Electric car production in Vietnam: Huge potential but not easy to exploit

Trường Lăng

June 7, 2022


Electric car production in Vietnam: Huge potential but not easy to exploit

Trường Lăng

June 7, 2022

Transport and Communications Magazine – With great potential, the electric car market in Vietnam has “prepared” to launch with the strong participation of Vinfast. However, limited infrastructure conditions and users’ usage habits are considered to be significant “barriers” in the race to the success of this type of car.

vf e
The first electric car with a Vietnamese brand produced by VinFast

Electric cars – a global trend

In the context of increasingly serious air pollution, electric cars (EVs) – a line of plug-in vehicles with thrust from one or more electric motors, use energy stored in rechargeable batteries for cars from more than 10 years has been recognized as an environmental friendly transportation solution. This technology began to appear in the world from about 2008 and there are more and more great steps in battery technology.

According to the US Department of Energy, compared to internal combustion engines, EV cars are quieter, have no rear end emissions and generally produce lower emissions. As a result, a number of national and local governments have introduced tax reduction, subsidies and other incentives to promote mass-market introduction and adoption of EV cars.

In Southeast Asia, many countries such as Thailand have also soon had a roadmap to promote this vehicle line when announcing a roadmap with a target of producing 250,000 electric vehicles by 2025, including 3,000 electric buses and 53,000 electric motorbike vehicles in March 2020. Not only providing a roadmap, Thailand also has many moves towards taking advantage of the available auto industry resources to develop into a major electric vehicle manufacturing center of the world such as training staff, prepare facilities as well as preferential policies to attract investors or develop research and manufacture fuel cells and electric motors.

Before these moves of Thailand, following the direction of the Prime Minister, the Government Office sent a document to the Ministry of Industry and Trade to consider and study the project to become a center of electric cars and electric motorbikes production in the ASEAN of Thailand. With this message, the Government is expressing its wish that Vietnam will develop the electric vehicle manufacturing industry in the future.

In fact, in Vietnam, there are also businesses investing in the production of electric vehicles. In 2019, Vinfast launched electric motorbikes products and achieved sales of up to 50,000 units. In 2021,VinFast opened for sale the first electric car line VinFast – VF e34 with the announced price of 690 million VND. Nearly 4,000 successful orders on the first day of sale show the eagerness and interest of consumers with this new vehicle. Along with the sale, this business also applied for a series of incentives for the development of electric cars in Vietnam, including a proposal to exempt special consumption tax and registration fees for electric vehicles for 5 years.

Before VinFast, a number of companies also imported electric cars and hybrid petrol cars (Hybrid) to Vietnam. Last August, Toyota brought to Vietnam the first Hybrid models from Thailand, with gasoline fuel consumption of only 4.6 liters / 100 km.

Another foreign car company has also brought the i-MiEV electric car model into the Vietnamese market for exploration. They built some electric charging stations in several localities, but then stopped this plan because it did not meet the target.

Potential but also many “barriers”

One of the strengths in the Vietnamese market is a young population, along with a strong Internet connection speed, and a very high number of Internet users via smartphones. Vietnamese people’s interest in electric vehicle technology has gone beyond current limitations such as high cost and time-consuming battery charging. However, the lack of infrastructure is the biggest obstacle for Vietnam.

Currently, Vietnam does not have a widespread system of charging stations or battery exchange, so it’s difficulty for electric vehicles to develop. Along with that, electric vehicle development policies are not synchronized. Specifically, electric cars are currently only entitled to a special consumption tax of 15% and are exempt from import tax on components for assembly, not to mention technological problems such as time consuming battery charging and short travel distances.

With current technology, the time to fully recharge an electric vehicle is quite long. For example, an electric car that can travel 300 km will run out of power and need about 6 hours to fully charge the battery. Therefore, for electric vehicles to operate normally, it is necessary to have a system of charging stations and battery exchange on the road. If there is no good infrastructure, the driver will have to be very economical such as: cannot use the air conditioner, keep the speed range stable, do not accelerate, emergency brake… If unfortunately there is a traffic jam and it is impossible to turn off the engine, there is a risk that the vehicle will stop in the middle of the road.

Meanwhile, according to calculations, to invest in a battery charging station, the cost is even greater than a current petrol station because it must use modern technology. Therefore, developing a large battery charging or rental network is not easy, requiring a lot of capital and time. Moreover, the current price of electric cars is still higher than gasoline cars, so it is difficult to encourage the choice of consumers.

Currently, the production and assembly of electric cars in Vietnam entitle the import tax rate of 0% for components and the special consumption tax of 70% compared to conventional gasoline-powered cars. These policies are considered to be not attractive enough for businesses and consumers. Therefore, it is necessary to have policies to encourage and support businesses to develop a network of charging stations. Otherwise, electric cars, if they run, will only go around for a short distance. Without infrastructure, electric cars are just for “show”.

Regarding to Vingroup’s recent proposal to exempt special consumption tax and registration fees for 5 years with electric cars under 9 seats, Deputy Minister of Industry and Trade, Do Thang Hai said it “can be considered” for a pilot application. , because it will encourage production and support consumers to use environmental friendly electric cars.

Source : TapchiGiaoThong

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