Geographically, Bangladesh is a small country in South Asia, but it has huge possibilities in different sectors. Keeping pace with the automotive world, the demand for electric vehicles in Bangladesh will rise within the next few years. Though the lack of raw materials and backward linkage has hindered growth in the automobile manufacturing and assembling industries in Bangladesh over the last three decades, local entrepreneurs are expected to soon enter automobile manufacturing in the country.
In 2015, the sales of global automotive vehicles were very close to 89,000,000 US$. From 2012, analysts projected that the emerging markets would increase their share of global sales to 60% by 2020, while they also expected their share of global profits to rise by 10%. Experts anticipated that consumers would always show the strongest purchase intent in Asia.
According to the Bangladesh Road Transport Authority (BRTA) recorded data, it shows that the last year saw the registration of only 8326 trucks. Imports of reconditioned and brand-new vehicles, mostly from Japan, China, India, Korea, and a few from Europe & the US, largely dominate the automotive industry in Bangladesh. Though currently the Bangladesh EV market is almost vacant and there is a lot of business scope for EVs. There are a few initiatives to introduce EVs in the passenger car segment in Bangladesh, mostly captured by the Chinese manufacturers.
Background of the Overall Vehicle Industry in Bangladesh
Bangladesh is a developing country & its economy is a developing market economy. Bangladesh is the 39th largest in the world in nominal terms, and 30th largest by purchasing power parity; it is classified among the Next Eleven emerging market middle-income economies and a frontier market. Rapid growth enabled Bangladesh to reach the lower-middle-income country status in 2015. Sustained economic growth has rapidly increased the demand for energy, transport and urbanization. In the first quarter of 2019, Bangladesh was the world’s seventh fastest-growing economy with a rate of 7.3% real GDP annual growth.
The transport sector of Bangladesh consists of a variety of modes. The flat plain of the country encourages the widespread use of all three modes of surface transport, i.e., road, railway, and water, for carrying both passengers and cargo. People commonly use the roads and highways for transporting goods and passengers. In Bangladesh, the total length of paved roads under the Roads and Highways Department stood at more than 21,000 kilometers. It is estimated that mechanized road transport carries more than 70% of the country’s total passenger and cargo volume.
Vehicle Companies in Bangladesh
Bangladesh is one of the largest markets for commercial vehicles, and importers bring all types of vehicles from abroad. Four manufacturers, namely Japanese, European, Chinese & Indian, capture the Bangladesh vehicle market. The Indian manufacturers, namely TATA, Ashok Leyland & Eichers are mostly covering the trucks market in Bangladesh. The Chinese manufacturers have a remarkable presence in the LCV & Pickup segment. Some Japanese & European manufacturers’ trucks & construction vehicles are running in Bangladesh, but those are not remarkable in quantity.
Japanese and European manufacturers mostly capture the passenger bus market for inter-city operation. European manufacturers, namely Scania, Volvo, MAN, and Mercedes-Benz, as well as the Korean brand Hyundai Universe, completely cover the luxury AC bus market. Japanese manufacturers Hino & ISUZU have a presence in this segment as well. In the non-ac bus market, Japanese manufacturer Hino is the market leader & they are capturing the largest portion of this market. In the intra-city operation, Indian manufacturers have acquired the leading position. TATA, Ashok Leyland & Eicher are covering the largest portion of the intra-city market.
Bangladesh is one of the most promising countries for the passenger car market. With the infrastructural development & mega projects completion, the road communication will be increased for both cargo carrying & passenger transportation. So, the next 5 to 10 years will be the most important for the passenger car vehicle industry in Bangladesh.
Electric Vehicles in Bangladesh
Bangladesh has moved one step forward towards implementing its plans of introducing at least 30% plug-in electric vehicles in the transportation system by 2030, with the introduction of the Electric Motor Vehicle Registration and Movement Guideline 2023. The guideline allows the import, manufacturing of EVs, two, three and four wheelers and running on the roads following registration. In addition, it will also determine its fare, route permits, economic life, etc.
According to informal estimations, there are 2.5 to 3 million electric three-wheelers in Bangladesh. PALKI CITYGLORY 2022 is the first electric car in Bangladesh that has been designed for the deshi millennial by deshi millennials. This is an electric car you will own, adore, and use daily.
While achieving “Net Zero” is becoming a burning issue, the transportation sector, which is a part of our daily lives, is itself responsible for 37% of global carbon dioxide emissions because of its high dependence on fossil fuels. As a part of the global movement, Bangladesh is committed to reducing 21.85% of its carbon emissions by 2030. It is a matter of hope that the country contributes only 0.21% of global carbon dioxide emissions, which is far less than that neighboring country, India. But it is growing at an alarming average annual rate of 7.52%. As the yearly emission of electric vehicles is 77.63% less than conventional fossil-fuel-run vehicles, the launch of electric vehicles can gear up the pace of the country’s journey towards a zero-carbon footprint.
Global Electric Vehicle Market Outlook
The global electric vehicle market is growing exponentially. As per a report published by the International Energy Agency, 6.60 million units of electric cars, combining the sales of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) together, were sold in 2021. Sales of electric cars contributed 8.57% of global car sales of cars. The number of electric cars running on the streets globally now stands at 16.50 million units as of 2021. China alone accounted for 3.30 million units of sales and had 7.80 million electric cars running on its streets as of 2021. This impressive scenario resulted from the government’s effort to reduce carbon emissions as a part of the country’s 14th Five-Year Plan (2021-2025). On the other hand, 2.30 million units of electric cars were sold in the year 2021 in Europe, which is 65% higher than the previous year.
The European market grew at a compound annual growth rate of 61% during the period 2016-2021. The proportion of electric car sales was higher in Norway, Iceland, Sweden, the Netherlands, France, Italy, and Spain than in other. As of 2021, 5.50 million units of electric cars were on the roads of Europe. In the United States, 630,000 units of electric cars were sold in 2021. The country has over 2 million electric cars on the streets. However, the US electric car market experienced a compound annual growth rate of 32% during the period 2016-21.
In some Asian countries like China, India, and Vietnam, electric two and three-wheelers have gained popularity over the years. Because of their simple manufacturing process and low operating costs, sales increased rapidly. Around 9.50 million units of electric two and three- wheelers were sold in China in 2021. 0.30 million units and 0.23 million units were sold in India and Vietnam, respectively. Sales of electric buses and trucks are relatively lower than those of cars. Electric buses and trucks accounted for only 0.30% of total sales in this segment in 2021. Globally, 4% of the buses and 0.10% of the trucks are electric variants as of 2021.
Progress of the Electric Vehicle Market in Bangladesh
The all-electric vehicle market is almost nonexistent in Bangladesh. However, the country is experiencing consistent growth in the imports of hybrid electric vehicles. A growth of 154% in hybrid car imports from 3,296 units in FY18 to 8,366 units in FY21 has been observed. Lower cost of maintenance and better fuel economy have driven the growth in sales. Hybrid variants of the Toyota Aqua, Honda Grace, and Nissan X-Trail have gained much popularity in Bangladesh. Also, there are nearly 4 million electric three-wheelers running on the streets of the country. These vehicles are known as ‘Easy Bikes’ to the masses.
Though bikes are not allowed on the streets of the capital, these vehicles have already become the primary vehicles for public passenger transportation in rural areas. Because easy bike owners use environmentally polluting lead-acid batteries and illegal electricity connections to charge the batteries, the industry is quite controversial. Also, easy bikes have safety issues due to their design. Nonetheless, the government is aiming to ensure mass adoption of electric cars by the year 2030. Through the Automobile Industry Development Policy, 2021, the government has announced its plan to undertake incentive programs to promote strategic investments with the aim of penetrating regional and global markets with locally produced electric cars. To promote local production or assembly, tax benefits have been proposed.
Manufacturers of energy-efficient vehicles will be able to enjoy a tax holiday for 10 years if they use 30% locally sourced components in the production process. A waiver of road tax and reduced registration fees will also be offered. A fund titled ‘National Energy Efficient Vehicle Production Fund’ will be created to support the industry.
