The spark of the future: Vietnam’s Electric Vehicle Market


Major cities such as Ha Noi and Ho Chi Minh are gridlocked with motorbikes on streets, alleys, and even sidewalks. This in turn has resulted in increased pollution and congestion. Hanoi and Ho Chi Minh City have ranked high in pollution levels globally several times. A poll by IQAir listed Vietnam as the 15th most polluted country in the world. In fact, cities like Hanoi and Ho Chi Minh City have a plan to restrict and gradually ban motorbikes by 2030. City officials also stated that if the public transport system improves then the ban can be implemented even earlier. Compare this with the inevitable trend that is clean energy and electric vehicles, we can see that the stage is set for electric vehicle to boom.
Furthermore, as a fast developing countries in terms of internet and technology, Vietnam’s government is looking to use technology as its develops its major cities into smart cities. Vietnam’s urbanization rate is about 3 percent per year with the middle class increasingly wealthy and aware of their personal choices. While rising fuel prices work in favor of the electric vehicle market, rising electricity prices do not. Electric vehicles transporting tourists can be seen in Hanoi, Ha Long Bay, and Da Nang, while younger students are also seen driving electric motorbikes in Ho Chi Minh City. Vietnam’s first-ever domestic car manufacturer VinFast part of VinGroup is ambitious and has big plans for being a leading automobile manufacturer in Vietnam. While demand is still not ripe, VinFast sold 50,000 e-motorbikes in 2019. While Vietnam has no specific incentives for electric automobiles, private businesses have attempted to promote the industry.

While government incentives are not forthcoming, the presence of private players underlines the attractiveness of the market and shows that electric automobiles will play a part in Vietnam’s future. Businesses that do invest may gain a first-mover advantage and may reap dividends when the market is finally ripe.
Looking ahead, Vietnam is well-positioned to become a low-cost nickel sulfate producer for the region’s EV lithium-ion battery market given the country’s nickel, cobalt, and other mineral ores.
As electric vehicles become more prominent, the government is likely to come up with clear goals on the number of electric vehicles, emission reductions, environmental regulations, and so on. While this change will be gradual and maybe even slow, investors can begin to lay the groundwork for this paradigm shift and gain first-mover advantage. Even if Vietnam is not ready, investors can begin to set up production facilities, take advantage of Vietnam’s free trade agreements and sell to the international market. Manufacturing locally will enable the investor to make use of Vietnam’s tax incentives and free trade agreements while benefiting from a local and more efficient supply chain.
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