Key facts
- Bangladesh has introduced duty benefits to promote local manufacturing of electric vehicles and batteries.
- The tax burden for locally manufactured EVs is reduced to around 33%, down from 89% for imported electric cars.
- Incentives aim to boost demand and attract investment in green mobility, with a target of 30% EV market share by 2030.
- A draft EV policy proposes further measures like reduced customs duty on fully built EVs and a nationwide charging network.
Bangladesh is implementing a package of tax incentives and duty benefits to foster its nascent electric vehicle (EV) sector, aiming to reduce prices and boost demand, particularly for manufacturers like China's BYD. The interim government's move, announced following the finance adviser's budget speech, significantly lowers the tax burden on locally manufactured EVs and batteries.
Under the new measures, the total duty and tax for electric or hybrid cars manufactured locally with a certain level of investment and value addition will be around 33%. This contrasts sharply with the current 89% duty on imported electric cars and plug-in hybrids up to 1500cc. Similarly, the duty on locally made e-bikes has been reduced to approximately 11%, down from about 37% for directly imported models.
Industry experts view these incentives as crucial for attracting investment in green mobility, potentially replicating the success seen in the localization of fossil fuel-powered vehicles. The government has set an ambitious target of achieving a 30% EV market share by 2030 and is also offering incentives for lithium and graphene batteries.
A draft National Electric Vehicle (EV) Policy 2025, led by the Ministry of Industries, further outlines a roadmap for cleaner mobility. This draft proposes additional financial incentives, including up to 60% bank financing for new EV purchases with up to eight-year repayment periods, and a potential reduction in customs duty on fully built EVs to 5%. The policy also includes plans for a nationwide EV charging network and mandates that at least 30% of vehicles procured by government entities be electric by 2030.
However, some industry stakeholders have raised concerns about the strict localization requirements attached to the incentives. For instance, e-bike manufacturers must produce components like shock absorbers, electric motors, and batteries themselves, which may not be feasible due to economies of scale. Relaxing these criteria, they argue, is necessary to attract sufficient investment and ensure the struggling manufacturing sector can thrive.
Demand for energy-saving vehicles has been rising in Bangladesh, especially since petrol prices surged in August 2022. While the lack of robust charging infrastructure currently favors hybrid cars, the introduction of global EV leaders like BYD and the availability of other brands are expected to accelerate market evolution. Local manufacturing is anticipated to reduce unit prices and improve market penetration, with localized hybrid cars potentially hitting the market in 2026.