Vietnam Electric Vehicle Market Outlook to 2030

Vietnam Electric Vehicle Market Overview

• The Vietnam electric vehicle market, reaching a valuation of USD 3 Bn in 2023, is driven by government incentives and increasing consumer awareness regarding environmental sustainability. Alon with favorable policies, tax benefits, and subsidies provided by the government to both manufacturers and consumers.
• Prominent players in the Vietnam EV market include VinFast, Toyota, Nissan, and Hyundai. VinFast, a local manufacturer, has been particularly influential, with its strong market presence and comprehensive range of EVs catering to different consumer needs. International brands like Toyota and Nissan have also established a significant foothold, contributing to the competitive landscape.
• In January 2024, BYD (China) introduced three new electric vehicle models Atto 3, Dolphin, and Seal in Vietnam, targeting the compact crossover SUV, hatchback, and sedan segments respectively. The Atto 3, a battery-electric compact crossover SUV, initially launched in China in February 2022, represents BYD's global push. The Dolphin, an all-electric hatchback with a sleek design, and the Seal, an electric sedan, were also showcased, marking BYD's strategic entry into the Vietnamese EV market.
• Ho Chi Minh City and Hanoi are the leading regions in the Vietnam EV market. Ho Chi Minh City, with its advanced infrastructure and higher consumer purchasing power. The city's proactive policies supporting EV adoption and extensive charging infrastructure contribute to its dominance.

Vietnam Electric Vehicle Market Segmentation

The Vietnam Electric Vehicle Market can be segmented based on several factors:

By Vehicle Type: Vietnam electric vehicle market segmentation by vehicle type is divided into passenger, commercial and two-wheelers. In 2023, passenger vehicles dominated the Vietnam EV market. This dominance is driven by increasing consumer preference for eco-friendly cars and substantial government incentives for passenger EVs.

By Battery Type: Vietnam electric vehicle market segmentation by battery type is divided into lithium-ion battery, nickel-metal hydride and others. In 2023, Lithium-ion batteries held a significant market share, due to their superior energy density and longer lifecycle compared to other battery types. These batteries are preferred for their efficiency and performance in electric vehicles.

By Region: The Vietnam electric vehicle market is segmented into four regions: North, South, East, and West. In 2023, South Vietnam emerged as the dominant region, capturing the largest market share. This leadership is attributed to the region's well-developed infrastructure and higher adoption rates of innovative technologies, making it a key area for EV growth and investment.

Vietnam Electric Vehicle Market Competitive Landscape

• Hyundai's Autonomous EV Introduction: In 2024, Hyundai introduced a new line of software-defined vehicles (SDVs), autonomous electric vehicles, showcasing advanced self-driving technology. This innovation is expected to revolutionize the EV market in Vietnam by offering enhanced safety and convenience features. The new Hyundai EVs are equipped with state-of-the-art sensors and AI-driven systems, allowing for seamless navigation and obstacle avoidance in various driving conditions.
• Toyota's Electric Vehicle Launch: In 2024, Toyota plans to phase out gasoline-only vehicles in favor of a hybrid-dominated lineup, reflecting a significant change in its long-term strategy. This move is part of a multi-pathway approach that includes hybrids, hydrogen fuel-cell vehicles, and other emerging technologies, while also aiming to convert about 30% of its global fleet to EVs by 2030.

Vietnam Electric Vehicle Industry Analysis

Vietnam Electric Vehicle Market Growth Drivers:

• Increasing Consumer Adoption: The number of electric vehicles registered in Vietnam surged to 2-4 thousand units in 2022, reflecting a growing consumer shift towards eco-friendly transportation. This rise is driven by the expanding awareness of environmental issues and the long-term cost benefits of electric vehicles over conventional internal combustion engine vehicles. As more consumers recognize the benefits of EVs, the adoption rate is expected to continue its upward trajectory.
• Expansion of Charging Infrastructure: In 2024, Vietnam added 5,000 new public charging stations, increasing the total of over 15,0000 across the country. This expansion is crucial for supporting the growing number of electric vehicles and alleviating range anxiety among potential buyers. The government's plan to further double this number by 2026.
• Corporate Fleet Electrification: Major corporations in Vietnam, such as Vingroup and Masan Group, announced plans in 2024 to electrify their vehicle fleets, adding electric vehicles to their operations. This move not only reduces their carbon footprint but also sets a precedent for other businesses to follow suit, further driving the demand for electric vehicles in the corporate sector.

Vietnam Electric Vehicle Market Challenges:

• High Initial Costs: Despite government subsidies, the initial cost of electric vehicles remains a barrier for many consumers. This price difference deters many potential buyers, particularly in the mid-income segment. While subsidies aim to make EVs more affordable, the upfront investment required for these vehicles is still higher compared to traditional internal combustion engine cars. This financial hurdle is especially challenging for mid-income earners, who may find it difficult to justify the higher initial expenditure despite the long-term savings on fuel and maintenance.
• Limited Battery Life and Recycling: The average lifespan of EV batteries in Vietnam is around 7-10 years, after which they need to be replaced. As of 2024, there are limited facilities for battery recycling, posing an environmental challenge and additional cost burden for vehicle owners. Developing a robust battery recycling infrastructure is essential to mitigate this issue.

Vietnam Electric Vehicle Market Government Initiatives:

• Import Tax Reductions: The Vietnamese Ministry of Transport has proposed a $1,000 subsidy for buyers of EVs to encourage the switch to green vehicles. This could be a significant incentive for consumers. Vietnam currently has a 100% import duty on fully built EVs, similar to India's tax rate. VinFast, a Vietnamese EV maker, has requested the government to cut this to 70-80% for a limited number of vehicles over a two-year period.
• Investment in Charging Infrastructure: The government committed to develop a nationwide network of charging stations. This investment aims to double the number of public charging stations to 30,000 by 2026, ensuring that EV owners have convenient access to charging facilities.

Vietnam Electric Vehicle Future Market Outlook

The Vietnam electric vehicle market is expected to show significant growth driven by continuous government support, advancements in EV technology, and increasing consumer demand for eco-friendly transportation solutions.

Future Market Trends

• Increased Market Penetration: By 2028, the Vietnam EV market is expected to see substantial growth. This increase will be driven by continued government incentives, declining battery costs, and rising consumer awareness of environmental benefits.
• Advancements in Battery Technology: Significant advancements in battery technology are anticipated over the next five years, leading to longer battery life and reduced charging times. By 2028, new battery technologies could increase the average driving range of EVs to over 600 kilometers per charge, making them more appealing to consumers.