FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
Trường Lăng, founder and 15-year director of Viettonkin, guides the company's strategic direction, makes top-level decisions, and represents the firm in key business negotiations. With over 20 years of consulting experience in Belgium and Southeast Asia, including 15 years specializing in FDI projects, he has established himself as a top expert who helps clients across industries expand their businesses. His deep knowledge of risk management and business operations, combined with his proven track record of successful consultation projects, makes him a valuable partner for investors seeking quality consulting services.
A few years ago, electric cars were still quite a strange concept, now it is considered a new wave in the future car market. Startups and private companies in Vietnam are driving the growth and adoption of electric vehicles through a variety of solutions.
At the end of August, VinFast and Gotion High-Tech Co., Ltd. (China) - one of the world's leading names in the field of clean energy - signed a Memorandum of Understanding. The focus of agreement is LFP batteries supply project and study the plan to build the first Giga factory to produce LFP battery cells (Lithium Iron Phosphate) in Vietnam.
Under the agreement, VinFast and Gotion High-Tech will jointly research, develop and produce LFP batteries. LFP batteries are currently the most popular battery technology in the global electric vehicle market, with outstanding points in safety, long life, without rare materials, limited supply, or being exploited under unsafety labor conditions causing environmental impacts such as cobalt, manganese, etc. In particular, LFP batteries have competitive costs, which help reduce production costs and are suitable for small and medium electric cars.
The study and construction of an LFP battery factory in Vietnam is one of VinFast's efforts to establish a clean energy ecosystem, contributing to the localization of supply, thereby promoting the development of electric vehicle market in Vietnam.
Mrs Thai Thi Thanh Hai, Vice President of Vingroup, shared that "Cooperating with Gotion High-Tech - the world's most prestigious battery manufacturer - is one of VinFast's important action plans in developing smart electric cars and self –controlling supply chain. Our common goal is to establish a clean energy ecosystem, reduce carbon emissions in Vietnam as well as contribute to this great goal in other market in which VinFast participates in business activities".
This partnership is also a big step forward in awareness and acceptance of electric vehicles in Vietnam. According to Bloomberg, the global electric car market is expected to reach more than 90 million vehicles by 2030 - and in Asia, one of the world's largest auto markets, the expansion of the electric vehicle market in Southeast Asia is very important. Currently, right in the ASEAN region, a number of countries such as Thailand and Indonesia are racing to produce, gradually changing appropriate mechanisms and policies to develop electric vehicles. Meanwhile, in Vietnam, in general, electrified vehicles are not yet popular.
According to the statistics of the Vietnam Registry, the number of electrified vehicles (hybrid, plug-in hybrid and pure electric vehicles) in Vietnam is still very small, 140 electric vehicles in 2019 and 900 vehicles in 2020 and by the end of the first quarter of 2021, there will be 600 vehicles, all of which are imported cars and almost are hybrids, electric vehicles are quite rare. This number is too small to calculate the proportion of total car sales over 300,000 vehicles.
Vietnam Auto Market
According to a report on the auto market called AutoCare Factbook 2022, the number of motorbikes in Vietnam is larger than passenger cars by an amazing ratio of 30:1 in 2020. If compared to the same period in countries having income similar to Vietnam, currently, the domestic market still consumes less cars because their cost is higher than in other countries, plus several high taxes and fees, leading to higher selling price. Therefore, motorbikes are still easier to own for Vietnamese people and suitable for conditions and traffic infrastructure in big cities.
The domestic passenger car market is growing at the rate of 18.3% per year from 2015 to 2019. With a population of nearly 100 million people and a growing middle class, more and more middle-class families are starting to buy a car, together with the popularity of shared vehicles has caused the number of vehicles in urban areas to increase rapidly. That leads to a common situation in urban centers of Vietnam: environmental pollution.
Motorcycles are still a popular means of transport in Vietnam
An IQAir survey listed Vietnam as the 15th most polluted country in the world. Along with poor road conditions and outdated urban planning, cities in Vietnam are facing a traffic crisis, resulting in high levels of air pollution and traffic congestion. To solve this problem, in reality, cities like Hanoi and Ho Chi Minh City have plan to gradually restrict and ban motorbikes by 2030. City officials also said that if the public transport system is improved, the ban could be implemented sooner. That makes the adoption and use of electric vehicles much more urgent across the country.
Opportunities and potentials for Vietnamese electric vehicle market
Although the electric vehicle market in Vietnam has not attracted much attention compared to other countries in the region and globally, this does not mean that there are no opportunities. Electric vehicles are an irreversible trend and will be the future as governments move towards clean energy and respect the environment. Vietnam is looking for way to use technology as it develops big cities into smart cities.
Electric cars meet the criteria of smart city concept as more and more people move to urban centers. Vietnam's urbanization rate is around 3% per year with the middle class is becoming increasingly wealthy and aware of their personal choices.
Vietnam's automobile industry development strategy to 2025, vision to 2035 approved by the Prime Minister in Decision No. 1168/QD-TTg dated July 16, 2014 clearly defines "Encouraging production of environmental friendly vehicles (fuel-saving cars, hybrid cars, biofuel-powered vehicles, electric vehicles...), meeting the requirements for emission standards according to the approved roadmap" and "Developing the automobile industry in sync with the development of transport infrastructure".
Catching this trend, enterprises manufacturing and importing cars and motorcycles such as VinFast, Mitsubishi, and Honda have begun to test, produce and launch environmental friendly vehicles such as hybrids, electric motorbikes, electric cars... go ahead and wait for the roadmap on policies and infrastructure for commercial production.
VinFast - Vietnam's first domestic automaker is gradually changing the acceptance and perception of electric vehicles in Vietnam through the launch of its first electric car model in 2021, the VF e34. This product has set a record in Vietnamese market when it received more than 25,000 deposit orders after only a short time of opening for sale. VinFast is also currently producing many models of electric motorbikes and electric buses for Vietnamese market.
In parallel with product development, VinFast also develops a system of charging stations in localities, electric vehicle battery rental workshops. These are the essential infrastructure for electric vehicles to operate. It is expected that by the end of 2021, VinFast has planned 2,121 charging station locations in 63 provinces, with more than 2,000 charging stations providing about 40,000 charging posts for car and electric motorbike for users across the country. Previously, VinFast announced plans to build from 30,000 to 50,000 charging stations.
Although, Vietnam currently does not have specific incentives for electric cars, but private enterprises have made efforts to promote this industry. Startup companies are also trying to promote electric motorbikes as the initial foray into electric vehicles for people in the country. Dat Bike, the only electric motorcycle startup recognized as "originating in Vietnam", has recently called $2.6 million in A pre-series round from a foreign fund group, led by investor Jungle Ventures. . Normally, this fund rarely pours capital into fledgling startups like Dat Bike. This is considered an "exception". The goal of this startup is to create low-cost and locally produced motorcycles having equal or higher capacity than gasoline motorcycles.
Currently, Dat Bike's first electric motorcycle model has the same capacity and distance as gasoline motorbikes. This vehicle has a 5,000 W motor and can accelerate from 0 - 50km/h in 3 seconds, 3 times higher than other electric motorcycles on the market. With a full battery charge, this vehicle can run for a distance of 100 km, twice the actual performance of other electric vehicles on the market. Without using lead batteries, this startup's vehicles use lithium ion batteries, the same chemical composition as the battery cores used in Tesla's electric cars and have a lifespan of up to 10 years. This type of lithium ion battery is also non-toxic and can be disposed of in landfills.
That shows the attractiveness of the market and the potential that electric vehicles will play an important role in the future of Vietnam. Investment companies can gain a first-mover advantage and can reap the benefits when the market is finally ripe. In addition, electric vehicles involve a complete chain of suppliers and related services from supply and distribution of electricity, charging stations and batteries including charging, recycling and disposal. This will create a complete ecosystem of buyers, suppliers, distributors and customers contributing to jobs and the economy.
Enterprises participating in the Vietnamese electrified vehicle market are also promoting the application of digital and technology solutions to serve the specific needs of Vietnamese people through AI, blockchain and even solar energy. However, these efforts will be futile if appropriate policies and legal regulations for electric vehicles are not adopted in Vietnam. The support from the Government will be needed to encourage people to switch to electric vehicles.
In order to be able to develop the electric vehicle market and the larger target of the electric vehicle industry, clearly, there is a need for a framework of preferential policies for electric vehicle users, manufacturers and infrastructure of related industries such as electricity and electronics. As such, Vietnam can promote and exploit the potential of the electric vehicle market in the future.
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Founded in 2009, Viettonkin Consulting is a multi-disciplinary group of consulting firms headquartered in Hanoi, Vietnam with offices in Ho Chi Minh City, Jakarta, Bangkok, Singapore, and Hong Kong and a strong presence through strategic alliances throughout Southeast Asia. Our firm’s guiding mission is aimed towards facilitating intra-ASEAN investments and connecting investors in Southeast Asia with the rest of the world, thus promoting international business relationships and strengthening inter-nation connections.
