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Vietnam’s electric vehicle industry: Opportunities in 2022

Vietnam’s electric vehicle industry: Opportunities in 2022

Tuesday 08, 02 2022
With the potential to develop clean power sources, Vietnam was the first country in the region that succeed in producing electric cars domestically. Vietnam’s electric vehicle is anticipated to be booming in 2022, with new support coming from the Government’s policies.

Vietnam’s electric vehicle industry to grow in 2022

Electric vehicles brought a new breath to the automobile industry of Vietnam in 2021. VinFast’s VF e34 was the foundation for converting from internal combustion engines to environmentally-friendly electric vehicles in Vietnam.

VinFast continued introducing VF7, VF8, VF9 to the electric vehicle segment and claimed that they would stop internal combustion engine vehicles and concentrate on electric cars by the end of 2022.

Such ambition to invest in the obvious 2022 trend of electric vehicles in Vietnam is shared among VinFast and other big names such as KIA, Mercedes-Benz, Toyota, etc. KIA introduced the KIA EV6 to the Vietnamese market in mid-2021 and will be putting this electric car on sale starting 2022.

VinFast

Toyota, Volvo, Mercedes-Benz, Tesla, etc., have either introduced or planning to put their distinguished electric vehicles brand on sale in Vietnam in 2022. FDI enterprises such as Mitsubishi Vietnam, Porsche Vietnam, etc., have also started constructing charging stations in preparation for electric vehicles distribution.

2022 is predicted to be a booming year for Vietnam’s automobile market, especially with the electric vehicles segment.

Chances and Challenges for Vietnam’s electric vehicle industry

Vietnam is a promising electric vehicles market. The country has a population of about 100 million and is full of potential to create clean power such as wind and solar power to provide the demand of the electric cars industry. Vietnam was also the first country in the Southeast Asia region to have a company that successfully manufactured electric cars, giving them a lead in developing the electric cars industry compared to Thailand or Indonesia.

electric vehicles market

There remains large room for the growth of the electric vehicle industry in Vietnam. Mr. Pham Tuan Anh, Deputy Director of the Industry Agency (under the Ministry of Industry and Trade), said that in Vietnam, there had been no companies besides VinFast that manufacture electric vehicles. In general, electrified vehicles are not popular in the country.

The number of electrified vehicles in Vietnam, including hybrid, plug-in hybrid, and pure electric ones, is still low. In 2019, there were 140 electric vehicles, in 2020 it increased to 900, and by the end of the first quarter of 2021, the number was 600. All were imported vehicles, and almost all were hybrids. Plug-in hybrids and battery electric vehicles accounted for a very small percentage.

Vice Chairman of the Vietnam Automobile Manufacturers’ Association (VAMA), Hiroyuki Ueda, admitted that electric cars in Vietnam are still rare and almost no car manufacturers have focused on business investment, except for VinFast.

To enhance the development of the electric vehicle industry in Vietnam, the Government has recently issued new decisions, serving as the motivation for electric vehicles to reach more people.

Specifically, the excise tax on battery electric vehicles under nine seats is only 3% from March 1, 2022, and it will be applied for five years. Currently, the excise tax on electric cars is applied at 15%, and the tax for gasoline cars with nine seats or less is calculated according to the cylinder capacity.

In particular, the registration fee for electric cars from March 1, 2022, is also exempted for three years, according to Decree 10/2022/ND-CP. Decree 10 will be a solid premise for the development of the Vietnamese electric vehicle market in the future.

Aside from such incentives, Vietnam’s electric vehicle industry will still have several obstructions to overcome.

Currently, there is almost no policy to encourage the development of electric vehicles in Vietnam. Electric vehicles so far have only received special consumption tax incentives, which are lower than petrol and diesel vehicles. Along with policies, infrastructure, unsynchronized regulations and standards are also major factors affecting the development of electric vehicles in Vietnam.

electric vehicles in Vietnam

According to Mr. Trieu Viet Phuong, Deputy Director of the Vietnam Standards and Quality Institute (under the Ministry of Science and Technology), despite efforts, the number of national standards and the system of national technical regulations for electric vehicles is still lacking and not synchronized with the world standard system, so it needs to be supplemented.

Mr. Hiroyuki Ueda stated that without the support of the Government, it would be difficult for VAMA members to invest in electric vehicles in Vietnam, and that is why electrified vehicles are not yet popular.

 

Compiled by VietnamCredit

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