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Vietnam’s electric vehicle market insight: much room for development

Vietnam’s electric vehicle market insight: much room for development

Monday 10, 01 2022
Lack of infrastructure and supportive policies are challenges for businesses that plan to produce electric vehicles in Vietnam. However, these challenges cannot deny the great potential of one of the world's most dynamic markets.

Potential market

At the 2021 United Nations Climate Change Conference (COP26), in addition to the strong commitment of countries on net emissions, there was also a commitment to kill off the traditional petrol-powered cars of many countries, car manufacturers and transport service providers.

United Nations Climate Change Conference

Electric cars have become a global craze, attracting both start-up players, traditional car corporations and technology and real estate giants with financial potential.

Vietnam has a potential electric vehicle market. According to consulting firm Dezan Shira & Associates, Vietnam has a growing population and an expanding middle class, which creates great opportunities for electric vehicle consumption as consumers become more and more aware of fuel saving and environmental protection.

Developing the electric vehicle market is also an important component towards the goal of building smart cities with net zero emissions.

There have not been many electric vehicles in the Vietnamese market. Data from the Vehicle Registration Department shows that by the end of the first quarter of 2021 the number of electric vehicles in Vietnam was about 1,500 units, all of which were imported hybrid vehicles while there was not a single rechargeable battery car.

Previously, Mitsubishi introduced the i-MiEV electric vehicle line in Vietnam, along with the installation of a number of charging stations. However, the exploration plan was stopped after a short time due to the failure of the target.

Mitsubishi

New policy on electric vehicles

The reason behind the above failure is believed to be the lack of policies for electric vehicles, which was acknowledged by the Ministry of Industry and Trade in a report submitted to the Government. Currently, new electric vehicles only receive a special consumption tax incentive of 15%, which is much lower than the 35-50% level of traditional cars. This support is not enough to make electric car prices attractive.

Not only the preferential price policy, the electric vehicle market in Vietnam also lacks a synchronous development policy, from technical standards, infrastructure to policies that encourage research and development.

However, Vietnam is having positive policies on sustainable development, with orientations on green economy, carbon neutrality and smart city construction.

The role of the electric vehicle industry in these master plans cannot be denied. Thus, according to analysis by Dezan Shira & Associates, a comprehensive policy on electric vehicles will soon be issued, including objectives, roadmap, technical standards, infrastructure planning and supporting policies on the price of electric vehicles.

Dezan Shira & Associates

 “As electric vehicles become more prominent, the government will set clear targets for electric vehicle development,” commented Mr. Pritesh Samuel, an expert at Dezan Shira & Associates.

Besides, even in the event that Vietnam's policy is not ready, the private sector can completely step into the game of establishing electric vehicle production as leading electric vehicle consumption markets such as China and the EU have both signed free trade agreements with Vietnam.

With the available potentials, many global giants such as Toyota, Volkswagen, and Tesla will not ignore this market. Rumor has it that several electric vehicles will appear in the Vietnamese market in 2022.

market lies The biggest obstacle of the Vietnamese in the tastes of consumers. In recent years, electric cars have become more and more popular, but most people still choose traditional gasoline cars.

However, according to VinFast, with economical operating costs, intelligent integrated technology and environmental friendliness, electric cars will quickly become the first choice. Along with that, efforts to invest in charging station infrastructure and battery rental services also partly dispel consumer stereotypes.

Source: theleader

Compiled by VietnamCredit

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