Viet Nam’s EV market appears poised for rapid expansion in the next decade, but there could be significant headwinds blunting that growth.

According to BMI Research, a Fitch Solutions research unit, passenger EV sales in the country is expected to at least double this year.

“In 2023, we expect passenger EV sales to expand by 114.8 percent year-on-year to reach around 18,000 units,” said BMI’s report published Thursday.

Specifically, sales for battery electric vehicle (BEV) could surge by 104.4 percent compared to the previous year to nearly 17,000 units, the report said. Plug-in hybrid vehicle, or PHEV, could jump nine-fold year-over-year to almost 1,100 units.

“We currently expect passenger EV sales in Viet Nam to average annual growth of 25.8 percent over 2023-2032 to reach an annual sales volume of around 65,000 units, up from 8,400 units in 2022,” said BMI.

The Viet Nam Automobile Manufacturers Association predicts that EV ownership will reach 1 million by 2028, and 3.5 million units by 2040.

Growth drivers

However, a strong EV growth is expected to be fueled by increased deliveries of VinFast vehicles as the local EV maker steps up production throughout 2023.

Viet Nam’s passenger EV market is currently dominated by VinFast, which holds more than 50 percent market share in 2022, said BMI. 

The research firm pointed out that increased EV production in ASEAN comprising of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam-to boost growth.

In January, Viet Nam’s government said it will continue to exempt import tax on completely built-ups cars from the 10-member bloc until the end of 2027.

Viet Nam’s Automobile Industry Development Strategy until 2025 with a vision to 2035 clarified that Viet Nam encourages the development of environmentally friendly vehicles that meet requirements in emission standards in line with the roadmap approved by the Prime Minister.

Under a Decree recently issued by the Government, battery-powered electric cars are to be exempt from the registration fee for three years, starting from March 2022. 

The National Assembly also agreed to reduce the excise tax placed on electric cars in an attempt to encourage greater investment in developing battery powered electric cars, thereby contributing to reducing environmental pollution from vehicle emissions.

VGP