Introduce
Vietnam has a population of nearly 100 million people. The overall car ownership rate is 1/43 people, significantly lower than neighboring markets such as Thailand: 1/10 or Malaysia: 1/20. [1] Forecasting Vietnam’s automobile demand in 2025 will be 800,000 – 900,000 new cars and by 2030, this number will be from 1.5-1.8 million cars.
Vietnamese consumers are increasingly interested in EVs. Mr. Nguyen Anh Duc, Director of Vietnam Petroleum Institute, said that at present, 33% of Vietnamese consumers want to buy EVs. [2] The Vietnam Automobile Manufacturers Association has forecast that Vietnam will have 1 million EVs by 2028 and 3.5 million EVs by 2040.
These data show that the EV market has great potential for expansion in Vietnam. With a strategic location in Southeast Asia, Vietnam can become an EV exporter.
Does EV really help reduce environmental pollution?
Greenhouse gas emissions from vehicles are calculated as the sum of gases emitted directly from the exhaust pipes of fuel-burning gas vehicles ( tailpipe emissions ) and gases released from the production, filtration and transportation processes. fuel ( fuel production emissions) , as well as emissions from the production, operation and disposal of the vehicle itself ( life cycle emissions ).
Exhaust pipe exhaust
EVs do not rely on internal combustion engines like traditional fossil fuel vehicles. Because they are powered by electric motors powered by rechargeable batteries, their tailpipe emissions are zero.
Fuel production emissions
Although there are no tailpipe emissions, emissions are still emitted during the manufacturing and charging of EV batteries. The production of lithium-ion batteries or the processes of mining and heating metals such as lithium, cobalt and nickel used in batteries still require the use of fossil fuels. As a result, to create an 80 kWh lithium-ion battery unit for a Tesla model 3, about 2.5 to 16 tons of CO2 will be released into the environment. [3] Thus, creating a new EV can emit 80% more emissions than a corresponding gasoline car. [4]
Vehicle life cycle emissions
The main source of EV emissions is from the electricity used to charge the battery. If electricity is produced from renewable energy sources, EV lifecycle emissions will be very small. However, in countries where most of the electricity comes from burning dirty coal, these emissions will be much higher.
Even so, the total calculated emissions from EVs are still lower than gasoline cars. On average, a gasoline car emits more than 350 grams of CO2 per mile over its lifetime, while a battery-powered vehicle only produces 200 grams. [5]
According to research by the National Renewable Energy Laboratory ( NREL ) and the Idaho National Laboratory, in its report on the average cost of EV charging in the United States , driving an EV instead of a traditional vehicle can Save drivers up to $1,000 per year. Additionally, in research conducted by Argonne National Laboratory ( ANL ) on light electric vehicles in the United States, emissions from generating electricity to operate an EV were 53% less than emissions from the exhaust pipes of gasoline vehicles. [6]
In the future, if electricity produced from renewable energy sources becomes more popular and consistent, the entire cycle including charging and operation will be greener and cleaner.
Investment fields
The EV market is opening up many attractive areas for investors. Each sector offers unique growth opportunities.
EV production
The world today has more than 100 EV manufacturers. Some of these companies, such as Tesla, GM, Volkswagen, Ford, Daimler, Toyota and Nissan, have built reputations in the field of automobile manufacturing.
In Vietnam, Vinfast is the only EV manufacturer currently. However, with the demand for an increasing number and variety of models, other EV manufacturers may consider investing in this market. There are still many investment opportunities that have not been fully exploited in the EV manufacturing sector.
Electric motorbikes are another story. Many electric motorbike brands already have a market in Vietnam including domestic brands such as VinFast, Datbike and Pega, along with foreign brands such as Yadea, Dibao and MBigo.
Electronic battery
Battery production is also an investment opportunity. The demand for various battery types such as lithium-ion, nickel-metal hydride and lithium-sulfur batteries will increase depending on the design and intended use of the EV.
Additionally, how to manage end-of-life batteries is also a market worth exploring. Improper disposal of EV batteries can lead to heavy environmental pollution. Efficient recycling processes are vital to recover valuable components, minimizing the exploitation of raw materials that cause adverse environmental impacts.
Additionally, demand for advanced battery technology is also increasing. Research and development (R&D) efforts in this area will be important and offer investment potential.
Charging station
Infrastructure such as charging stations is key to the EV market. Public charging stations need to be built in an inclusive and efficient manner, complemented by home and workplace charging solutions.
Currently, VinFast has installed charging stations in 63 provinces and cities, 125 national and provincial highways, with 150,000 charging ports and diverse capacities up to 360 kW.
Mr. Pham Nhat Vuong, Chairman of Vingroup, announced the establishment of V-GREEN Global Charging Station Development Company with an investment of VND 10,000 billion to build, upgrade and perfect the existing VinFast charging station system. . This will make Vietnam one of the countries with the largest density of EV charging stations in the world.
Demand for wireless charging technology, Vehicle-to-Grid ( V2G ) and Vehicle-to-Home ( V2H ) technology, along with telematics control and information management solutions, is also expected to grow. EV market development.
Additionally, solar-powered EV charging stations will have a positive impact on both the EV industry and the energy industry. Developing charging stations of this type will contribute to boosting the demand for EVs.
Train
Market growth will go hand in hand with the need for technician training programs specializing in EVs such as EV maintenance and repair, safety procedures, certification. At the same time, continuing education and training about hybrid vehicles is also an indispensable part.
Educational institutions can also form partnerships with manufacturers to develop more advanced technologies in the EV sector as a whole.
Addresses the transition from traditional vehicles to EVs
After being converted to EV, how will old gasoline vehicles be handled? Some possibilities to consider are as follows: developing a used car resale market, scrap treatment, disposal and recycling programs, modification into EVs, or into vehicles combining electricity and gasoline.
Direction of the Government
The Law on Environmental Protection and Decree 08/2022/ND-CP related to environmental protection in transportation activities have encouraged the development of public transportation and vehicles using renewable energy. , low fuel consumption, little or no emissions. This aims to reduce and eliminate fossil fuel vehicles that pollute the environment. [7]
The government has announced that Vietnam will reduce greenhouse gas emissions and set specific targets for different sectors, for example: “ From now until 2030, 37.5 million tons of CO2 equivalent will be cut in Transportation “ . [8]
EVs, with zero tailpipe emissions, have contributed to reducing air pollution. Even if EVs need to use energy generated from fossil fuels, that amount of fuel still causes less pollution than traditional vehicles. As EVs become more popular and electricity is generated from clean sources, total emissions will also decrease further. [9]
In July 2022, the Prime Minister approved Decision 876/QD-TTg on “Action program for converting to green energy and minimizing CO2 and CH4 methane emissions from transportation”. [10] Decision 876 sets important milestones to convert the number of gasoline-powered vehicles to EVs. From now until 2040, Vietnam will continue its transition to EV. All existing and newly established bus stations will use green energy. By 2040, Vietnam plans to stop producing and importing cars and motorbikes powered by fossil fuels for domestic use; and by 2050, 100% of heavy-duty vehicles in Vietnam will use electricity and green energy.
To achieve these important milestones, the government is committed to implementing key strategies on many fronts, including infrastructure development, offering incentives and policies, investing in research and development development, awareness raising and community education, cooperation and partnerships.
Related benefits
Decision 876/QD-TTg encourages investors to explore opportunities in many fields related to Vietnam’s transition to EV.
Vietnam has implemented policies to reduce the cost of EV ownership: eliminating registration fees for buses using clean energy; develop environmentally friendly public passenger transportation; Reduce special consumption tax ( SCT ) significantly from 5-15% to 1-3%. Registration fees for electric cars registered for the first time from March 1, 2022 to February 28, 2025 have also been reduced to zero. [11]
In addition, the tax rate for electric cars is currently lower than the tax rate for internal combustion engine cars of the same capacity. Specifically, the SCT for internal combustion engine cars ranges from 15 to 150% depending on the vehicle model and cylinder capacity, while the SCT for electric cars has decreased to 1 – 3% (from December 1, 2017). March 1, 2022 to February 28, 2027) and 4 – 11% (from March 1, 2027). [twelfth]
What elements are still missing?
Vietnam currently does not have any comprehensive set of regulations on EV business, production and distribution. These regulations will have to set national standards on commercial, safety and technical aspects.
To speculate how regulations will develop in Vietnam, we can refer to neighboring countries, which have implemented legal frameworks in this area earlier than us.
Australia is perhaps the most advanced neighbor in this area. The Australian government offers both financial and non-financial incentives. Financial incentives include subsidies, interest-free loans, registration exemption, stamp duty exemption, parking discounts for both private and commercial EVs, and toll exemption. In addition, they also have a luxury car tax exemption policy for EVs and more. Non-financial incentives include allowing EV drivers to use large vehicle ( HOV ) priority lanes that help EV drivers beat traffic congestion during rush hour.
Australia applies Euro 6 and Euro 7 fuel standards to reduce vehicle emissions. For example, Euro 6 is a comprehensive set of emissions standards introduced by the European Union ( EU ) to set acceptable levels of pollutants emitted from vehicles equipped with internal combustion engines such as automobiles. Cars, small trucks, heavy trucks and buses.
Besides Australia, other countries with clear EV regulations include China, Japan and South Korea. Their regulations address EV safety, performance and emissions standards. All of this contributes to the overall growth of the EV market. Vietnam does not yet have such a framework but appears to be under consideration.
Conclusion
The future of gasoline cars in Vietnam depends on market demand, government policies, technological advances and environmental commitments. However, one thing is certain: no matter which direction and at what speed the Vietnamese auto industry develops, it will inevitably undergo huge changes.
The transition to EVs is happening rapidly. From the perspective of reducing GHG emissions, although EVs are not a perfect solution to pollution from transportation, EVs still solve a large part of this problem. As Vietnam aims to achieve net zero GHG emissions by 2050, the opportunities for investors in the EV market are huge.
This transformation is not only affecting the automotive industry, but is also spreading to other related industries such as battery manufacturing, charging station infrastructure, technical training, and many others. Vietnam is standing at the pinnacle of this new era.
For further information, please contact:
Lam Nguyen Hoang Thao, Russin & Vecchi
LNHThao@russinvecchi.com.vn
[1] Signs of Vietnam’s domestic electric car market, Vietnam Petroleum Institute ( VPI ) < https://vpi.pvn.vn/tag/xe-dien/ >.
[2] Survey by Frost & Sullivan (USA).
[3] Erik Emilsson and Lisbeth Dahllöf . ” Lithium-ion battery manufacturing for vehicles: 2019 status of energy use, CO2 emissions, metal use, product environmental impact, and recycling . ”IVL Swedish Environmental Research Institute, in cooperation with the Swedish Energy Agency, Report C444, November 2019.
Hans Eric Melin. ” Analyzing the climate impact of lithium-ion batteries and how to measure it . ” Circular Energy Storage Research and Consulting, July 2019. Commissioned by the European Federation for Transport and the Environment.
Dale Hall and Nic Lutsey . “ Effect of battery production on life-cycle greenhouse gas emissions of EVs .” International Council on Clean Transportation, February 2018.
[4] This estimate comes from the GREET (Greenhouse Gases, Emissions Control, Energy Use in Technology) Model of Argonne National Laboratory, funded by the U.S. Department of Energy. ( https://climate.mit.edu/ask-mit/are-electric-vehicles-definitely-better-climate-gas-Powered-cars ).
[5] MIT Energy Initiative: Insights into the future vehicle market , November 2019.
[6] David Gohlke and Yan Zhou, Light EV Evaluation in the United States, 2010–2018, Argonne National Laboratory (March 2019) < https://afdc.energy.gov/fuels/electricity-research >.
[7] Law on Environmental Protection, article 65.7 and Decree 08/2022/ND-CP, article 75.
[8] Decree No. 06/2022/ND-CP dated January 7, 2022.
[9] Ly, Z.; Khajepour , A.; Song, J. Comprehensive review of key technologies for pure EVs. Energy 2019, 182, 824–839.
[10] Decision 876/QD-TTg.
[11] Decree No. 10/2022/ND-CP.
[12] Law on Special Consumption Tax and Law No. 03/2022/QH15 amending and supplementing a number of articles of the Law on Special Consumption Tax.
