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Developing electric vehicles in Vietnam: Seizing the golden opportunity but do not rush

Trường Lăng

June 7, 2022

News

Developing electric vehicles in Vietnam: Seizing the golden opportunity but do not rush

Trường Lăng

June 7, 2022

Electric vehicles are currently a global trend and are expected to replace fossil fuel vehicles in the future. This is an opportunity that should not be missed, so what should Vietnam do to create momentum for the effective development of the electric vehicle market? 

Environmental pollution due to emissions from vehicles is an urgent global problem. Therefore, electric vehicles are considered as a solution to save energy and reduce air pollution. Many developed countries such as the US, China or European countries have achieved certain achievements in the process of domestic development and at the same time targeting the international market.

According to statistics of the International Energy Agency, the number of electric vehicles sold in 2020 increased by 70% compared to 2019. The total number of vehicles in circulation in 2020 is estimated at 3 million vehicles. In which, the estimated number of vehicles in Europe is 1.4 million vehicles, followed by China with 1.2 million vehicles and the US with 295,000 vehicles.

In Southeast Asia, neighboring countries such as Thailand, Singapore and Indonesia are also racing to develop the electric vehicle market. Vietnam has a population of nearly 100 million people, but the number of electric vehicles is still very limited, so it is considered a very potential market for green and environmentally friendly vehicles.

Currently, enterprises and manufacturers in Vietnam have started testing and launching electric motorcycles, hybrid cars and electric cars.

This is a golden opportunity to develop the electric vehicle industry, Ms. Phan Thi Thuy Duong, Director of VinFast’s Battery Development Centre said:

“Vietnam is almost at the same starting point with other countries in the region. Vietnam is even the first country in the region with a successful domestic production of electric cars, while neighboring countries have almost none.

We need to promptly seize the opportunity. If we delay, in a year or two, when other countries in the region have perfected the legal and infrastructure foundation before us, Vietnam will lose this chance of a lifetime.”

To develop the electric vehicle industry, one of the indispensable factors is the charging station infrastructure. Currently, Vinfast is actively implementing and reaching 500 out of 2,000 charging stations in the phase 1 plan in 63 provinces and cities. It is expected to complete 2,000 charging stations, corresponding to more than 40,000 charging posts of all kinds in 2021.

However, according to Ms. Phan Thi Thuy Duong, Vietnam’s electric vehicle industry still has many gaps in terms of regulations and infrastructure standards. In this regard, Mr. Trieu Viet Phuong, Deputy Director of Vietnam Standards and Quality Institute, The Directorate for Standards, Metrology and Quality of Viet Nam said:

“The current number of Vietnamese National Standards only partially covers the requirements for electric vehicles and key components, but does not fully reflect the requirements that have arisen recently. For example, there is a lack of new standards related to the electric vehicle revolution such as the battery revolution, the charging time revolution, the control system revolution, etc.

The lack of a National Standards system will have a direct impact on the development of the electric vehicle manufacturing and assembly and the supporting industries for electric vehicle production in Vietnam. Manufactured products and spare parts will face difficulties in finding consumer markets and competing with imported products.”

Currently, the world does not have any common standards for charging stations. According to Mr. Nguyen To An, Deputy Director General of the Vietnam Register, before Vietnam or the world has a common standard on charging stations, it is necessary to have a temporary plan to meet the abundance of the market:

“The common desire of consumers is that the charging station must meet common standards and be compatible for all different manufacturers. Currently, manufacturers and countries around the world are also using different charging stations.

I believe that, at this point, we need to temporarily accept manufacturers with different technologies that can use the same charging station. This is in response to the abundance of the electric vehicle market. We can arrange different chargers at the charging station.”

Besides the problem of charging station infrastructure, electricity infrastructure for industry activities is also an issue that needs attention. According to Mr. Vo Quang Lam, Deputy General Director of Vietnam Electricity (EVN), 40,000 VinFast charging posts connected to the power system in the near future could be equivalent to the capacity of Lai Chau hydropower plant.

The electric vehicle load alone can increase by hundreds of MW (megawatt) to GW (gigawatt) in the following years; significantly affect the operation of the power system and power quality. Therefore, according to Mr. Vo Quang Lam, it is necessary to have specific plans and regulations so that the electricity industry can prepare:

“We have talked a lot about planning, if there is a plan for a charging station, it is clear that it needs to be planned soon to know where the 440MW or 1,000MW station needs to be located. I also hope that the Ministry of Industry and Trade, the Ministry of Transport, the Ministry of Science and Technology will soon come together to develop standards for electric charging stations.

Along with that, the charging station standards must be completed, because these stations will affect the substation. Having this charging station will immediately affect the medium-voltage substation supplying electricity to the scale of apartments, urban areas, parking lots, etc.”

According to Mr. Truong Ba Tuan, Deputy Director of Tax Policy Department, Ministry of Finance, having a synchronous charging station system will encourage the use of electric vehicles in the country. Therefore, besides the policy to promote the production of electric vehicles, there should be appropriate policies to promote the development of charging stations:

“The story of incentives for charging stations, when it comes to investment incentives in general, we have to rely on the principles in the Investment Law which are built and designed based on 2 principles: List of industries and areas that need to be encouraged for investment.

Thus, in order to have appropriate preferential policies for the construction and development of charging stations, it is necessary to review relevant legal documents as a basis for policy formulation”.

As experts have commented, Vietnam is having a golden chance to develop the electric vehicle industry. At this time, the incentive mechanisms and policies will be a push for businesses to develop and produce electric vehicles, helping Vietnam quickly catch up with the trend of the world, or at least in the region.

However, the State and departments also need to pay attention, control and prevent massive but inefficient development, causing waste of resources. VOV’s perspective:  Seize the golden opportunity but do not rush.

From an outsider in the race, in just a few years, China has quickly become a “big player” in the global electric vehicle industry, currently accounting for 97% of the global electric car market share.

According to the latest statistics, in China, pure electric cars account for more than 81% of the 5.5 million new energy cars in circulation. There are a total of 1.88 million charging stations nationwide, including 1 million private charging stations and 880,000 public charging stations.

However, besides those successes, China’s electric vehicle industry still has its downsides, which are the consequences of years of massive development.

According to Bloomberg, China’s Minister of Industry and Information Technology said that the country currently has too many electric vehicle companies. Due to being attracted and blinded by policies and incentives, many electric vehicle companies were established and then failed, went bankrupt, only a few successfully raised capital and became prominent.

Notable recent failures include Evergrande Real Estate Group. During the phase of portfolio diversification, this Group decided to jump into the electric vehicle sector and established Evergrande NEV.

This business was proud of its product portfolio of 6 different models, but in reality, no cars have been shipped since the company was founded because the CEOs keep pushing back production schedules. This business even reported a loss of 740 million USD in the first half of this year. According to the Fortune, Evergrande NEV may be the worst electric car company in the world.

Bloomberg’s source also said that, in light of this situation, the Chinese government is considering setting production limits for the electric vehicle sector. Accordingly, provinces cannot give the green light to new projects until excess capacity is put into operation. Resources will only be available to a few selected centers.

To develop an industry, policies need to be one step ahead to lead and orient. However, with the current electric vehicle industry in Vietnam, there are signs that businesses are ahead of the policy.

The consequences have been witnessed through the massive development of solar power. The massive investment in solar power projects while policies, infrastructure and operational capabilities cannot keep up has caused an oversupply of electricity that cannot be mobilized.

Recently, the Ministry of Industry and Trade had to propose to inspect and strictly handle violations of the law by individuals and organizations in the process of implementing solar power development.

That is a lesson that Vietnam’s electric vehicle industry needs to heed. Countries that started later like Vietnam, besides enjoying the advantages, will also face many difficulties and challenges.

In order to develop the electric vehicle industry effectively and sustainably, it is necessary to have synchronous solutions with a medium and long-term vision.

Source : VOV

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