Despite the country's efforts to reduce pollution and transition to cleaner cars, electric vehicle (EV) sales are yet to pick up due to multiple factors, including taxes and high registration costs, which sellers describe as "impractical".

Importers said that the Bangladesh Road Transport Authority (BRTA) calculates the registration fee for a modest 150-kilowatt EV equivalent to that of a 3,000cc car -- roughly comparable to high-end fossil fuel-burners like the Mitsubishi Pajero or Toyota Land Cruiser.

EV buyers, who already own a car, are also subject to an annual surcharge of Tk 1 lakh for the EV.

Collectively, these factors contribute to lower-than-expected EV sales, as high registration fees based on kilowatt power increase the purchase price.

"Even though EVs are highly economical and environmentally friendly, the BRTA method of calculating EV registration fees is impractical and discourages EV purchases," said Saad Khan, managing director of Audi Bangladesh, the sole distributor of German high-end automaker Audi.

In September 2022, the BRTA introduced the EV registration guidelines. In January 2023, Audi Bangladesh became the first to officially begin selling EVs in Bangladesh.

At least seven brands, including BMW, Mercedes-Benz, Audi, BYD, Chery and MG have introduced EVs to the Bangladeshi market, aligning with the government's efforts to promote low-carbon-emission vehicles

According to Khan, they have sold 48 EV units in the past two years. Audi Bangladesh currently offers three EV models, priced between Tk 1.69 crore to Tk 2.25 crore.

At least seven brands, including BMW, Mercedes-Benz, Audi, BYD, Chery and MG have introduced EVs to the Bangladeshi market, aligning with the government's efforts to promote low-carbon-emission vehicles, he added.

The Audi Bangladesh managing director said the BRTA calculates registration charges based on the kilowatt power of EVs, equating 20cc of engine capacity to each kilowatt. This calculation leads to high registration costs.

He said EV dealers recently requested the National Board of Revenue (NBR) to reduce import tariffs and duties on completely built-up (CBU) EVs to lower prices and boost the EV market.

"We suggest reducing the import tariff for CBU EVs to 37 percent from the current 89.1 percent," he said.

Khan cited examples of neighbouring countries imposing import duties from as low as 25 percent to charging nothing at all on EVs.

"We believe that a lower tariff rate can positively impact government revenues through increased vehicle sales as they become more affordable," Khan wrote to the NBR.

The EV dealers also said letter of credit (LC) margins for vehicle import were increased from 10-20 percent to 100 percent in July 2022 in the face of a forex crunch.

With reserves now stable, they recommended removing the LC margin restrictions on EVs to encourage imports.

"The registration fee for an electric vehicle is at least Tk 3-4 lakh and the one-time advance income tax is at least Tk 1.5 lakh, which is a massive burden for buyers," said Chowdhury Mohammad Nabil Hasan, head of marketing at Rancon Motors, the distributor of Mercedes-Benz EVs in Bangladesh.

Hasan said EVs are highly economical as they are capable of driving up to 400 kilometres on a single charge.

"If we calculate the current electricity price per unit, the cost per kilometre is only Tk 2, which is very cheap compared to fossil fuel-based vehicles," he said.

According to him, EV sales will grow with the expansion of charging station networks and increasing consumer awareness regarding EVs.

"We have already built 18 charging stations in Dhaka, Cumilla, Chattogram, Sylhet and Cox's Bazar under the brand Charge Easy," he added.

Mercedes-Benz currently sells about seven EV models in Bangladesh, catering to high-end consumers who prefer the German automaker.

Md Tauhidul Islam Tushar, deputy director (Engineering-1) at BRTA, said they have recommended a 50 percent reduction in advance income tax (AIT) to the ministry to lower registration fees considering environmental benefits.

"The BRTA has also recommended reducing the surcharge on EVs, and we expect the NBR to waive this charge," he said.

As of September 30, 281 EVs were registered with the BRTA, and this figure is expected to exceed 300 by the end of the year, Tushar added.

Despite growing car use, per capita car use in Bangladesh is very low compared to comparator countries.

Bangladesh has three cars per 1,000 people, compared with 897 per 1,000 in Malaysia, showed a research paper of the Policy Research Institute of Bangladesh, a think-tank. It is 34 in Vietnam, 22 in India, and 16 in Pakistan.