Bangladesh has set out a package of tax incentives for electric vehicles (EVs) in its budget for the fiscal year starting July, covering importers, manufacturers and buyers.
The measures also apply to machinery imports and charging infrastructure and include value-added tax (VAT) relief and lower vehicle taxes for consumers buying battery and plug-in hybrid EVs.
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According to Nikkei Asia’s report, industry figures said the steps could position Bangladesh as a new destination for EV investment as manufacturers seek expansion in emerging markets.
Demand is expected to rise after the US-Iran war increased fuel costs and added pressure to Bangladesh’s trade balance through higher import bills, the report added.
Under the policy, imported electric buses and trucks will remain exempt from all levies except VAT until June 2030.
EV manufacturers and importers will also receive lower tax rates.
The total tax burden on imported EVs will fall from 93% to 66-80%, depending on the vehicle’s value, although the rate will increase for models priced at $50,000 or above.
Taxes on plug-in hybrids will also be reduced. By contrast, taxation on internal combustion engine vehicles will rise from 132.36% to 155.88%.
VAT on EVs assembled in Bangladesh will be reduced to 5% until 2030 and removed entirely for models using major components made in the country.
BYD agreed an assembly partnership with local company Runner Automobiles in March.
Runner, which distributes imported BYD vehicles, plans to establish an EV manufacturing facility in Bhaluka, 113km north of the capital city Dhaka.
Aminur Rahman Mithu, Runner’s head of corporate affairs, who was cited in the report, said the company plans to invest Tk2.6bn ($21.2m) in phases and wants to develop a locally made EV through the BYD partnership.
Rancon Motors is separately planning a Tk3bn investment in EV assembly. Rancon, Bangladesh’s sole Mercedes-Benz distributor, has introduced six EV models from the brand over the past two years.
Audi and BMW have also launched EV models in the market.
Rancon Motors CEO Arman Rashid said: “We, a new car seller, are fighting with reconditioned vehicles. Unless we can lower the prices of EVs through local manufacturing, it will be difficult to popularise EVs.”
Runner estimates that more than 1,000 battery and plug-in hybrid EVs have been sold in Bangladesh since 2024, mainly in 2025 and 2026.
Citing Bangladesh Customs, the report said 178 EVs were imported in the fiscal year to June 2025, followed by 82 in the first half of the current fiscal year.
