Vietnam's electric vehicle market will be promising in 2023

Electric vehicle (EV) manufacturer BYD recently announced plans to build a factory in Vietnam to produce auto parts. This is the Chinese electric vehicle company's first step in its plan to penetrate the Southeast Asian market. Backed by legendary investor Warren Buffett's Berkshire Hathaway, BYD produces clean energy vehicles, including EVs and plug-in hybrids.

In the past, China has been pushing the production of small and affordable electric vehicles. 2022 will see Chinese electric vehicles account for more than 50% of global sales. Chinese manufacturers are showing that they have products that suit the needs of the Southeast Asian market.

“With lower average incomes, Thailand and other emerging Asian countries have different requirements for EVs than the U.S.,” said Hirotaka Uchida, head of the Southeast Asia automotive business at management consultancy Arthur D. Little. If Chinese EV makers win in the ASEAN market, they will likely use it as a stepping stone to gain market share in Europe, the second-largest EV market after their home region.

Vinfast is a pioneer in the electric vehicle sector in Vietnam. Photo: Linh Pham/Bloomberg

Over the years, Vietnam has actively cooperated with the international community in the fight against climate change - which is also the goal that electric vehicles aim for when this type of vehicle uses clean energy. This is also one of the factors that is expected to create development for the electric vehicle market in our country.

Decree 10/2022/ND-CP of the Government stipulates that battery-powered electric cars, within 3 years from March 1, 2022, will pay the first registration fee at a rate of 0%. Within the next 2 years, the first registration fee will be paid at a rate equal to 50% of the fee for gasoline and diesel cars with the same number of seats. This is the latest legal document of our country to encourage the electric vehicle market towards the future of vehicle electrification.

According to the International Trade Administration (ITA – part of the US Department of Commerce), Vietnam’s EV market is in its infancy but still has significant growth potential. Vietnam’s car ownership rate of 5.7% in 2020 is still much lower than other markets in Asia. This rate is expected to increase to 9% in 2025 and 30% in 2030, making Vietnam one of the countries with the fastest growing demand with a growth rate of 10.5%.

ITA also assessed that Vietnam has a young population and a growing middle class, with a strong interest in advanced technologies, fuel efficiency and environmental awareness. These are opportunities for the electric vehicle market to grow at a double-digit rate in the coming years. On the other hand, the electric vehicle market in Vietnam is a promising market although it still needs stronger and clearer support from the Government in terms of policies, tax incentives, subsidies, standards and technical regulations to develop.

VinFast is a domestic pioneer in the field of electric vehicles in Vietnam. In early 2023, the company under Vingroup announced record sales results for electric vehicles: 2,730 VF8 cars and 1,548 VFe34 cars were delivered to customers in December 2022 alone, a number 7 times higher than November 2022 and the highest in the months of last year. Such sales were achieved due to the supply chain gradually stabilizing as well as the optimized production system.