The electric vehicle (EV) market in Vietnam is barely in its infancy. This rapidly developing country is home to two of the three most polluted cities in Southeast Asia. Ho Chi Minh City takes first place, and Hanoi comes in third.
While the Vietnamese public supports the idea of EVs as a solution to the poor air quality, very little has been done to encourage and develop an environment that would promote their adoption.
Vietnam’s Income Levels Are Low
The per capita GDP in Vietnam in 2017 was just USD $2,307. While steadily accelerating economic growth has seen this per capita GDP figure increase by six-fold over the past twenty years, it is generally still too low to support individual personal four-wheeled vehicle ownership.
The primary form of personal transportation in Vietnam is the motorcycle. The country has 40 million of them, and they are a primary source of air pollution. Electrification would greatly help this problem, and will likely first be applied to motorcycles. Automobile sales are relatively low, but are steadily increasing as the middle class and wealthy move from two wheels to four.
What Charging Infrastructure?
There are virtually no EV charging stations in Vietnam. Until the Vietnamese government develops a plan for building out a charging network, there will be little progress in this area. The lack of a charging infrastructure will negatively impact EV sales. Tesla also has no current plans to build out its Supercharger network anywhere in Southeast Asia. Vietnamese consumers who plan to purchase an EV in the near future will need to provide their own charging system for it.
Local EV Production Is Starting Slowly
Ho Chi Minh City-based Electric Car World Co., Ltd. has annual sales of 500 electric vehicles, most of them with less than 16 seats and without doors. These have been sold to tourism companies, hotels, and households engaged in tourism services. Sales are growing, with some being purchased for private use.
The Vinfast automobile company is Vietnam’s first domestically-backed company to commit to manufacturing automobiles, including EVs. Vinfast has engaged Italian design firms Pininfarina and Italdesign to create designs for a range of vehicles. Engineering and production firm Magna will fully develop Vinfast’s first two vehicles, a sedan and an SUV. These will be introduced at the Paris Auto Show in October 2018.
Mitsubishi Vietnam plans to introduce and produce EVs at some point in the future, but Vietnam’s current policies do not yet encourage the growth of EVs.
Government Incentives Are Nonexistent
Vietnam has neither tax incentives nor price subsidies for EVs. In addition to import duties, EVs shipped to Vietnam have been subject to special consumption tax rates ranging from 15-70%, which has increased prices by up to 20%.
Under free trade agreements in which Vietnam is a signatory party, some EVs will be protected from tariffs starting in 2018. These include EVs from Korea and China. EVs from Japan will be taxed at 4%, while Tesla cars from the US will be taxed at 70% under most-favored-nation status.
Electricity Generation Sources In Vietnam
As its economy continues to grow, Vietnam will be afflicted by chronic electricity shortages in the near future. The government’s solution is the construction of more coal-fired thermal power plants. Figures from US Energy Information Administration project that Vietnam’s electricity production sources in 2020 will be:
Oil & Gas: 19%
By the year 2030, this will become:
Oil & Gas: 13%
This means that coal will become the source of more than half of Vietnam’s electricity by 2030, and that the combination of coal, oil, and gas will produce two-thirds or more of the country’s electricity for many years to come. This just moves the pollution from the tailpipe to the power plant, with two out of three electric cars essentially being powered by fossil fuels.
Vietnam Has A Long Way To Go
Vietnam faces a variety of obstacles to its becoming an EV-friendly country. These include low personal incomes, no charging infrastructure, high vehicle prices, lack of supportive government policies and incentives, and dirty electricity. Until these things change for the better, Vietnam will see weak EV sales. It will also continue to suffer from some of the world’s worst air pollution, which will only get worse as the vehicle population increases.