Automakers call for EV incentives to drive green mobility

Infograph: TBS

The country's automobile industry is eagerly awaiting the introduction of duty incentives for the local manufacturing of electric vehicles (EVs) in the upcoming national budget, citing it as a crucial enabler for promoting green mobility.

The Bangladesh Automobiles Assemblers and Manufacturers Association (BAAMA), in its pre-budget proposal letter to the National Board of Revenue (NBR), urged a local manufacturing-friendly duty structure for EVs and hybrid cars in line with the relevant policies the government had announced in recent years.

At present importing an electric car is subject to 89% duty and taxes in total, less than the minimum 127% duty burden for a 1600cc petrol car.

Based on the Automobile Industry Development Policy 2021, the government in 2023 reduced duties on imports of parts for local manufacturing of petrol cars to around 35% that started a new wave of local car making.

For instance, Korean Hyundai became the market leader in the brand new cars market in 2023 as the local plant helped cut prices by around 18% then.

"Yet there is no such incentive for EV manufacturing and it is risking the national goal for having 30% of the total vehicles electric by 2030," BAAMA President Hafizur Rahman Khan told The Business Standard.

The Automobile Industry Development Policy 2021 outlined that the government would ensure incentives for EV manufacturers and importers so that EVs share surges to 30% by 2030 as the country eyed a carbon dioxide emission cut by 3.4 million tonnes.

The government in 2022 came up with guidelines for EV charging and in 2023 for registration and operation of electric vehicles.

"People are looking to buy EVs. But the high duty is expensive for them," said Hafizur, who is also the chairman of CG Runner that imports BYD electric cars.

His association wrote to the NBR for at least an equal reduction of the duty burden, to around 35%, for EV makers having local plants.

"Without the minimum policy support to EV makers, the expected EV adoption is unlikely to be realised," he said.

The essential incentives for EV manufacturing were expected to be announced in June 2024.

Homegrown Bangladesh Auto Industries Limited, with over 1,000 crore investments, was gearing up to start full-fledged manufacturing and marketing of its own branded EVs from the Chattogram plant.

Since July last year, it has written to several authorities, including the NBR, but nothing has worked till date.

"Production deferral means revenue losses and increased debt burden for a business," said the company's Managing Director Mir Masud Kabir.

If at least equal treatment for EV manufacturing does not come in the upcoming budget, existing investors would face bigger business losses and also the new investors might lose interest, Kabir said.

"If an imported unit and a locally manufactured unit face same duty, who will invest in building factories?" said Mostafizur Rashid Bhuiyan, executive director of Rancon Group that has built a car making complex at Gazipur to start local painting and assembling of Proton, Mitsubishi passenger cars.

MG cars are also in his distribution portfolio that has a strong regional presence in the EV market.

"We are also interested in locally painted and assembled plug-in hybrid cars that are seeing a higher demand in Bangladesh. But we need a favourable duty structure," said Mostafizur.

Uttara Motors Chairman Matiur Rahman said only an equal duty structure for eco-friendly cars will not suffice, the government should come up with less registration costs for green vehicles.

The dollar hike alone in the past three years inflated duties by more than 40% and if the government reduces duty rates for the sake of affordability it would not hurt its revenue collection, he said.

Mostafizur Rashid Bhuiyan said EVs cost up to 50% higher at factory level and they should be subject to comparatively less duties if the government is serious about its national goals for green mobility.

Hafizur Rahman Khan said, "We are already late to start the green mobility journey and policies should be set in line with the national goal soon."

He added, "To achieve 30% electric vehicle adoption by 2030, the interim government, led by Professor Muhammad Yunus, who advocates for the "Three Zero" vision, should now purchase electric vehicles only."