Vietnam Electric Vehicle (EV) Market Outlook to 2028

Vietnam Electric Vehicle (EV) Market Overview

• The Vietnam Electric Vehicle (EV) market has seen rapid growth, with the market size reaching around USD 3 Billion in 2023, driven by increased environmental awareness, government support, and the rising demand for cleaner mobility solutions. Vietnam's urban population and economic growth have led to higher vehicle ownership rates, prompting the demand for electric vehicles, particularly in urbanized regions.

• Key players in the Vietnam EV market include VinFast, a homegrown leader, along with Tesla, Hyundai, and BYD. VinFast has capitalized on local production capabilities, gaining a substantial market share. Tesla and BYD have made significant inroads with premium electric vehicles targeting affluent consumers, while Hyundai has introduced affordable models, targeting mass-market buyers. These companies have invested heavily in EV infrastructure, including charging networks, to support their growing customer base, ensuring competitive pricing and wide availability of their models.
• In March 2023, VinFast launched its latest EV model, VF9, aimed at the luxury segment, priced at around $60,000, marking a milestone in the local EV market. The company also made a significant announcement about expanding charging stations, adding 2,500 new stations across the country by the end of 2024. Meanwhile, Tesla announced a partnership with Vietnamese real estate developers in early 2024 to expand its Supercharger network, enhancing the EV ecosystem to attract more high-end customers.
• The cities of Hanoi and Ho Chi Minh City dominate the Vietnam EV market, largely due to their high levels of urbanization, wealth concentration, and environmental concerns. These cities have seen rapid EV adoption because of their higher income levels and stronger infrastructure capabilities. Moreover, the dense population in these cities creates a pressing need for more sustainable and efficient transportation solutions, leading to an accelerated shift toward EVs. Both cities are also key hubs for government policies and private investments that further drive the market's growth.

Vietnam Electric Vehicle (EV) Market Segmentation

• By Vehicle Type: The Vietnam EV market is segmented by vehicle type into passenger cars, commercial vehicles, and two-wheelers. In 2023, two-wheelers dominated the market share due to the country's reliance on motorcycles for daily commuting. Vietnams motorbike culture, coupled with rising fuel prices, has pushed consumers towards electric two-wheelers as a cost-effective alternative. Additionally, homegrown companies like VinFast have heavily invested in producing affordable and reliable electric scooters, capturing a large portion of the market.

• By Charging Infrastructure: The market is also segmented by charging infrastructure into home charging, public charging, and fast charging. Public charging infrastructure led the market in 2023, driven by the government's focus on building a robust EV ecosystem. Public charging stations have become a priority in urban areas, providing convenience to users and reducing range anxiety. Government and private sector investments in public fast charging stations in shopping malls, office buildings, and highways have accelerated their dominance in this segment.

• By Region: The Vietnam EV market is segmented by region into Northern, Central, and Southern Vietnam. The Southern region dominated the market share in 2023, due to its economic prosperity and the presence of major metropolitan areas, including industrial hubs. The regions advanced infrastructure and higher disposable income levels have made EV adoption more feasible. Southern Vietnam also benefits from early government focus on infrastructure development, which has facilitated widespread EV usage.

Vietnam Electric Vehicle (EV) Market Competitive Landscape

• VinFast Developments: In 2024, VinFast announced a $1 billion investment in expanding its EV production capabilities, targeting both domestic and international markets. The company plans to increase its annual production to 250,000 units by the end of 2025. In addition, VinFast partnered with Vietnam Electricity (EVN) to build 2,500 new charging stations by 2024, bolstering the nations EV infrastructure.
• Tesla Developments: In February 2023, Tesla entered the Vietnam market through a strategic partnership with VinGroup, planning to open five Tesla showrooms in key urban areas by the end of 2024. Tesla's move aims to capture the premium segment of the market, focusing on affluent urban customers. Additionally, the company announced plans to install 100 Superchargers across the country, with a focus on key transit routes.

Vietnam Electric Vehicle (EV) Market Analysis

Vietnam EV Market Growth Drivers

• Rising Fuel Costs and Energy Security: Rising fuel prices in Vietnam have significantly impacted the operational costs of internal combustion engine (ICE) vehicles, with fuel averaging 29,000 VND per liter in 2024. This increase, driven by global supply chain issues and rising crude oil prices, has made electric vehicles (EVs) a more cost-effective alternative. Consequently, both individual and commercial vehicle owners are increasingly adopting EVs to counter fluctuating fuel costs. The government's focus on energy security further boosts demand for locally manufactured EVs.
• Investment in EV Charging Infrastructure Investment in EV charging infrastructure is rapidly expanding in Vietnam, with the government and private sector committing substantial resources. In 2023, Vietnam Electricity (EVN) allocated $100 million to enhance charging infrastructure, targeting the installation of 5,000 stations by 2025. This initiative aims to alleviate range anxiety among consumers, making EVs more practical for long-distance travel. Partnerships with companies like VinFast are also contributing to this growth, as they plan to add 2,500 new charging stations by the end of 2024.
• Government Tax Incentives for EV Manufacturers: To promote domestic manufacturing of electric vehicles, the Vietnamese government introduced a 15% reduction in import duties on EV components in 2023. This initiative is part of the broader National Energy Transition Strategy aimed at increasing local production capabilities. These tax incentives benefit both local manufacturers like VinFast and international brands such as Hyundai, allowing them to lower production costs and making EVs more affordable for consumers.

Vietnam EV Market Challenges

• High Upfront Cost of EVs: The high upfront cost of electric vehicles (EVs) in Vietnam continues to be a significant barrier for average consumers. As of 2024, the average price of an EV was notably higher than that of traditional gasoline-powered cars, which limits adoption, especially among middle-income households. To address this issue, manufacturers and the government are considering battery leasing models to lower initial costs, but such solutions have yet to gain widespread acceptance.
• Limited Battery Recycling Infrastructure: Vietnam's battery recycling infrastructure is currently underdeveloped, with only a couple of facilities operational as of 2023. This lack of capacity raises environmental concerns regarding the disposal of EV batteries, as improper disposal can release toxic materials. The government has recognized this challenge and is working towards enhancing recycling capabilities by 2025 to mitigate the growing waste management issues associated with increased EV adoption.

Vietnam EV Government Initiatives

• National Energy Transition Strategy (2023): In 2023, the Vietnamese government introduced the National Energy Transition Strategy, which aims to phase out internal combustion engine vehicles by 2040 and achieve 100% electric vehicle sales by the same year. This initiative includes substantial investments in EV charging infrastructure, battery production facilities, and incentives for EV manufacturers. The strategy is a critical driver in accelerating EV adoption across the country
• EV Component Tax Reduction (2023): The Vietnamese government introduced a 15% tax reduction on EV components in 2023, aimed at boosting the local EV manufacturing industry. The policy is part of a broader effort to increase domestic production and reduce reliance on imports, while also making EVs more affordable for consumers. The tax reduction has been particularly beneficial to local manufacturers like VinFast, enabling them to expand their production capacity.

Vietnam EV Market Future Outlook

The Vietnam EV market is poised for rapid growth over the next five years, with several factors driving this expansion. The governments continued commitment to reducing greenhouse gas emissions and promoting clean energy is expected to further incentivize the adoption of electric vehicles. The governments collaboration with international manufacturers will further boost domestic production, reducing reliance on imported components. Vietnams strategic initiatives are likely to transform the country into a leading hub for EV manufacturing in Southeast Asia.

Future Trends

• Advancements in Battery Technology Over the next five years, the development of more affordable and efficient battery technologies will be a key trend in the Vietnam EV market. Companies like VinFast are expected to focus on producing longer-lasting batteries with shorter charging times, reducing the overall cost of ownership for consumers. Battery leasing models will also gain traction, making EVs more accessible to middle-income buyers.
• Expansion of EV Charging Networks The expansion of Vietnams EV charging infrastructure will continue at a rapid pace. The country is expected to have a well-established network of fast-charging stations across both urban and rural areas. This will make electric vehicles a more viable option for long-distance travel and reduce range anxiety among users, further accelerating EV adoption.