Electric vehicle market and Green solution

VCN - When the burden of air pollution is day by day affecting the health and life of every citizen, the conversion to green, environmentally friendly means of transport such as electric vehicles is one of the fundamental solutions, has practical significance not only in Vietnam but around the world. However, developing the electric vehicle market is not simple because this is one of the most difficult, resource-consuming and fiercely competitive fields.
Tax incentives for battery-powered electric cars Tax incentives for battery-powered electric cars
Proposal to extend the deadline for paying excise tax in 2022 for domestically manufactured and assembled automobiles Proposal to extend the deadline for paying excise tax in 2022 for domestically manufactured and assembled automobiles
MoF develops excise tax policy to promote electric vehicle production MoF develops excise tax policy to promote electric vehicle production
VinFast, Vietnam's first domestic electric vehicle manufacturer, in 2023 has officially completed its electric vehicle product range in many segments with VF 5, VF 6 and VF 7 and VF3.
VinFast, Vietnam's first domestic electric vehicle manufacturer, in 2023 has officially completed its electric vehicle product range in many segments with VF 5, VF 6 and VF 7 and VF3.

Fast, hot, fierce competition

Seeing clearly the trend, over the past time, Vietnam's electric car investment and production activities have had spectacular and rapid development with Vingroup's VinFast brand. If in 2020, domestic enterprises had not yet produced and assembled hybrid and electric cars, by 2022 there would have been 1,318 hybrid and 7,483 electric cars on the market. 2023 continued to witness outstanding numbers when 15,486 electric cars were produced and assembled domestically. In the first quarter of 2024 alone, 7,195 domestic electric cars were produced, bringing the total number of domestically produced and assembled electric cars from 2021 to present to 30,298.

Market research company BMI Research forecasts that new electric car sales in Vietnam in 2024 will increase 114.8% over the same period in 2023, reaching about 18,000 units. Of which, sales of pure electric vehicles will rise by 104.4%, expected to reach nearly 17,000 units. Plug-in hybrid electric vehicle (PHEV) sales are also expected to grow significantly, 9 times higher than 2022, to nearly 1,100 units.

It can be said that Vietnam's electric vehicle market is growing quite rapidly with dozens of large and small brands. Therefore, despite its advantages, domestic electric car production is having to compete fiercely with foreign brands.

In the high-end car segment, famous brands such as Mercedes-Benz, BMW, Porsche, Audi, Volvo... all quickly introduce their electric car list in Vietnam.

In the popular car segment, only in June 2024, the Vietnamese auto market witnessed the appearance of a "whirlwind" of car brands from China with models which have fast growth and best-selling in the world.

Notably, the appearance of the world's leading brand in new energy is BYD. Previously, BYD was very successful when entering the Thai market with the BYD Atto 3, BYD Dolphin and BYD Seal models and they are all in the group of 10 best-selling pure electric cars in this market (30,650 BYD's electric cars were consumed by Thai customers in 2023).

Setting foot in Vietnam, with technological advantages, a solid economic foundation, and brand reputation, the Chinese car company has launched a massive campaign for customers to understand their brand and freely experience their products as well as the promise of an attractive price.

Another brand in electric vehicles in China is Chery Group, has taken steps to carefully explore the Vietnamese market as well as plan to build a factory. Geleximco joint venture and Omoda & Jaecoo Co., Ltd. (part of Chery Group) announced an investment plan to build an automobile factory in Thai Binh province worth more than US$800 million, with a capacity of 200,000 vehicles per year. Before the factory will be completed (in 2026), Omoda & Jaecoo will import the pure electric crossover SUV Omoda E5 and the Jaecoo 7 Phev vehicles from Indonesia to enjoy intra-bloc import tax incentives (AFTA).

According to statistics from the Vietnam Register, if in 2020 there were only 6 electric cars imported into Vietnam, in 2021, 33 cars; In 2022, 113 vehicles, so in the first quarter of 2024 alone, the number of electric vehicles imported into Vietnam was 366. And with the massive appearance of Chinese car brands, it is forecast that the number of imported electric cars will increase rapidly in the second half of 2024.

The Vietnam Automobile Manufacturers Association (VAMA) forecasts: Vietnam will hit the milestone of 1 million electric vehicles around 2028 and about 3.5 million electric vehicles by 2040.

The electric vehicle market in Vietnam is increasingly vibrant with the presence of many large automobile manufacturers with policies to promote sales from the high-end car segment to the popular segment.
The electric vehicle market in Vietnam is increasingly vibrant with the presence of many large automobile manufacturers with policies to promote sales from the high-end car segment to the popular segment.

Green and sustainable

Mr. Le Cong Thanh, Deputy Minister of Natural Resources and Environment, said that the conversion to green, environmentally friendly means of transport such as electric vehicles is one of the fundamental solutions, has practical significance not only in Vietnam but around the world.

Supporting domestic automobile production with green and sustainable development trends has been a consistent policy of the Government for many years. Deputy Head of Export Tax and Import Tax Division, Department of Tax, Fee and Charge Policy Supervision and Management (Ministry of Finance) said: Vietnam has issued many preferential policies on taxes, fees and charges for the automobile industry and auto supporting industry to encourage the development of the auto industry and auto supporting industry, as well as effectively implement commitments in the Free Trade Agreement (FTA) of which Vietnam is a member.

Notably, preferential policies for environmentally friendly electric vehicles are quite outstanding. According to the current Special Consumption Tax (SCT) law, electric cars (including fuel cell cars, battery-powered electric cars, and solar-powered electric cars) has a special consumption tax rate of 5 - 15%.

As for registration fees, within 3 years from March 1, 2022, the first registration fee for battery electric cars is 0%. In the next 2 years, the first registration fee is equal to 50% of the rate for gasoline and diesel cars with the same number of seats.

On the business side, although this is one of the most difficult, resource-consuming and fiercely competitive fields, Vingroup has clearly shown its determination to accelerate the roadmap for developing electric vehicles Vinfast brand and steadfast with this choice.

Mr. Nguyen Viet Quang, Vice Chairman and General Director of Vingroup, said: in the context that air pollution has become the biggest threat to the health and future of humanity, electric vehicles are considered one of the most effective solutions to help reduce CO2 emissions for a greener and more sustainable future.

"Our desire is to build as soon as possible a solid foundation for a green Vietnam of the present and the future, and contribute to the goal of reducing greenhouse gas emissions to zero by 2050, which the Government has strongly committed to the international community," Mr. Quang affirmed.

Despite rapid and steady development, VinFast also encounters difficulties as the market size is still quite small and competitors continuously appear, especially competitors from China.

Many worries

According to Mr. Nguyen Hoang Anh, Deputy Head of Transport, Vehicle and Driver Management Department (Vietnam Road Department), despite some initial achievements, Vietnam is still in the early stages of the energy transition process and electric transportation development.

The conversion of transportation business vehicles from gasoline vehicles to electric vehicles is an issue not only for the transportation industry but also for many other industries and fields. To prepare for electric vehicle infrastructure, the Vietnam Road Department has revised the standards for road rest stops, requiring all rest stops on national highways and expressways to have a minimum parking space for charging, accounting for 10% of the total parking spaces at the station.

The rapid development of electric vehicles requires synchronizing charging station infrastructure. Currently, in addition to charging station system invested by Vinfast through VGREEN (the company has planned 150,000 charging ports covering 63 provinces and cities), there have also been third providers of charging services such as EV One company ( it has completed the deployment of more than 20 charging stations across the country and aims to develop more than 100 charging stations by 2025).

However, currently brands importing and distributing electric vehicles in the Vietnamese market have not specifically implemented the construction of a charging station system, but mainly "rely" on third parties or self-charging solutions at home (which is not convenient nor ensure safety). Some electric car companies, like Wuling, even consider residential power outlets as "charging stations" for Wuling Mini EV products without considering fire safety factors, as well as the residential power grid system.

The "whirlwind" of Chinese electric vehicles flooding to Vietnam also raises concerns about vehicle quality and operational safety. For example, recently, BYD has been continuously entangled in many controversies about vehicle quality in markets outside of China. In Thailand, many users have complained about peeling paint and plastic, and BYD cars emitting smoke while charging. In Israel, these Chinese brand cars also continuously have errors of warping of the roof rack when loading items, mold inside the interior compartment. Or recently a car model of the Omoda & Jaecoo brand had a serious safety incident in Malaysia.

On the other hand, electric vehicles also pose a major environmental problem in disposing of expired batteries. An expert in this field said that: A standard battery for electric vehicles has a lifespan of about 8 years. Currently, Vietnam does not have a specific policy on the handling of electric vehicle batteries. In the next 4 or 5 years, cheap imported electric vehicles will be imported into Vietnam with uncontrolled quality and short lifespans, which will lead to environmental hazards from the volume of expired batteries.

Reality shows that the current "picture" of electric car development in Vietnam, in addition to the results of investment and growth, has been revealing many concerns about the problem of green and sustainable development.

By Ha Phuong/ Huyen Trang

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