There are now more than five million Battery Electric Vehicles (BEVs) on the roads worldwide.Two million have been sold globally in 2018 alone, whereas the number of BEVs sold stood at just a few thousands in 2010. By definition, EV refers to an electrically-driven vehicle which uses one or more electric motors for its propulsion. It uses chemical energy stored in efficient and environment-friendly rechargeable lithium ion battery packs instead of fossil fuel to propel it. This advancement in transport technology has been helping to fix transport problems, bringing new possibilities and choices in many countries.
Due to pollutants and traffic jams, authorities around the world are increasingly promoting the use of environment-friendly engines. Globally, transport emissions from traditional Internal Combustion Engines (ICE) accounted for over 24% of global CO2 emissions in 2016. The BEV is a better alternative than ICEs in addressing localized pollution, national energy security and energy efficiency. In addition, it has a zero tail-pipe emission and thus emits less carbon dioxide compared to those powered by ICEs.
The Global EV Market
Historically governments worldwide have supported diffusion of technologies in different sectors linking suppliers and users. Globally, the electric car’s share in the total automobile industry is on the rise. At the end of 2018, it stood at 4.6 percent, almost double from what it was in 2017, according to the Centre of Automotive Management (CAM). China is currently the leader in the global EV market followed by the USA, Norway, Japan and the UK. These cars are expected to seize a third of the market by 2025 and 51% by 2030. Several factors driving the demand for BEVs in these markets include: government incentives lowering the total cost of ownership, tighter regulations on tailpipe emissions and falling prices of batteries that allow increasingly extended driving ranges.
Electric Vehicles in the Asia-Pacific
The Asia-Pacific electric car market is dominated by China followed by Japan, South Korea and India. Some major players in these markets include BYD Motors, Nissan Motor Corporation, Energica Motor Company S.P.A., Tesla, Daimler Ag and Ford Motor Company. The key drivers for the Asia-Pacific market are rising environmental awareness, rising income level, growing urbanization and increasing government support. Countries like China and India plan to replace all cars with electric ones and are offering a considerable subsidy on electric cars depending on the battery size. The electric car market growth in Asia-Pacific as a region is expected to be faster than North America and Europe as companies would not have to wait for the conventional cars to be replaced by the electric ones. Due to current low penetration of cars in Asia-Pacific, many first-time owners of a car might opt for an electric car.
Diffusion of EVs in Bangladesh
The dense population and growing number of floating populations have resulted in the increase of commercial activities including secondary and tertiary industries in Bangladesh. This has led to a growing demand for transport. However, the growth rates of buses on the streets have remained stagnant. Under these circumstances, para-transports (transports that supplement fixed-route mass transports by providing individualized rides without fixed routes or timetables) penetrated fast in the public transport system.
In Bangladesh, the BEV is commonly known as Easy Bike. It has five batteries and carries six to eight passengers with power generated from rechargeable lead-acid batteries. The main source for charging the BEV is electricity from the main grid. The technological characteristics of an EV has fitted in well in Bangladesh due to the limited size of the country where its transport system has a prodigious reliance on road transportation than inland water and rail. Moreover, there has been a remarkable increase in the access to electricity in the country from 48% to 72%. (7th Five Year Plan, 2015)
Between 2005 and 2006, with more imports trickling in, easy bikes gained popularity in the rural and urban areas without the aid of radio, newspaper or television adverts. The main reason for this was its shared riding facility, low fare charges for short distance and the hop-in and hop-out facility. Researchers acknowledge that the local commuters, local manufacturers, importers, middle to low-income people have all assisted in the creation of demand for BEVs, in the absence of policies in Bangladesh. Despite wide acceptance throughout the country during introductory phase, EVs gradually shifted away from the city streets. Factors like lack of engine and chassis number for registration, huge hindrance leading to scarcity of power etc led to ban of EVs from streets of some cities. Despite this, many divisional cities and most towns are using the EVs for their short commutes in everyday life. There were around one million EVs running in Bangladesh, predominantly in district towns and rural areas as of March, 2019.
Domestic Manufacturing of EVs and Challenges in Bangladesh
Some companies in Bangladesh manufacturing EVs (easy bikes) and related parts include Apollo Solar and Power Technologies (EVs), BD Power (EVs), Greene Consortium Ltd. (Lithium batteries), A B Power (EVs), Rahimafrooz Globatt Limited (Lead Acid batteries) etc.
Besides the aforementioned companies, there are upcoming companies who will be manufacturing passenger vehicles integrally. Nitol Motors is set to come with a locally-assembled electric vehicle. With the size of regular cars, the model is called Suvare and will cost about BDT 12 lakh. Local automobile company Bangladesh Auto Industries Ltd (BAIL) plans to start making electric vehicles from 2020 with an initial investment of USD 200 million at the Mirsarai economic zone in Chattogram. 80 percent of the planned investment of USD 200 million will be sourced locally and the rest will come as Foreign Direct Investment (FDI). The plant in Chattogram is expected to manufacture almost 60 percent of the components of the vehicles, including lithium battery, motor, controller, software platform, chassis and body. The team will also create a web-based portal for co-creation in product and ecosystem development. The EVs are claimed to cut fuel cost by 90 percent and per kilometre energy cost will be less than BDT 2.
|EV Type||Expected Selling Price|
|Motor cycles||BDT 50,000 – 1,50,000|
Table: Expected Price of different types of EVs planned to be manufactured by BAIL
Domestic manufacturing, however, still has the following challenges to overcome:
- In 2011, BEVs were banned from the main highways of Bangladesh due to serious accidents over a very short period of time. The market for EVs, in comparison to other types of transport options like reconditioned vehicles, seems to be smaller at the moment in meeting the demand of 30,000 units per year. This indicates that local demand may not be high enough for large-scale mass production and in order for local production to increase, Bangladesh has to target export markets.
- The market faces a steep tax barrier (89.7%), if imported as a Completely Built Unit (CBU) or fully-built vehicle. This is the only technology in recent times that has attracted a six tier tax charge.
- Given the fact that each EV carries five batteries, to date there are 7.5 million batteries out there that will have to be disposed of or managed. Apparently there is no government policy or regulations for recycling of batteries in Bangladesh. Fully-fledged battery waste recycling plants are necessary to make BEV a sustainable option. This, in turn, depends on the regularization of BEV registration and availability of BEV Policy and Battery charging guidelines.
- There are some obstacles in the BRTA act in registering the EVs. BRTA gives registration to vehicles based on CCs whereas the capacity of EVs is not measured in CCs.
The Road Ahead
- The numbers of BEVs in Bangladesh will continue to rise following the growth from an estimated number of 397, 000 in 2013 to about 1,500,000 in 2019. The tax charged for Completely Knocked Down Units (CKDU) is 37%. This is a direct benefit put by the government for importers to enjoy.
- Various stakeholders need to follow the EV adaptability pattern in the following way to achieve steady growth of the electric mobility ecosystem:
- As far as recycling is concerned, there are a few companies like Rahimafrooz and Confidence Batteries which are making BEV batteries and manufacturing recycling plants. Rahimafrooz has made huge investments in setting up a smelting plant to recycle the recovered lead from the used batteries, running awareness campaigns among the battery users and encouraging owners to avail the buy-back benefits offered by the company for used batteries. This can serve as a good example for the other companies.
- There are different types of batteries used in EVs besides Lithium-ion batteries namely lead-acid, NiCd, nickel-metal hydride, zinc air and molten salt batteries. Hence, there need to be clear policy guidelines set by the authorities as to use type, size and grade of batteries. Depending on the resources required, the government also needs to consider foreign relations with the source countries who can provide steady supply of resources for the growing EVs.
- Going forward, the EV industry has the potential to create an informal sector and facilitate entrepreneurship in the areas of Mechanics, Driving, Battery recycling, Battery Charging, Auto mechanics, Panel Beating and Spraying, Tyre technicians and finally some form of revenue collection for small and organized municipalities who locally register them. As a result, it will also assist in alleviating poverty.
- To realize the industry’s potential, the Government has some aspects to consider in order to make the process of EV adoption smoother and more successful. These aspects chiefly include – promoting development of local battery industries, ensuring availability of resources, ensuring the availability of required infrastructure and incentivizing the marketplace. Establishing long-term contracts with Lithium producing countries like Australia and China will be a step in the right direction for the industry. The government can follow the initiatives taken by countries like China who extended strong policy support to the diffusion of EVs in their market. Their policy response included purchasing cobalt mines in Africa and building cobalt refining facilities and providing R&D incentives.
- 1. Understanding state electrical vehicle diffusion in Bangladesh – Dhaka Tribune
- 2. Everything You Need to Know About the Fastest-Growing Source of Global Emissions: Transport – World Resources Institute
- 3. Who Will Drive Electric Cars to the Tipping Point? | BCG – BCG
- 4. Local firm to set up $200m plant to make electric vehicle – The Daily Star
- 5. Understanding state electrical vehicle diffusion in Bangladesh – Dhaka Tribune
- 6. Electric vehicle a transformation force, needs comprehensive policies – The Financial Express
- 7. Rahimafrooz Batteries Ltd. – Rahimafrooz official website
- 8. APAC Electric Vehicle Market |Size, Trends, Forecast| 2020 – 2025 – Market Data Forecast
- 9. Locally assembled electric cars to hit streets soon – The Daily Star
- 10. The future of the automobile industry in Bangladesh – The Daily Star