Target to reduce 226 million tons of CO2 emissions

The World Bank's recently released report “Vietnam: Proposal for a National Roadmap and Action Plan for the Transition to Electric Vehicles” outlines a roadmap for realizing Vietnam's ambitious goals.

Specifically, by 2030, 50% of urban vehicles and all buses and taxis will be electric. The goal is to completely convert road vehicles to run on electricity or green energy by 2050.

This transition will reduce 5.3 million tons of CO2 emissions (equivalent to 8% of Vietnam's emission reduction target) by 2030 and 226 million tons (equivalent to 60% of the target) by 2050.

This report states that in the transportation sector, the combustion of gasoline and diesel by vehicles using internal combustion engines emits significant amounts of air pollutants such as nitrogen oxides, sulfur oxides and particulate matter with a diameter of 10 micrometers or less (PM10).

These emissions contribute to local air pollution, leading to serious environmental damage and threatening people's health.

electric car
The transition to electric vehicles in Vietnam will mainly take place in the 2-wheel vehicle segment from now until 2035.

Currently, road transport is by far the largest contributor to greenhouse gas emissions, accounting for about 85% of the transport sector’s emissions. In 2022, two-wheeled vehicles (motorbikes and scooters) will account for 28% of emissions; buses and inter-provincial coaches will account for 11%; cars will account for 6%; and trucks of all sizes will contribute up to 56% of emissions.

Previously, the Prime Minister of Vietnam approved the "Action Program on green energy conversion, carbon and methane emission reduction in the transport sector" through Decision 876, July 2022.

This important decision is the first policy in Vietnam with a specific target of reducing the contribution of the transport sector to total greenhouse gas emissions across the economy by about 7.2%. This is also an important step for Vietnam to achieve its Nationally Determined Contribution (NDC) under the Paris Agreement and its net zero emissions target by 2050.

Total electric vehicle sales must reach 78 million units

The World Bank report also provides a series of policy recommendations for Vietnam to achieve the goals set under Decision 876, with an emphasis on converting transportation to electric vehicles.

However, the transition to electric vehicles is considered a complex process, covering a multi-industry ecosystem focused on the development of electric public transport, including promoting the supply and production of electric vehicles (EVs), incentives for EV demand, deploying a network of charging stations, preparing the electricity industry to adapt to electric vehicle charging activities, etc.

“The essential first step for this transition is to establish an intergovernmental body to lead and coordinate efforts throughout the transition,” the report recommends. The Ministries of Industry and Trade, Transport, Planning and Investment, Science and Technology, and Finance will play leading roles in their assigned areas at this intergovernmental body.

The efficiency of this intergovernmental body will have a decisive impact on optimizing the speed and costs associated with the transition.

The report emphasizes that to achieve the target of electric vehicle usage, sales of this type of vehicle in Vietnam need to increase from 500,000 units in 2022 to about 1.5 million units in 2030 and 7.3 million units in 2050. This figure corresponds to a market demand for all types of electric vehicles of more than 7 million units in the period 2024–2030 and 71 million units in the period 2031–2050.

electric car
Vinfast officially becomes the car brand with the number 1 market share in Vietnam in the first 10 months of 2024.

Accordingly, before 2035, two-wheeled vehicles (2W, including motorbikes and scooters) are expected to still dominate the Vietnamese vehicle market, although overall demand tends to decrease. The condition promoting the transition to electric vehicles is the increase in the use of electric two-wheeled vehicles (E-2W), as has been the case since 2014.

Vietnam is the second largest market for electric two-wheelers in the world, after China. In 2022, electric two-wheelers will account for 12% of total 2W sales. Therefore, Vietnam is ready to rapidly accelerate the use of E-2W on a much larger scale.

In fact, the market for electric two-wheelers in Vietnam is quite diverse and vibrant, with many suppliers competing in terms of quality and price. Consumer acceptance of E-2W is quite high, especially in urban areas. In some E-2W segments, the purchase cost and total cost of ownership can compete with gasoline-powered two-wheelers.

In the passenger car (PC) segment, the World Bank report clearly shows that Vietnam has a great opportunity to move away from conventional gasoline and diesel cars in the process of motorization, moving to the era of electric cars (E-PC).

However, it will take another decade for PC to replace 2W and become the mainstream vehicle choice in the Vietnamese market. Notably, at this stage, the price of E-PC vehicles will become increasingly competitive compared to traditional PC vehicles due to significantly improved performance.

Notably, when VinFast - Vietnam's first domestic electric vehicle manufacturer, launched its first E-PC models in 2021, it immediately captured more than 14% of the total PC market share that year.

The purchase price of some of VinFast’s most popular E-PC models is now on par with that of traditional passenger cars. The total cost of ownership of these E-PC models over 10 years is also reduced by up to 27% thanks to fuel savings from switching from gasoline to electric and less maintenance requirements.

According to VinFast's recently announced figures, this unit delivered more than 11,000 electric cars of all kinds to customers in October 2024, bringing the cumulative total to more than 51,000 units, officially becoming the car brand with the No. 1 market share in Vietnam in the first 10 months of 2024.

The World Bank report also noted that, in addition to the personal vehicle segment, the transition to electric vehicles in the public bus and commercial vehicle segments is equally important, especially in terms of reducing carbon emissions.

Recently, the Hanoi People's Committee approved the "Project to develop a public transport system using electric and green energy buses in the city". Accordingly, by 2035, Hanoi will convert 50% to electric buses; 50% of vehicles will run on CNG/LNG energy.

Previously, Ho Chi Minh City also set a goal of converting all existing buses to electric buses from 2030, and opening 72 new bus routes from 2025, all of which must use green energy.

Switching to electric vehicles to reduce air pollution, Vietnam will save 6.5 billion USD The transition to electric vehicles can help reduce the cost of environmental damage due to local air pollution in Vietnam, with a reduction of 30 million USD by 2030 and 6.4 billion USD by 2050.