Vietnam's electric vehicle market, holding just 15 per cent of the automotive market share, shows promise but faces significant challenges in scaling up due to infrastructure and regulatory obstacles.
The electric vehicle (EV) market, now featuring around 10 brands, is expanding rapidly, yet critical issues such as the planning of urban charging stations and inadequate infrastructure are stalling growth.
“The development of EVs in Vietnam is encountering major difficulties, particularly in the unreasonable planning of charging stations in cities and the lack of infrastructure to meet the consumer demand for green vehicles,” said Vo Minh Luc, CEO of BYD Vietnam.
EV brands are focusing on major urban markets, but constructing charging stations remains challenging due to limited land availability in densely populated areas, Luc told a seminar on reducing emissions in the automotive industry hosted by Vietnam Investment Review on August 29.
Manufacturers often resort to installing charging stations in residential areas and apartment complexes, but these solutions are proving ineffective due to infrastructure constraints. Concerns over fire risks are also causing many residential areas and buildings to reject requests for EV parking and charging facilities.
Even when locations for charging stations are secured, manufacturers face legal and regulatory obstacles. "Fire safety standards and connection requirements for power sources are unclear and inconsistent, causing significant delays and challenges for investors," Luc noted.
BYD Vietnam is currently collaborating with over 10 partners to develop a nationwide charging network. Luc expressed hope that the government would introduce supportive policies, including land allocation and tax incentives, to facilitate investment in charging infrastructure and drive the growth of the EV market.
As Vietnam strives to achieve net-zero emissions by 2050, the transition to green transportation has become crucial. The Institute of Occupational Health and Environment reports that about 6.5 million gasoline-powered cars, which it labels as "mobile emissions stations," are contributing to severe air pollution in urban areas.
The development of the EV industry could require billions of dollars in low-interest, long-term credit to fund electric vehicle production and related services, said Le Xuan Nghia, Director of the Institute for Carbon Finance Development Consulting.
Nghia suggested that Vietnam could learn from countries that have supported the early stages of their automotive industries by maintaining a banking system robust enough to fund the research, development, and production of EVs.
Regarding the upcoming amendments to the Special Consumption Tax Law, expected to be submitted to the National Assembly in October 2024, Dao Cong Quyet, head of the Communication Subcommittee of the Vietnam Automobile Manufacturers Association (VAMA), suggested that the government consider incentives for hybrid vehicles.
Hybrids, which do not require new battery charging, could help Vietnam ease the pressure on infrastructure investment and the power grid required for charging stations, Quyet said.
VAMA proposed a two-phase roadmap to accelerate the transition to green transportation, with a goal of stabilizing the EV market by 2041 without the need for government support.
The first phase would focus on stimulating demand for EVs through tax incentives, fee reductions, and support for charging infrastructure development. The second phase would involve gradually reducing support for hybrid vehicles while continuing to support EV production.
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