Last December, Vietnamese automaker VinFast officially launched its very own line of electric vehicles (EV), making it the first and only domestic automobile manufacturer to sell electric cars in Vietnam as per Nikkei Asia. Although the company is working on releasing a comprehensive catalogue of EVs, VinFast announced that their initial offering would only include their flagship EV model: a compact SUV dubbed the VF e34.
While the release of the VF e34 is historical as it marks VinFast’s inaugural electric car, the domestic production and subsequent sale of these EVs indicates that the company is also proactively working toward the sustainable development goals (SDGs) that Vietnam is seeking to accomplish. Moving forward, expect EVs to play a critical role in Vietnam’s mission to becoming a more sustainably minded nation.
Vietnam’s Vision for Sustainable Transportation
Although motorbikes are the predominant form of transportation in Vietnam, public consciousness has slowly shifted, and consumers are becoming more aware of their environmental impact, which has helped bolster awareness for EVs. In line with the trend of becoming sustainably aware, Vietnam is planning and implementing initiatives that use environmentally friendly tech across several sectors. One such example is the use of EVs within the public and private transportation sector.
In the YCP Solidiance white paper Public and Private Sector Cooperation: Sustainable Urban Development in Vietnam, the Vietnamese government established three future transportation goals that are centered on achieving sustainability in the automotive area, namely: (1) 250,000 EV units produced annually, (2) 20,000 charging stations to support and accommodate the use of EVs, and (3) 15 – 20% of Hanoi public transportation will use renewable energy by 2025.
Moreover, aside from the goals set by the Vietnamese government and the efforts of private companies like VinFast, preferential policies have also been created to encourage the use of EVs. For instance, the Vietnamese government has implemented a special consumption tax for EVs among consumers wherein rates have only increased from 5 to 15% since 2018 – which is significantly lighter when compared to the tax rate imposed for conventional car purchases with rates rising from 35 to 150%.
Challenges for Implementation
Despite the significant development surrounding the adoption of EVs and its potentially pivotal role in accomplishing SDGs, challenges for nationwide implementation remain. One such obstacle is consumer awareness. While citizens are becoming more aware of their environmental impact in terms of transportation, the overall awareness on the benefit of EVs are affected by high purchase cost as well as factors like travel practicality and lack of infrastructure.
Furthermore, automotive businesses that can help encourage the adoption of EVs are hesitant as there is minor incentive to do so due to EVs’ small market size and potentially expensive manufacturing costs. In terms of resource allocation, while the government has already recognized the importance of EVs there is still need for careful consideration as other sectors will also vie for funds to be allocated.
For Vietnam to overcome these challenges and successfully utilize EVs to help achieve the SDGs, collaboration and support from the private and public sector will be of the utmost importance. The private sector (automotive manufacturers, suppliers) will need to focus heavily on developing infrastructure such as charging stations, manufacturing plants, and battery cell factories to support eventual nationwide implementation. Meanwhile, the public sector (government ministries) should create further policies that incentivize the consumption of EVs both for consumers and producers. Through this collaborative approach that includes several stakeholders, EVs will undoubtedly offer a sizeable contribution toward Vietnam’s goal of becoming a sustainable nation.
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