A charging station of VinFast. (Photo: VNA)This was one of the Ministry of Transport’s proposals onincentives for EV producers and users, which have been submitted to DeputyPrime Minister Tran Hong Ha in a bold effort to promote the transition awayfrom fossil fuel cars and reduce greenhouse gas emissions as Vietnamaims to achieve net zero by 2050.
Accordingly, a sum of 1,000 USD would be provided to buyers foreach EV purchase, which aimed to change the consumption behaviour away fromfossil fuel vehicles, the ministry said.
The ministry suggested three types of EVs to receive incentives,including battery-powered EVs, fuel cell electric vehicles (FCEVs), whichare powered by hydrogen, and solar EVs. Existing policies to encourage the useof EVs of Vietnam only focus on battery EVs (BEVs) with incentives relating tospecial consumption tax and registration fees.
The ministry proposed to add EV manufacturing and assemblingindustries, and battery production to the list of industries that receivespecial investment incentives. It also proposed an exemption and reduction ofimport tax on equipment, production lines, and import of complete componentsand components for the production and assembly of EVs and batteries.
For EV manufacturing, assembly, and maintenance companies, theministry asked for a preferential mechanism that helps them access financialsources. At the same time, a tax incentive mechanism is also needed forimported EVs.
Notably, according to the ministry, many businesses have proposedthe continued application of the special consumption tax incentive of 3% forEVs with nine seats or less after February 28, 2027, for domestically producedand assembled EVs. The companies also asked for VAT exemptions for the firstfive years and a reduction of 50% for the five following years.
The registration fee for EVs is exempt for the first fiveyears from March 1, 2022. In the next five years, from March 1, 2027, the firstregistration fee is 50% of the fee for petrol and diesel cars with the samenumber of seats.
The ministry also proposed exemptions of import tax on componentsand equipment for the installation of electric charging stations, corporateincome tax and land fee for five years and a reduction of 50% for the nextfive years.
According to Dam Hoang Phuc from the Hanoi University of Scienceand Technology, it was critical for Vietnam to not only develop the market forEVs but also build an EV production industry.
EV production was the race not only between makers but alsobetween countries, he said, stressing that good policies would promote thedevelopment of the EV industry.
Charging infrastructure
The ministry also proposed standards for charging stations to beraised together with policies to encourage investment in the development ofcharging stations, which was critical to promoting the development of the EVmarket and production industry.
The ministry said that many companies stepped up to developcharging stations throughout the country.
VinFast, a major EV maker in Vietnam, has developed a system ofcharging stations with more than 150,000 charging ports for electricmotorcycles and electric cars in all 63 provinces and cities.
Another company, EVIDA, also participated in providing chargingservices in Vietnam with EBOOST charging system which now has more than 850charging points across the country.
Vietnam Electricity (EVN) joined the market with the pilotoperation of some charging stations in the central region.
Some car makers also started to install charging stationssuch as Porsche, Audi or Mercedes – Benz with plans to expand the chargingsystem in major cities.
Global companies such as Siemens, Charge and ABB were also eyeingto invest in charging infrastructure in Vietnam, the ministry said.
Although the number of charging stations was increasing rapidly, Vietnamneeds policies and solutions to expand and upgrade the charging infrastructureto meet the demand, the ministry said.
Potential market
According to the Ministry of Transport, there were now only two EVproducers and assemblers – Vinfast, a member of multi-industry Vingroup, andTMT Automobile Joint Stock Company.
Vinfast provides the market with four types of electric cars. Acar with batteries has prices ranging from 538 million VND to more than 2billion VND, while the versions without batteries are from 458 million VND tonearly 1.7 billion VND.
The Thanh Cong Group Joint Stock Company and Truong Hai AutomobileJoint Stock Company have also introduced electric car models to explore themarket and eyed domestic production and assembly.
The number of EVs in Vietnam has increased rapidly in recentyears. From 2018 to 2021, there were only 167 vehicles. By July 2023, thenumber had increased to nearly 12,600. However, they are mainly passenger carsand city buses.
Recently, Geleximco Group said that it planned to invest in an EVplant in Thai Binh province.
To realise Vietnam's commitment to achieving net-zero carbon emissionsby 2050, the Prime Minister approved an action programme on green energytransformation, reducing carbon and methane emissions in the transport sector.
Under the programme, Vietnam will promote the production,assembly, import, and use of electric motorised road vehicles, along withcharging infrastructure in the 2022-2030 period. It is expected that from 2025,all new buses on roads will use electricity and green energy.
From 2030, all new taxis will use electricity and green energy. By2050, all road motorised vehicles and construction vehicles participating intraffic will be converted to electricity and green energy. Vietnam aims tocomplete charging infrastructure to sufficiently provide green energy to meetthe demand of people and businesses nationwide.
According to market intelligence in 2022 of the InternationalTrade Administration, the EV market in Vietnam was in its infancy, yet therewas potential for significant growth, given its young population and anincreasing middle class with strong interest in cutting-edge technologies, fuelefficiency and environmental awareness. “These are opportunities for the EVmarket to grow at a double-digit rate in the coming years,” the report said./.
VNA
