Pandemic puts electric vehicle plant in the slow lane

The target of Bangladesh Auto Industries Ltd (BAIL) to market the country's first locally manufactured electric vehicles will be delayed by up to one year as the ongoing coronavirus pandemic has halted development work of its factory.

"We missed the target as the suppliers could not ship the required equipment on time even though we opened letters of credit earlier on," Mir Masud Kabir, managing director of BAIL, told The Daily Star.

BAIL now faces three challenges due to the Covid-19 fallout: a shortage of steel, equipment and workers, he added.

The company initially aimed at completing development works of the project by April before going into full production in June earlier this year.

Now though, BAIL has targeted the same time next year to bring 'made in Bangladesh' cars to the public.

According to the managing director, local steel suppliers have been unable to provide the necessary steel within the stipulated timeframe.

In light of these adversities, BAIL urged Bangladesh Economic Zones Authority (Beza) to consider reducing the rent of land leased for the project at Bangabandhu Sheikh Mujib Shilpa Nagar in Chattogram by 50 per cent for a three-year period.

Besides, banks seem reluctant to provide loans against the project as the investors of economic zones do not own the land on which their business operates.

Automobile manufacturing requires huge setup, skilled manpower, massive investment, research and development.

To make matters worse, BAIL has been unable to send its technical recruits abroad for foreign training due to the ongoing pandemic, Kabir said.

"We were on track before the Covid-19 crisis hit but the prevailing situation has not been favourable for us. Regardless, we are maintaining correspondence with our foreign partners via digital platforms to keep the project alive," he added.

The managing director also said the cost to fully develop the factory could increase due to delays in implementation.

Of the planned $200 million investment for the project, 80 per cent will be sourced locally while the remainder will come in the form of foreign direct investment.

Total investment in the project could reach $1 billion within the next five years, Kabir said.

BAIL will manufacture two and three wheelers alongside sedan, hatchback and sport utility vehicles (SUV) at the plant before expanding their production base to include pick-ups, mini-trucks and multipurpose vehicles.

Foreign partners from China, Hong Kong, India and Italy are providing technical support for the facility in the meantime, Kabir added.

About 60 per cent of the components required to produce a finished car, including lithium batteries, motors and the chassis, will be built at the factory.

Internationally acclaimed designers have already designed the first models of EVs to be produced by BAIL, the managing director said.

A team appointed by the company is leading the initiative by carrying out research on future development projects with foreign experts, Bangladeshi expatriates and local talents, according to Kabir.

The company's SUV line will sell at around Tk 25 lakh per unit while sedans will be priced between Tk 12 lakh to Tk 15 lakh and hatchbacks will go for Tk 8 lakh or less.

Meanwhile, the price of motor cycles will range from Tk 50,000 to Tk 1.5 lakh.

The automobile market in Bangladesh seems to be small at the moment but will continue to expand as the economy is growing at a steady pace.

"And so, there is huge regional and global potential for the sector," Kabir said.

BAIL's EVs will cut fuel costs by 90 per cent per kilometre while the energy cost could be less than Tk 2 per kilowatt-hour.

"Customers will replace their fossil fuel-run vehicles with EVs thanks to their comparatively lower price, fuel efficiency and environmental benefits," he added.

According to a market analysis conducted by BAIL, annual car sales could reach two lakh units by 2025.

In 2018, the number of units sold was just 20,000.

EVs will feature a 50-kilowatt-hour battery capacity, which costs about Tk 400 to fully charge as per the existing rates on electricity.

"With a 20-minute charge, our EVs can run 400km," Kabir said, adding that the car can be charged at home with a regular connection or at a quick charging station.

Quick charging stations will be set up on highways, at refuelling stations, parking spaces and convenient stores. There will also be provisions for charged battery swaps too.

The battery's lifetime will be around 10 years, he said.