The Southeast Asian electric vehicle market is expected to log a compounded annual growth rate of 32.73% to 2027. One of the region’s first movers in the EV market is Vietnam, where the local industry is on the rise. The country is seeing a paradigm shift from petroleum to electric-powered vehicles, including passenger, commercial, and public transport vehicles.
VinFast, the electric vehicle brand under local conglomerate VinGroup, is currently leading the race for electric vehicle opportunities in Vietnam. As the government aims to develop smart cities in the country’s urban areas, the electric vehicle market share in Vietnam is also expected to increase as it fits the smart city concept.
What does the future of electric vehicles in Vietnam look like, and what are the current and possible opportunities in the electric vehicle market?
Before the COVID-19 pandemic, two-wheelers segment made up 95% of the overall electric vehicle market in Vietnam. Since the demand for two-wheelers is always high in Vietnam, electric motorbikes sold up to 500,000 units before 2020. Pollution and emissions from motorbikes in cities like Ho Chi Minh and Hanoi are becoming more concerning, and there have been plans to ban them by 2030 to combat the country’s air quality problem.
VinFast first launched their electric two-wheelers in 2018, a year after they were founded. The company has the capacity to produce up to 250,000 electric two-wheelers annually and is currently manufacturing around 100,000 electric scooters and mopeds per year. The lack of infrastructure and energy options for electric passenger cars make these options more viable and cost-efficient for Vietnamese consumers.
VinGroup is also rolling out a massive electric vehicle charging infrastructure project for scooters and cars across the country. Recently, they also entered a joint venture with Taiwanese company ProLogium to produce solid-state batteries for their next generation electric vehicles, starting in 2024. Their goal is to produce environment-friendly, safe, and high-performance EV batteries.
While Vietnam is considered the first mover in electric vehicle production in Southeast Asia, Thailand and Indonesia are now racing to keep up. These countries are introducing more favorable policies to attract more investors into their EV manufacturing sector, where incentives and tax cuts were also announced.
Vietnam needs to ensure that its policies support the entry and expansion of companies in the country if it wants to maintain its lead in the electric vehicle market in the region. With no incentives awarded to the industry unlike its neighboring countries, the private sector can help by developing the EV ecosystem in the country that will contribute to new jobs and the economy.
As electric vehicles become the trend going forward, investments in sectors like infrastructure, energy, and manufacturing can help accelerate the growth of Vietnam’s electric vehicle market share. The future of EVs in the country is bright, and with more investments and partnerships underway, it can expect monumental growth in the coming years.