Excitement in Vietnam’s EV Industry
The road transport sector in Vietnam makes up a significant amount of its GHG emissions, totaling 18% of national emissions. While currently a cause for concern, the switch to electric transport could be beneficial to both the economy and environment. A report on the EV market in Vietnam found that it has the potential to be a leader in the electric 2-wheeled market as well as a growing demand for rapid passenger vehicles. However, up to this point Vietnam has seen significantly more success in adopting electric 2-wheeled options. Part of this is simply due to the amount of motorbikes in Vietnam. As of 2022, more than 60% of the population of roughly 100 million had a motorbike, whereas in 2020 the car ownership rate was below 6%. Encouraging electric 2-wheeled transport may be the quickest way to reduce the road transport emissions.
However, the relatively low passenger vehicle rate is misleading as it does not account for the anticipated growth of passenger vehicles. With the expected number of passenger vehicles to reach 30% by 2030, it is critical that Vietnam make as many of these vehicles electric as possible. There have been concrete steps made to advance the electric vehicle market in Vietnam. This includes the passing of the Action Program on Green Energy Transition and Reducing Carbon and Methane Emissions in the Transport Sector. This program sets up ambitious benchmarks for the development of the EV industry. The first period of the program, lasting from 2020-2030, emphasizes the production, assembly, and use of EVs as well as improving charging infrastructure. The second phase, lasting from 2031 to 2050, will include the ending of fossil fuel vehicle production for domestic use by 2040 and a requirement of all electric or green vehicles on the road by 2050.
Unfortunately the ambitious objectives set in their action program have not translated into ambitious policies. Despite the potential of electric 2-wheeled transportation drastically reducing the GHG emissions in cities, there has not been meaningful legislation passed to encourage 2-wheeled EV adoption. There has, however, been limited legislation concerned with the adoption of electric passenger vehicles. This includes a three year exemption on electric vehicles for the paying of registration fees. After this ends in 2025, the cost of registration fees for electric vehicles will be half the cost of ICE vehicles.
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This is relatively little financial encouragement for people thinking about making the switch to electric vehicles in Vietnam, especially considering the higher upfront cost. One possible solution to reduce this upfront cost is the implementation of fiscal incentives to the owning and operating of electric vehicles. Fiscal incentives in other countries, including tax exemptions and purchase subsidies, have seen a positive correlation in adoption in the US, China, and several European countries. Another option to encourage adoption is non-fiscal policies such as low-emission zones, priority lanes, and free parking.
The lack of available public charging options is a cause of hesitation for potential EV adopters. To combat this mistrust, there has been significant investment in EV charging stations.
This process has been led by VinFast, which has already installed 150,000 charging ports that cover all 58 provinces as well as the 5 municipalities. The average distance between charging ports is 65 km and continuously shortening.
In conversation with Andrew Chan, Head of Global Charging and Service Partnerships at Vinfast, it immediately becomes clear how Vietnam has been able to take advantage of lessons learned in the US. Original equipment manufacturers are particularly interested in making vehicles that can work with a variety of chargers. Rather than following the previous Tesla model of specific chargers for specific vehicle brands, there is a push for wider inclusion. Chan emphasized the excitement surrounding the growth of the EV industry in the region. As he explained, the manufacturing of gasoline-powered cars has been dominated by Europe and Japan, but there is now an opportunity for new countries to enter the industry. This will be aided by the rapid demand growth for passenger vehicles in Vietnam, as well as proximity to markets and resources.
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