For over a century, the internal combustion engine (ICE) reigned supreme in the automotive industry. However, a seismic shift is underway, fueled by environmental concerns, technological advancements, and consumer preferences. Battery electric vehicles (BEVs) are rapidly emerging as the new powertrain king, attracting significant investments from automotive giants, startups, tech companies, and suppliers alike. This global phenomenon is mirrored in Vietnam, a market on the cusp of explosive growth in the electric vehicle (EV) segment.
Nguyen Tuan Hong PhucPartner, Head of Customer & Operations ConsultingKPMG in Vietnam and Cambodia
Trieu Khac ThiepDirector, Head of VehiclesChợ Tốt Xe
Explore Vietnam''s electric vehicle market with our latest report. Discover key insights, future trends, consumer preferences, market dynamics driving the transition to electric mobility.
Despite being relatively new in Vietnam''s Electric Vehicle Market, electric vehicles have generated significant local interest, with nearly 70% of survey participants expressing a tendency to buy an EV (including full EVs and hybrid vehicles).
Participants from early Gen Z and Millennials (aged 25-44), with greater financial independence, are more receptive to new and emerging technologies such as full EVs or hybrid vehicles. In contrast, older generations and the youngest group tend to prefer traditional ICE vehicles.
The widespread availability of charging stations is crucial for potential EV buyers. Enhancing this infrastructure will significantly influence and potentially change the minds of those currently hesitant to buy EVs.
Durability, performance, comfort/ interior, and vehicle space are paramount considerations when purchasing a vehicle. Subsequently, financial factors and delivery time also come into play.
Regarding desired EV features, power, range, and charging stations stand out as appealing factors; younger buyers show more interest in sustainability, technology, and insurance benefits.
Key factors influencing customer purchasing decisions at dealerships, along with financial support factors specifically for 4-wheel buyers.
In recent years, Vietnam''s automotive industry has experienced significant growth and development. Although it started a bit later than neighbouring countries such as Thailand, Indonesia, and Malaysia, the potential is promising. Vietnam has already established itself as a key player in the automotive market.
One of the key factors that contribute to Vietnam''s potential in the EV market is the growing manufacturing capabilities in the country. Some ICE and EV models are now produced domestically and exported. The emergence of electric vehicles (EVs) has presented new opportunities for the country to become a regional or even global EV powerhouse.
Additionally, trade agreements between Vietnam and other countries can play a pivotal role in driving Vietnam''s EV industry growth. With one of the largest networks of FTAs among ASEAN countries (in terms of signed agreements), Vietnam can gain access to cutting-edge technology, knowledge, and partnerships with other EV markets, enhancing its capabilities further. It is also important for Vietnam to create a supportive policy environment, which includes tax incentives. This would encourage individuals and businesses to invest in EVs, technology, and supporting infrastructure thereby accelerating the growth of the local market.
In response to this need, KPMG in Vietnam and Chợ TốtXehave embarked on a collaborative research project. This initiative involved a comprehensive survey of over 1,000 participants from diverse demographics across Vietnam, alongside in-depth interviews with six dealerships experienced in selling both traditional ICE vehicles and full EVs.
This comprehensive approach aims to provide a holistic understanding consumer preferences and market dynamics for electric vehicles in Vietnam. When combined with our Annual Global Automotive Executive Survey, KPMG seeks to equip stakeholders with actionable insights to make informed decisions and propel Vietnam''s automotive evolution towards a sustainable and electrified future.
For more detail about the structure of the KPMG global organization please visit https://kpmg /governance.
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Vietnam Briefing has developed into a premium source for insight on doing business in Vietnam. It publishes business news concerning foreign direct investment into Vietnam, including the most important tax, legal and accounting issues. The Vietnam Briefing Magazine was first published in 2009, and is contributed to by investment professionals based in Vietnam.
Vietnam’s emerging electric vehicle (EV) sector holds a lot of promise but also faces a number of challenges. These were discussed in depth at an e-mobility seminar in Ho Chi Minh City by a number of experts in the field. Here’s what they had to say.
An e-mobility seminar held at the Green Economy Forum and Exhibition 2022, has seen industry insiders confirm Vietnam’s potential with respect to its EV industry.
The seminar compared Vietnam to its regional peers, with guest speaker, Laurent Genet, the CEO of Audi, noting that by 2030 up to 37 percent of the car market in Singapore and 30 percent in India would be electric.
However, attendees also heard that in Vietnam there were a number of challenges the EV market would need to overcome before it could reach comparable numbers.
The car market in Vietnam is growing exceptionally fast. For every 1000 people in Vietnam, there are at least 22 cars. Also, according to Statista, in 2022, just over 50 percent of Vietnamese people expressed an intention to purchase or lease a new car.
At the same time, transportation is the biggest contributor to greenhouse gas emissions in Vietnam, accounting for 19.3 percent of annual emissions.
Furthermore, according to IQAir, by the end of 2021, the concentration of PM2.5 fine dust in Vietnam was 4.9 times higher than the WHO’s recommended level. This puts Vietnam at number 36 worldwide in terms of air pollution and creates a burden on Vietnamese peoples'' health.
As a result, Vietnamese consumers are looking for carbon free transport alternatives.
In addition, the Vietnamese government has set a goal of building smart cities in 41 localities, in which EVs will fare far better than many other types of automobiles, at meeting technological and environmental standards.
But in order for Vietnam''s EV market to truly come into its own, the industry will need some support.
FIND BUSINESS SUPPORT Identify the Optimal Investment Destination with Cross Country Competitiveness Benchmarking ⟶ The Vietnamese government has recently taken clear action to improve the penetration of EVs in Vietnam''s car market, attendees at the seminar heard.
For instance, before 2022, EVs that were imported were subject to special consumption taxes ranging from 15 to 70 percent. This, however, was changed on March 1, 2022, when the excise tax rates for EVs were reduced by up to 12 percent.
In addition, the Prime Minister has issued a Decree laying out a road map for reducing the registration fees on electric vehicles. Specifically, within three years of the Decree being issued, the registration fee for battery-powered electric cars will be eliminated. Until then, the registration fee will be half that of petrol and diesel cars with the same number of seats.
Singapore, for instance, has launched a series of initiatives since 2011, led largely by the Land Transport Authority (LTA). These measures include the provision of charging infrastructure, the New Vehicular Emissions Scheme, and rebate schemes for buyers of electric cars.
Similarly, in India, to boost demand for EVs as well as motivate manufacturers to invest in EV research and development, the government has launched a number of initiatives. These include a battery swapping policy, establishing special electric mobility zones, and tax incentives.
By comparison, Vietnam has been somewhat slower to adjust policy to promote the development of the EV sector, however, it is now pushing forward.
Related Reading What is Vietnam''s Mining Capacity for EV Batteries? Vietnam’s EV market has welcomed products from major global brands, namely Mercedes-Benz, Tesla, Honda, and Peugeot.
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