general lack of technical guidelines and regulations for vehicles, the UNDP says in its document.
Creating charging infrastructure and adoption of solar power/hybrid charging infrastructure, fixing tariffs for electric charging are also very challenging, observes the UN body.
SM Jashim Uddin, head of EV unit at EnergyPac, said, prices of electric cars are already high due to high production costs.
On top of this, there is a high import duty. Again, the registration fee of EVs is much higher compared to other types of cars, he added.
"Many countries are offering subsidies on EV production. But, such facilities are not available in our country. The tariff structure needs to be reformed, if we want to introduce eco-friendly electric buses in this situation."
A senior official of the National Board of Revenue, wishing anonymity, told the Business Standard that taxations on vehicles have been fixed as per the current policy. In the current structure, import duty is highest on diesel cars, followed by hybrid cars and EVs.
Pointing out that the imports of electric cars are currently very low, he, however, said the authorities may think about reducing the tariff, if the imports increase in the future.