Bangladeshi government has introduced a package of tax incentives for electric vehicles (EVs) in its budget for the fiscal year commencing in July, covering importers, manufacturers and consumers.

The measures also apply to machinery imports and charging infrastructure and include value-added tax (VAT) relief and reduced vehicle taxes for consumers purchasing battery electric vehicles and plug-in hybrid electric vehicles. According to a media report, industry representatives stated that the measures could encourage additional EV-related investment in Bangladesh as manufacturers seek expansion opportunities in emerging markets.

Demand is expected to increase following the US-Iran conflict, which has raised fuel costs and added pressure to Bangladesh's trade balance through higher import bills, the report further 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 be subject to lower tax rates.

The total tax burden on imported EVs will be reduced from 93% to between 66% and 80%, depending on the vehicle's value, although the rate will be higher for models priced at US$ 50,000 or above.

Taxes on plug-in hybrid vehicles will also be reduced. In contrast, taxation on internal combustion engine vehicles will increase from 132.36% to 155.88%. VAT on EVs assembled in Bangladesh will be reduced to 5% until 2030 and eliminated entirely for models using major components manufactured within the country.

BYD agreed to an assembly partnership with Runner Automobiles, a local company, in March. Runner, which distributes imported BYD vehicles, plans to establish an EV manufacturing facility in Bhaluka, located 113 km north of the capital, Dhaka.

Aminur Rahman Mithu, Head of Corporate Affairs at Runner, who was cited in the report, stated that the company plans to invest BDT 2.6 billion (US$21.2 million) in phases and aims to develop a locally manufactured EV through its partnership with BYD.

Rancon Motors is separately planning a BDT 3 billion investment in EV assembly. Rancon, Bangladesh's sole distributor of Mercedes-Benz vehicles, 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 electric and plug-in hybrid vehicles have been sold in Bangladesh since 2024, with the majority of sales occurring in 2025 and 2026.