Electric vehicles contribute to bringing Vietnam closer to the goal of reducing net emissions to zero

(Dan Tri) - HSBC assesses that the development of electric vehicles is taking Vietnam further on the journey towards emission balance and contributing to sustainable growth for Vietnam.

Promoting green energy transition in Vietnam HSBC Bank's Global Research Department has just published a research report related to the electric vehicle market. In recent years, the energy transition has become a focus in Asia and Vietnam is no exception. As early as 2021 at the COP26 summit, Vietnam set a target of achieving carbon neutrality by 2050. In the spirit of the energy transition, the development of electric vehicles in Vietnam reduces carbon emissions and creates green economic growth. Domestic electric vehicle manufacturers have been somewhat successful in greening motorbikes, but growth will slow down later while automobiles seize the opportunity. Currently, Vietnam's electric motorbike market is the largest in ASEAN and the second largest in the world , after China. In the future, Vietnam's electric vehicle market still has a lot of room to continue growing, HSBC said. While predicting the future of a rapidly growing industry is not easy, HSBC estimates that Vietnam’s annual sales of electric motorbikes and cars could rise from under a million units in 2024 to over 2.5 million by 2036.

(Source: HSBC)

The analyst also predicts that electric motorbikes will be at the forefront of Vietnam's electric vehicle development. Compared to electric cars, electric motorbikes are more affordable with higher component similarity, and have a high domestic production rate. Vietnamese consumers who switch to electric vehicles will also be more familiar with motorbikes, a popular means of transport, much more so than relatively expensive cars, with a ratio of 30 to 1. The bank expects that by the end of 2030, electric motorbike sales will stagnate in Vietnam as the domestic motorbike market becomes saturated. At the same time, Vietnam's electric car market has huge untapped potential, given that more than 60% of people owned motorbikes in 2020, while only 5.7% owned cars (according to the International Trade Administration, US Department of Commerce, as of July 2022).

The development of electric vehicles in Vietnam reduces carbon emissions and creates green economic growth, HSBC said (Photo: GM).

What is the key to overcoming barriers for electric cars? Domestic electric car manufacturers in Vietnam, such as industry leader VinFast, will face challenges in replicating the successful model of electric motorbikes in the electric car segment, according to the report. Vietnamese consumers are hesitant due to high prices, fear of insufficient battery power, worries about batteries and concerns about the lack of charging infrastructure. The analysis unit believes that some obstacles in the popularization of electric cars can be solved through government policy support. For example, Vietnam has implemented a policy of exempting registration fees for battery-powered electric cars, reducing import taxes on battery-powered electric cars and exempting corporate income tax for projects investing in battery-powered electric cars. The Ministry of Transport has also proposed a policy of subsidizing $1,000 for each electric car buyer, but is facing opposition from the Ministry of Finance. The key to overcoming the barriers to electric vehicle adoption in Vietnam, according to HSBC, lies in infrastructure investment, which is also an obstacle to the energy transition. HSBC estimates that installing enough electric vehicle charging infrastructure and renewable generation capacity to support the forecast new electric vehicles will require around $12.3 billion in investment and 14tWh of cumulative energy over the 2024-2040 period.

(Source: HSBC)

Vietnam can also upgrade its domestic EV ecosystem by tapping into its abundant rare earth reserves, the second largest in the world after China, according to the analysis unit. Although rare earths are not as common as lithium, which plays an important role in the EV battery supply chain, these 17 rare earth elements are still very important for the EV manufacturing industry. In particular, neodymium and samarium are commonly used in motor magnets. Vietnam’s success in greening its auto industry also depends on maintaining foreign investment and collaborating with domestic enterprises. Japanese and Korean multinationals play an important role in Vietnam’s auto industry.

Dantri.com.vn

Source: https://dantri.com.vn/kinh-doanh/xe-dien-gop-phan-dua-viet-nam-tien-gan-muc-tieu-giam-phat-thai-rong-bang-0-20240509153714015.htm