Vietnam Electric Vehicle Industry

The number of electric automobiles in Vietnam including hybrid, plug-in hybrid, and pure electric ones remains modest at 140 in 2019, 900 in 2020, and an additional 600 units as of the first quarter of 2021, in which most of them were still hybrid models. In 2021, VinFast, a part of VinGroup known as the leading domestic EV manufacturer in Vietnam, successfully launched two electric car models, VF e35 and VF e36 in November at the 2021 Los Angeles Auto Show (LAAS). Vingroup has also established VinBus to operate e-buses in Hanoi, Ho Chi Minh City, Haiphong, Da Nang, and Can Tho. By 2022, VinFast expects to build 20,000 electric cars and around 1,500 buses.

The major EV players in Vietnam are KIA, Mercedes-Benz, Toyota, Daimler, Tesla, Proterra, Nissan, BYD, Honda, Hyundai, VDL, ABB and Volvo. Most of the companies have either introduced or are planning to develop new products for sale in Vietnam in 2022. KIA introduced the KIA EV6 to the Vietnamese market in mid-2021 and will be putting it on sale starting 2022.

Electrical Vehicle Charging Infrastructure
One of the biggest challenges for Vietnam to overcome in this sector is the limited number of EV charging stations. The first quick EV charging system was opened in Da Nang in December 2017. This pilot project is funded by the Central Power Corporation in cooperation with Mitsubishi. By July 2021, VinFast installed 500 EV charging stations and plans to have 2,000 charging stations set up nationwide with over 40,000 charging ports by end of 2022. Backed in Nov 2020, VinBus signed a contract with Star Charge to provide advanced smart charging technology for charging stations. In December 2021, Vinfast built a $174 million VinES Battery Manufacturing Factory in Ha Tinh, Vietnam, which is expected to produce up to 1 million battery packs per year.

Besides Vinfast, Porsche has built fast charging stations in Hanoi and Ho Chi Minh City for its Taycan models while Mitsubishi or Audi are also setting up charging stations for its distribution of EVs.

The 500kV power grid is the backbone of the Vietnamese electricity system with a length of more than 1500 km running from the north to the south. The main electricity system is 220V. Vietnam’s electricity demand is increasing at an average rate of 9 percent a year, which may face power shortages from 2021. If public charging stations do come into operation, Vietnam can expect to experience between a 3%-32% electric overload in select transmission lines. However, Vietnam has a large potential for renewable energy such as wind and solar power to provide the demands of the electric cars industry.

Electrical Vehicle market potentials
With a population of about 100 million, more than 60 % of Vietnam’s population owns motorcycles. Vietnam’s car ownership rate of 5.7% in 2020 is still much lower than other markets in Asia. This rate is expected to increase to 9% by 2025 and 30% by 2030, making Vietnam one of the countries with the fastest-growing demand for passenger vehicles at a 10.5% growth rate.

Vietnam has a young population, and an increasing middle class with strong interest in cutting edge technologies, fuel efficiency, and environmental awareness. These are opportunities for the EV market to grow at a double-digit rate in the coming years.

The growing demand of passenger vehicles, the popularity of ride-sharing fleets, the prevalence of gas-powered motorbikes, have all led to high levels of air pollution and traffic congestion in urban cities like Hanoi, and Ho Chi Minh. To combat pollution, the Government have put forth regulations to gradually restrict motorbikes on city streets by 2030 in its major cities like Hanoi, Hai Phong, Danang, Ho Chi Minh and Can Tho, which paves the way for EVs’ adoption within the country.

Government’s policy and incentives
Vietnam has no explicit policy frameworks and incentives for the electric vehicle industry. The Government has been applying several solutions to promote EV through its sustainable development plan including four focused areas: sustainable development, green growth, climate change, and environmental protection laws. The policy framework dedicated to EV and its charging infrastructure development is still in the initial stage including:

Resolution 55/NQ/TW issued on 11 February 2020 providing Guidelines for the National Energy Development Strategy until 2030 with a Vision to 2045, is the first official national document that requires the promotion of e-mobility and energy storage in line with global trends.
Decision 1095/QĐ-BGTVT dated June 17,2021 on building National Transportation Vehicle Development Strategy with an aim to develop environmentally friendly vehicles, implemented by the Transport Development and Strategy Institute during 2022-2023.
Approved Paris Agreement in July 2020 with commitment in its updated Nationally Determined Contribution (NDC) to cut GHG emissions by 9% in 2030. EV adoption has a high potential to reduce GHG emissions in the transport sector. As part of NDC plan, in Jan 2022, Ho Chi Minh City has been chosen as the first locality to carry out studies on the e-transportation development plan, involving e-vehicles in the southern hub.
Decision No. 1393/QĐ-TTg in 2012 regarding the National Green Growth Strategy (NGGS). Ministry of Planning and Investment is formulating a new NGGS for the period 2021-2030, considering for vehicle electrification. In addition, some provincial Green Growth Action Plans include transportation considerations and electrification targets.
- Hanoi Green Growth Strategy sets the target of e-motorcycles reaching 5% of total motorcycles in Hanoi by 2030.
- Nha Trang Green Growth Strategy aimed to develop 200 e-buses in circulation by 2025 in Nha Trang.
The National Automobile Development Strategy (2021-2050) proposed by Vietnam Automobile Manufacturers Association (VAMA) to stimulate manufacturing and increase the volume use of e-vehicles. Between 2030-2040, the number of electric vehicles would increase significantly to reach a production capacity of 3.5 million vehicles by 2040.

To enhance the development of EV industry in Vietnam, the Government has recently issued new decisions including:

Decree 10/2022, effective from Mar 1,2022 regarding the exemption of registration fee for Battery Electric Vehicle for the first 3 years and 50% fee reduction for the next 2 years.
Law no. 03/2022/QH15, effective from March 1st, 2022, regarding the reduction of the excise tax rate for battery electric vehicle to a 1- 3% for a period of five years starting from March 1, 2022.

With the current inevitable trend for EVs, the initial development of the battery industry and charging infrastructure, the pioneer of key private manufacturers coupled with the Vietnamese Government’s efforts to promote low-carbon transport development. The EV market in Viet Nam is a promising market although it still requires strong and explicit Government ‘s support in policy, tax incentives, price subsidies, standards and technical regulations, toward EV development.

For further information, please contact our Commercial Specialist: Anh Nguyen (Hanoi) at [email protected] and Nga Hoang (Ho Chi Minh City) at [email protected]