One of Southeast Asia’s fastest-growing economies, Vietnam’s government wants to lead in sustainable transportation. To support this goal, the government has established aggressive electric mobility adoption objectives in Vietnam. The government wants 10% of new Vietnamese automobiles to be EVs by 2030.
Private companies are driving Vietnam’s new e-mobility push. The local EV market started with electric scooters. However, hard work from the business sector helped Vietnam become Southeast Asia’s first successful electric vehicle manufacturer. Vietnam’s EV growth might surpass Thailand and Indonesia and perhaps challenge China.
A growing middle class in Vietnam is interested in cutting-edge technology, fuel economy, and environmental consciousness, offering a potential for the EV market to develop by double-digits.
This post addresses Vietnam’s EV journey questions and electric mobility adoption in Vietnam
- What role do the Vietnamese EV industry’s leading players play in market evolution?
- How do Vietnam’s government and commercial sector promote EVs?
- What are Vietnam’s EV adoption obstacles and opportunities?
Current EV Market in Vietnam
In Vietnam, motorcycles dominate transportation. Motorbikes dominated passenger cars 30 to 1 in 2020, and automobile ownership was 5.7%, far lower than in comparable Asian economies. Due to Vietnam’s expanding middle class and ride-sharing fleets, this rate will rise. The International Trade Administration expects 9% automobile ownership by 2025 and 30% by 2030.
Unfortunately, this change would raise the Vietnamese transport sector’s CO2 emissions from 33.2 million tons in 2014 to 89.1 million tons in 2030. Vietnam has pledged to limit CO2 emissions under the Paris Agreement. Promoting EV adoption is the best strategy in this scenario.
Vietnam’s EV market is young yet promising. Second internationally in two-wheeler electrification behind China, Vietnam had almost 1.8 million electric motorbikes and scooters in 2021, accounting for 10% of the 2-wheeler market. Vietnamese electric two-wheeler market leaders include VinFast and Pega.
The electric four-wheeler market had about 3,000 automobiles built, assembled, and imported in August 2022, up from 2019. VinFast leads local enterprises, while government-supported international companies join the market. EV adoption will cut the transport sector’s greenhouse gas emissions, focusing on clean, renewable sources.
Major Vietnamese Electric Four-Wheeler Market Players Making a Difference in Electric Mobility Adoption in Vietnam
VinFast supplied 4,200 EVs from 2020 to 2022, up from 190 imported EVs in 2019. Kia, Hyundai, Audi, Mercedes Benz, Lexus, Toyota, and Porsche aim to offer their own EV vehicles and strategies to Vietnam. Foreign companies often create indigenous supply chains and charging infrastructure. Mitsubishi, Skoda, Toyota, Hyundai, and Kia are building their supply chains in Vietnam. Others, like BYD, are building factories in Thailand to manufacture vehicle components for Vietnam assembly and proposing a local supply chain. To meet rising EV demand, Mitsubishi and Porsche are installing EV charging stations, while CHARGE+, ZenCar, Autel, and others provide battery charging options.
Electric 2-Wheeler Fleets in Vietnam
Electric 2-wheelers’ market share in Vietnam has increased from 5.14% in 2019 to 8.54% in 2020 and 10% in 2021, spurring Vietnam’s transportation electrification. Due to their similarities and significant local manufacture, electric 2-wheelers are simple to switch to. VinFast, Pega, Anbico, Detech, DK Bike, and Datbike are among the leading Vietnamese E2W manufacturers.
Electric Buses as part of aggressive electric mobility adoption objectives in Vietnam
Electric bus fleets are in demand owing to government initiatives that promote emission-free public transportation. Rapid urbanization, growing oil prices, and cheaper battery costs encourage electric bus adoption. Electric buses cost more than ordinary buses, which limits their market growth.
Ride-hailing
Uber use in Vietnam is rising and is expected to reach USD 2609.67 million by 2028. Ride-hailing businesses are converting gasoline cars to EVs, decreasing emissions, promoting eco-friendly travel, and raising EV awareness to compete in Vietnam’s booming market. According to Grab, FastGo, and Gojek, Hanoi’s electric ride-hailing sector will rise rapidly.
Other Electrification Forays
Vietnam is exploring E-mobility solutions via many company and institution pilot projects. For instance, VinFast wants to construct 30,000–50,000 free e-motorcycle charging sites. Central Power Corporation and Mitsubishi provide rapid charging for electric automobiles, while Ho Chi Minh National University, UNDP, and others offer e-bike sharing.
21 provinces have tested electric 3-wheelers for waste collection and 4-wheelers for tourism. Vingroup and VinBus propose to run electric buses in major cities and Phu Quoc Island, backed by the Ministry of Transport’s vehicle industry growth and sustainable transportation goals.
Government incentives and EV targets in Vietnam
Private firms dominate Vietnam’s EV sector, which receives less official backing than others in Southeast Asia. Vietnam’s sustainable development strategy promotes EV adoption via sustainable development, green growth, climate change, and environmental protection regulations, even though it lacks EV regulatory frameworks and incentives.
Master EV Plan in Vietnam as part of aggressive electric mobility adoption objectives in Vietnam
Vietnam has committed to reducing greenhouse gas (GHG) emissions by 9% in 2030 compared to BAU utilizing local resources under the Paris Agreement. It wants to reach 27% versus BAU with worldwide backing. Net-zero transport emissions are also its goal by 2050.
Several industries support this environmental development goal. In particular, VAMA’s National Automobile Development Strategy (2021–2050) aims to produce 3.5 million electric cars by 2040. Additionally, many levels of Vietnam’s government have presented EV development strategies.
State Plans as part of aggressive electric mobility adoption objectives in Vietnam
The state-level government of Vietnam has offered guidance on the lack of national goals or roadmaps.
In July 2022, the Vietnamese government passed Decision No. 876/QĐ-TTg, addressing the Action Program for Green Energy Transition and Reducing Carbon and Methane Emissions in the Transport Sector. EV manufacturing, import, and charging infrastructure from 2022 to 2030, phasing out fossil-fueled cars by 2040, and assuring all road vehicles operate on electric and renewable energy by 2050 with a countrywide charging infrastructure.
Other state regulations promote clean-energy cars and public transit. Each electric vehicle type has orientations in these policies. The pioneering Hanoi government has a road vehicle strategy with high goals. They want to electrify 5% of motorbikes and 5–20% of four-wheelers by 2030. They propose to increase the bus fleet from 2,900 in 2021 to 6,800 in 2030. As part of its national green development goal, Nha Trang plans to introduce 200 e-buses by 2025.
EV Supply-Side Incentives as part of aggressive electric mobility adoption objectives in Vietnam
The Vietnamese government supports EV and battery manufacture but offers little regulatory assistance. To protect domestic manufacturers, Vietnam’s Ministry of Finance has rejected tax incentives for imported electric automobiles. The government has also refused to fund infrastructure or R&D. The “environmental tax” on fossil fuel users in Vietnam has had little effect. More efficiently, the National Assembly’s electric vehicle excise tax cut has lowered manufacturing costs and made electric four-wheelers more inexpensive.
EV Demand-Side Incentives
Vietnam has various initiatives to promote electric 4-wheelers but none for electric two-wheelers. 4-wheeler EV incentives include:
Lower registration fees
The Prime Minister reduced electric car registration costs by Decree. Batteries-powered EVs will be free in three years and half the price of petrol and diesel automobiles with the same number of seats till then.
Special tax on consumption
A 15–70% consumption tax applied to all imported EVs before 2022. Since March 1, 2022, EV excise taxes have dropped by up to 12%.
Public transit incentives
Decision 13/2015/QD-TTg encourages public electric and natural gas bus development with preferential financing, import duty exemptions, and subsidies.
Potential EV Market Challenges in Vietnam
Despite some teething difficulties, Vietnam’s EV sector looks promising.
Poor government regulations and policies
As indicated, the EV policies regarding the aggressive electric mobility adoption objectives in Vietnam are weak and ineffectual. Policymakers struggle to create policies that promote investment. Environmental fees to discourage ICE car use have not proven effective, probably owing to their inadequate influence on consumer attitude. The lack of appropriate incentives or price subsidies hinders EV adoption. Lack of battery manufacturing and charging infrastructure restrictions hinder EV development.
Limited Charging Infrastructure
Many of Vietnam’s EV adoption issues include battery and charging infrastructure. The lack of rapid-charging facilities is a serious issue. Despite little success, VinFast is installing e-motorbike quick-charge stations. Even though battery swapping is the only viable solution for two and three-wheelers, it needs costly infrastructure, and brand-specific solutions are incompatible.
Low Investment and Support
Vietnam’s electric two-wheeler sector has high production capacity owing to market demand, while the electric four-wheeler market lags behind due to a lack of investment. Thus, electric four-wheeler solutions are few. Scarcity worsens market demand and hinders industrial growth. Due to Vietnam’s reliance on foreign replacement components, automobile manufacturing costs have risen. Manufacturers may be apprehensive about investing in EV manufacturing due to gaps in EV technical requirements.
Future Growth Opportunities in the EV Industry in Vietnam
Improved Policies
The supply side should set production and sales objectives in line with Decision No. 876/QĐ-TTg to boost the Vietnamese EV sector. Standards for EVs, charging infrastructure, and car disposal will boost investor trust throughout the value chain. Stricter pollution requirements for older cars may reduce the ICE-EV pricing gap. Fiscal incentives including tax reductions, investment allowances, and VAT exemptions for EV manufacturing may also attract investments.
Purchase subsidies, tax exemptions, free parking, and cheaper power costs may encourage EV adoption on the demand side. Priority lanes, parking spaces, and low-emission zones may benefit EV drivers. Low- or zero-emission zones, environmental levies, and registration quotas may boost EV adoption. Finally, EV education and awareness initiatives are essential to customer trust in EV technology.
Clear goals and rules are essential for battery manufacturing and charging infrastructure. Mandating EV charging stations and E2W battery swapping in new buildings and offering land rental exemptions may enhance infrastructure expansion. Harmonizing charging infrastructure and battery switching standards will improve user experience. Upgrading the power system to utilize renewable energy and phase out fossil fuels and coordinating charge providers may improve EV charging efficiency and save money.
Expand EV Charging Network
Many nations have made headway in overcoming the EV ownership-charging infrastructure problem. Singapore promotes public-private collaborations, while India and Taiwan investigate battery swapping as a cheaper alternative to plug-in charging. Vietnam might adopt an EV charging network strategy from these nations.
Optional methods include:
- Strategically put public EV charging stations countrywide
- The EV charging network should grow with consumer demand and electricity infrastructure
- Strategically site stations along busy routes and near transmission lines with enough capacity to satisfy electrical needs
- Increase private sector participation in the public-private partnership paradigm
- The government may involve itself more in EV infrastructure and use private enterprises’ finance
- Hydropower and solar power generation should be more efficient
- V2G (vehicle-to-grid) technology in battery-swapping systems boosts charging speed by assisting the electrical grid
- EV adoption will increase charging demand and private sector investment.
Examine Investment Options
Vietnam relies on auto manufacturing, which accounts for 3% of GDP. Many significant automobile assembly and manufacturing projects in Vietnam strive to fulfill local and regional demand. Thus, Vietnamese citizens, enterprises, and governments have several EV manufacturing investment options. Excellent investing options include:
- Battery manufacture – Nickel deposits in Vietnam are 3.6 million tons and lithium 1 million tons. However, research and technology to use these minerals remain restricted.
- Public transit -Vietnam, like many nations, invests extensively in public EV fleets to minimize pollution
- Sales and assembly – Due to the EU-Vietnam Free Trade Agreement (EVFTA), investors may sell Vietnamese goods abroad
Future of Vietnam’s EV Market
Vietnam is expanding fast in Southeast Asia’s EV industry thanks to private companies. Even while motorbikes dominate the nation, EV usage is rising, particularly for electric two-wheelers. Government support for sustainable energy transition and emission reduction targets has promoted EV manufacture, import, and charging infrastructure. Local businesses like VinFast and multinational vehicle manufacturers are making great EV market progress, but charging infrastructure rules and investment are still lacking. Vietnam’s EV landscape has great promise for a greener, more sustainable future with targeted government policies and private sector investments.
