E-mobility Seminar Sheds Light on Vietnam’s EV Market

Vietnam’s emerging electric vehicle (EV) sector holds a lot of promise but also faces a number of challenges. These were discussed in depth at an e-mobility seminar in Ho Chi Minh City by a number of experts in the field. Here’s what they had to say.

An e-mobility seminar held at the Green Economy Forum and Exhibition 2022, has seen industry insiders confirm Vietnam’s potential with respect to its EV industry.

The seminar compared Vietnam to its regional peers, with guest speaker, Laurent Genet, the CEO of Audi, noting that by 2030 up to 37 percent of the car market in Singapore and 30 percent in India would be electric.

However, attendees also heard that in Vietnam there were a number of challenges the EV market would need to overcome before it could reach comparable numbers.

Demand for electric vehicles in Vietnam

The car market in Vietnam is growing exceptionally fast. For every 1000 people in Vietnam, there are at least 22 cars. Also, according to Statista, in 2022, just over 50 percent of Vietnamese people expressed an intention to purchase or lease a new car.

At the same time, transportation is the biggest contributor to greenhouse gas emissions in Vietnam, accounting for 19.3 percent of annual emissions.

Furthermore, according to IQAir, by the end of 2021, the concentration of PM2.5 fine dust in Vietnam was 4.9 times higher than the WHO’s recommended level. This puts Vietnam at number 36 worldwide in terms of air pollution and creates a burden on Vietnamese peoples’ health.

As a result, Vietnamese consumers are looking for carbon free transport alternatives.

In addition, the Vietnamese government has set a goal of building smart cities in 41 localities, in which EVs will fare far better than many other types of automobiles, at meeting technological and environmental standards.

But in order for Vietnam’s EV market to truly come into its own, the industry will need some support.

Government support for a EV market development

The Vietnamese government has recently taken clear action to improve the penetration of EVs in Vietnam’s car market, attendees at the seminar heard.

For instance, before 2022, EVs that were imported were subject to special consumption taxes ranging from 15 to 70 percent. This, however, was changed on March 1, 2022, when the excise tax rates for EVs were reduced by up to 12 percent.

In addition, the Prime Minister has issued a Decree laying out a road map for reducing the registration fees on electric vehicles. Specifically, within three years of the Decree being issued, the registration fee for battery-powered electric cars will be eliminated. Until then, the registration fee will be half that of petrol and diesel cars with the same number of seats.

There are, however, further steps that can be taken.

Singapore, for instance, has launched a series of initiatives since 2011, led largely by the Land Transport Authority (LTA). These measures include the provision of charging infrastructure, the New Vehicular Emissions Scheme, and rebate schemes for buyers of electric cars.

Similarly, in India, to boost demand for EVs as well as motivate manufacturers to invest in EV research and development, the government has launched a number of initiatives. These include a battery swapping policy, establishing special electric mobility zones, and tax incentives.

By comparison, Vietnam has been somewhat slower to adjust policy to promote the development of the EV sector, however, it is now pushing forward.

Vietnam’s homegrown electric vehicles

Vietnam’s EV market has welcomed products from major global brands, namely Mercedes-Benz, Tesla, Honda, and Peugeot.

It has, however, also started producing its own electric vehicles too.

In 2021, domestic carmaker VinFast officially handed over its first electric car making it the first Vietnamese-branded electric car company in the country.

Since then, VinFast has reported the handover of 4,200 electric cars. This is remarkable growth compared to the 190 registered electric cars in Vietnam in 2019 which were all made overseas.

VinFast’s participation in the EV market, as a domestic business, has also firmly encouraged the expansion of the EV sector and its supporting industries.

Nevertheless, there are still barriers that the EV industry faces.

Challenges facing the EV market in Vietnam

Customer awareness

Electric cars are often seen as inconvenient for traveling long distances and in their early days this was the case. It has, however, changed as technology has advanced, but this perception, in many ways, has not. Developing a public awareness campaign around the current abilities of electric vehicles may be necessary to foster growth in the sector.

A lack of variety

Electric vehicles that can satisfy the price, capacity, and type of vehicle that Vietnamese consumers are looking for are not widely available. Expanding product lines and extending distribution networks may help to overcome this issue.

Charging infrastructure

Charging stations are not yet ubiquitous in Vietnam. The current network needs to be extended in line with customer needs and existing power infrastructure. This means they should be placed at regular intervals along popular routes but also near transmission lines with the capacity to meet their electricity needs.

A lack of incentives

Though the government has created incentives for consumers if they buy an electric car, these are not yet sufficient. Petrol vehicles, for example, are still more convenient and relatively cheap to run. Additional taxes could make these vehicles less attractive and subsequently steer consumers toward electric vehicles.

Investing in Vietnam’s EV market

Overall the e-mobility seminar in Ho Chi Minh City saw experts emphasize that technology and infrastructure would need to be at the heart of Vietnam’s EV revolution. This, however, will require vast investment which presents a unique opportunity for international car markers and financiers.

In 2021, Vietnam Briefing, took an in depth look at Vietnam’s electric vehicle market and the opportunities for investors and many of these claims still ring true. FTAs as well as low production costs are still creating a fertile environment for investment that automotive manufacturers may be able to take full advantage of.

For more information see: Why Investors Should Consider Vietnam’s Electric Vehicle Market