Vietnam EV Market: Sustainability, Opportunities & Challenges

Read this white paper in Vietnamese.

 

Vietnam is on a journey towards the ‘future of mobility’ with the Government’s green energy transformation action program setting a goal for all vehicles on the road to be powered by green energy by 2050 to meet its goal of net zero emissions. But how ready is the market for this transition? 

With this whitepaper, Vero’s mobility-focused brand consulting practice explores several facets of the electric vehicle (EV) market in Vietnam: the goals that various brands are striving for, perceptions of EVs among Vietnamese consumers, and ways for brands to overcome current barriers and capitalize on the market’s potential. As communication consultants at Vero, we aim to provide our perspectives on how brands can expand in this market and get ahead of the game in the coming era of sustainable transportation.  

Electric motorbikes have forged a path — and cars can follow 

In Vietnam, where motorbikes rule the road, the electric motorbike industry is experiencing continued growth. According to the Ministry of Industry and Trade, sales of electric motorcycles have grown by about 30-35% in recent years, making Vietnam the largest electric two-wheeler (E2W) market in the ASEAN region and the second-largest worldwide, after China. 

Sales of E2Ws are predicted to eventually surpass gasoline-powered motorbikes due to growing environmental concerns and surging gasoline prices, a report from motorcyclesdata.com shows. According to Vero IQ, the YoY% growth rate in terms of search volume for E2W in Vietnam is 71% (data measured from Jan 2019 to Mar 2023). This data indicate that Vietnamese consumers are increasingly exploring and considering electric two-wheelers as a viable and eco-friendly means of commuting. 

Yadea, the China-based “world’s largest manufacturer of electric two-wheeled vehicles,” invested 100 million USD in an assembly plant in Bac Giang Province in January 2023 that is expected to produce 2 million electric motorbikes per year. 

The evident success of electric motorbikes in Vietnam serves as a model for electric car brands looking to join the sustainable transportation race. 

Several automotive brands have already established their presence in the local market. The EV industry is a buzz with sales-boosting initiatives by brands from mainstream to luxury brands:  

  • VinFast, the major homegrown player in Vietnamese EVs, has installed charging stations in 63 provinces and is highly active in pushing their collaborations with ride-hailing services and taxis. In addition to its current EV portfolio, Vinfast has announced an upcoming mini electric car that will compete with the Wuling Hongguang Mini EV from China’s TMT that is coming to Vietnam in late 2023.  
  • Mercedes-Benz Vietnam launched its first luxury electric sedan EQS in Vietnam in late 2022. After EQS, Mercedes-Benz will bring 3 more all-electric SUV models to Vietnam, including EQB SUV – small luxury SUV, EQE SUV – mid-size luxury SUV, and EQS SUV – large luxury SUV in 2023.  
  • Other automotive brands, especially those in the luxury car segment like BMW, Porsche, Audi, Volvo have introduced their first electric cars in Vietnam, as well as shared their strategy to launch their electric car portfolio in Vietnam in the near future.  
  • Audi also offers fast charging at two showrooms in Ho Chi Minh City, with their new fast-charging premium lounge in District 1 being free to use in 2023. 
  •  Hanoi-based Selex Smart Electric Vehicles JSC (Selex Motors), a manufacturer of EV battery packs, is currently in a US$3 million convertible note investment round with ADB Ventures – Asian Development Banks’s venture arm, Schneider Electric Energy Access Asia, Touchstone Partners, and Sopoong Ventures. 
  • Leading wheel manufacturer Bridgestone is launching a new product using Enliten technology by the end of 2023. This technology promises a greener, more durable, and lightweight tire but still ensures load bearing and smoothness when the car turns. 

Electric car adoption: Government push, consumer POVs and present roadblocks 

In December 2021, VinFast released the VF e34, the first electric car to be produced in Vietnam as well as the first ever EV sold in the country. That historic moment marked the beginning of a new era for transportation in Vietnam. As of August 2022, nearly 3,000 electric cars had been produced, assembled or distributed nationwide, data from the Vietnam Register shows

The Vietnam Automobile Manufacturers Association (VAMA) forecasts that Vietnam will reach 1 million EVs around 2028, and about 3.5 million EVs by 2040. According to 6Wresearch, Vietnam’s electric vehicle market size is growing at a CAGR of 22.9% during the 2020-2025 period. 

While this may sound ambitious, considering Vietnam only accounts for 0.7% of total EV sales in Southeast Asia (Statista Q3 2022), new government policies and incentives are expected to further promote the use of EVs among Vietnamese consumers.  

Tax incentives pushing green mobility 

Vietnam has implemented a compelling incentive for electric cars, providing a 0% registration fee for battery electric vehicles for three years starting from March 1, 2022. Over the following two years, the registration fee will be merely 50% of what applies to petrol-fueled cars with the same seating capacity. Additionally, the special consumption tax rate for battery electric cars has been significantly reduced to just 1-3% until the end of February 2027, positioning it as a game-changing “springboard” to catalyze the growth of the EV market in the country. 

Consumers acknowledge EV’s environmental benefits 

EVs present a viable solution to combat environmental degradation by significantly reducing carbon emissions and air pollutants compared to traditional internal combustion engine (ICE) vehicles. Vietnamese consumers recognize this fact, as supported by a survey Vero conducted earlier this year. 

Of the 91 respondents – aged 18 to 54 and split equally between males and females – two-thirds of the respondents said they had researched or considered purchasing an EV, with the majority citing environmental protection as their main purchasing driver. Reduced operating costs came in as the second factor, with 69% of respondents saying EVs are more economical than their fuel-powered alternatives. 

Vietnam EV - Sustainability

These findings coincide with the latest report released by NielsenIQ, which showed that 55% of consumers in Vietnam value the sustainability factor in consumption, and 24% are actively living more sustainably to save money. 

Vietnam EV sustainabilityBut, what’s putting the brakes on EV adoption?

While the Vero survey revealed that a majority (two-thirds) of the respondents have researched or considered purchasing electric vehicles, we found some interesting insights into why EV adoption in the country remains relatively slow. 

  • The lack of charging stations is creating range anxiety 
  • Too few people understand the EV technology 
  • The younger generations are the least interested in EVs 

We’ll delve deeper into these current roadblocks and highlight why they must be addressed for the EV industry to gain full momentum in Vietnam. 

The charging infrastructure gap deters EV shift

Promoting sustainable mobility in Vietnam requires associated infrastructures, such as accessible power sources, charging stations, batteries, and battery treatment. VinFast has already installed 150,000 charging ports on about 3,000 charging stations at locations such as apartments, parking lots, highway rest stops, and gas stations. Their charging stations include 11kW normal charging stations, 30kW and 60kW fast charging stations, 250kW super-fast charging stations and 1.2kW electric motorbike charging stations. 

Other brands and startups, including EBOOST and Charge+ are also installing charging stations across Vietnam to encourage the use of more EVs. 

However, our survey found that the charging infrastructure gap remains a significant challenge, making potential customers hesitant to adopt electric vehicles. 

In Vero’s survey, nearly 90% of those who said ‘No’ to the prospect of buying an electric car cited their belief that the current network of charging stations is insufficient, which would cause them anxiety — especially on long road trips. 

Vietnam EV

There’s evidently a huge task ahead for EV manufacturers and brands to place charging infrastructure at regular intervals along popular routes but also near transmission lines with the capacity to meet their electricity needs. 

Vietnam EV

EVs are still an uncharted course

The Vietnamese EV market is still in its infancy, so it’s natural for consumers to be skeptical about an electric vehicle’s functionality versus the ICE automobiles they’ve been using for decades. Many of our respondents admit that they still lack overall knowledge about EVs, their technological features, and their safety. In fact, 63% of respondents said they have never ridden in or driven an EV car. 

More than half of those who don’t intend to buy EVs (17 of 30 respondents) said they are unfamiliar with EVs, while 72% ranked their ability to differentiate between types of EVs as 1 (lowest score). 

Vietnam EV

Educating Vietnamese consumers about electric vehicles should be a top priority for EV brands. By prioritizing education, they can bridge the information gap, dispel myths, and provide clear and transparent information about the advantages of electric vehicles, thereby empowering consumers to make well-informed decisions. 

GenZ and Millennial consumers are unconvinced

Interestingly, while more Gen Z and Millennial respondents (aged between 18 and 34) described EV as “environment-friendly” than any other age group in the survey, these young consumers were also found to be the least keen to buy an EV for themselves.

Vietnam EV


These generations currently make up more than half of the Vietnamese population and are expected to account for around 
40 percent of Vietnam’s consumption by 2030. With their proficiency in innovative technologies and high social awareness, it seems conflicting that they are least interested in shifting gears when it comes to electric cars. 

We have identified two behavioral patterns that are currently influencing Gen Z and Millennials’ hesitancy toward shifting to EVs: 

  • The rise of ride-hailing services in Vietnam, with some of them already using electric vehicles, has made traveling around the city or even between cities easier, making owning a car a low priority among Gen Z and Millennials
  • With the current economic situation, the cost of owning and maintaining a car (either fuel-powered or electric) is significantly higher than their current incomes allow. According to our survey, respondents aged between 18 and 34 have an average income of 10-25 million VND. It’s also worth noting that these young consumers are known to prefer experiences over possession, which explains why they prefer renting a car or using ride-hailing apps to owning one. 

Vietnam EV

Gen Z and Millennial consumers might not be fully enthusiastic about buying EVs at the moment, but they represent the future target market. As they age, build families, and prioritize convenience, EV brands must continuously engage and communicate with them to establish lasting connections and encourage the eventual adoption of electric vehicles.

 

Vero recommendations: EVs race to market success 

Vietnam’s EV landscape has started off at a slow pace, but the potential for substantial growth is undeniable. Brands entering the EV race have a golden opportunity to leverage this burgeoning market by capturing early adopters, building trust, and establishing a strong foothold to reap long-term benefits. 

Here are several actions brands could take that might improve the public’s response to electric vehicles.
 

Streamline hurdles with a user-centric approach 

Vietnam EV Market - Address consumer pain point

With the lack of charging infrastructure the most prevalent concern among Vietnamese consumers, it is important for EV brands to assure them that convenience and peace of mind can be part of traveling in an EV. | Image source: Midjourney

Vietnamese electric vehicle consumers closely resemble Tesla’s initial target market. They belong at the intersection of individuals who have a passion for cars, technology, and sustainability. It’s important to break down their misconceptions about EVs, ease their green mobility shift anxiety, and guide them through the entire experience to fully penetrate the market.  It’s also important to note that educating consumers on the strengths of EVs should be done without denigrating the use of gasoline vehicles. 

Brands should proactively address prevalent concerns about the accessibility of charging stations and the safety of electric vehicle batteries. Doing so can enhance consumer confidence by assuring them that convenience and peace of mind can be part of traveling in an EV, regardless of the distance, weather, or road conditions. 

Another potential strategy is to showcase EV models in Vietnam before they are available for commercial purchase to build hype and gauge consumer interest. This can be done through media coverage highlighting the themes of innovation and sustainability. The target audiences for this approach would include fleet managers and consumers. 

To foster greater familiarity and enthusiasm, brands should actively promote test drive activities aimed at educating customers on driving techniques and the intricacies of EV technology. Additionally, they can introduce programs like “EVs for rent,” which allow interested customers to experience driving an electric car firsthand and assess its suitability for their individual needs. 

Introduce EV models that suit local preferences 

Vietnam EV market

Vietnamese have distinct travel styles – they go in groups and often travel between provinces. Brands entering the local EV market should introduce models that suit consumer preferences. | Image source: Midjourney

Electric car brands that aim to enter the market must understand the needs and preferences of Vietnamese consumers, including factors such as pricing, design, and convenience. 

For one, Vietnamese consumers frequently travel in groups of family and friends between provinces. To cater to their travel preferences, EV carmakers should prioritize introducing models with more seats, such as SUVs. 

For urban driving, however, the opposite could prove more practical: compact microcars are well suited for Vietnam’s many narrow roads and alleys, where cars must compete for road space with throngs of motorbikes, buses, and even street sellers.  

Placing EVs in a local context, such as sponsoring cultural events or arranging photoshoots or test drives with popular celebrities and influencers, can prove to be a compelling marketing strategy that helps brands enhance their visibility and create positive associations among the local community. 

“Local insights are the key to success in the EV race,” says Tran Kim Hoang Yen, PR Account Manager and leader of Vero’s Vietnam Tech & Mobility practice. “As the EV landscape in Vietnam continues to evolve and become more competitive, both foreign and local car brands must embrace a deep understanding of local preferences, values, and pain points and use that understanding as a roadmap to thriving in this promising market and driving the future of sustainable mobility in the country.” 

Embrace authentic sustainability messaging – but dont overplay it 

Vietnam EV market - sustainability messaging

By showcasing concrete actions and realistic results of their sustainability efforts, EV brands can foster greater trust and credibility. | Image source: Midjourney

In navigating their sustainability messaging, EV brands should demonstrate their genuine commitment to environmentally positive practices. However, they should tread carefully to avoid overwhelming consumers with excessive green claims, as skepticism towards sustainability persists in Vietnam. By showcasing concrete actions and realistic results of their sustainability efforts, EV brands can foster greater trust and credibility, assuring the public that their commitment to environmental responsibility goes beyond mere PR stunts.  

Brands can also leverage the interests of government and environmental groups to power discussions around the readiness of the EV charging grid and the enhanced safety provided by EVs (for both drivers and the environment), including the upcoming 2040 milestone when Vietnam plans to impose restrictions on the manufacturing and import of vehicles using fossil fuels. In doing so, they can emphasize a narrative of inevitable progression towards sustainable transportation. This discussion should take place at an industry level, with all major EV makers joining forces in promoting the category in the media and educating government representatives and journalists.   

“As we can see on car enthusiasts’ Facebook groups, for example, consumers place high expectations on the brands they follow and are quick to scrutinize details of their products,” says Vu-Quan Nguyen-Masse, Vice President of Brand & Culture at Vero. “When the conversation moves to sustainability, they will rapidly identify weaker messages or misleading competitive claims. For that reason, brands have more reason to tread with care and craft meaningful messages that foster allyship and engagement with their audiences.” 

Promote green mobility as a lifestyle 

Vietnam EV market - Green mobility lifestyle

EV brands can showcase electric vehicles in relatable Vietnamese settings, such as urban commutes, family outings, or leisure trips. | Image source: Midjourney

Brands can focus less on the features of the product itself than its role as a status signifier that represents a modern lifestyle in line with international trends and individual ambitions. This could be done by identifying like-minded opinion leaders leading conversations about sustainability and shaping the future of Vietnam as a cleaner, wealthier, safer nation and positioning EVs as part of their lifestyles. 

This would require brands to strategically integrate EVs into everyday scenarios and contexts that resonate with the local culture and lifestyle. Using advertising and product placement techniques, EV brands can showcase electric vehicles in relatable Vietnamese settings, such as urban commutes, family outings, or leisure trips, which can help consumers perceive EVs as practical, convenient, and suitable for their daily routines. Rather than high-minded concerns about climate change, they can emphasize how EVs translate to cleaner, more breathable air in urban areas — and issue that affects Vietnamese people daily. 

And as the infrastructure catches up and the government creates broader incentives, there will be an opportunity to leverage that luxury positioning by letting mid-range consumers “join the club.” 

“Brands and consumers already associate EVs with sustainability,” says Dong Ngoc Bich Ngan, Senior PR Account Executive at Vero. “Convincing them to fully embrace EVs as a lifestyle will be a challenge. But conveying the right message – an appeal to social responsibility, cost savings, and a sense of excitement and progress – can effectively encourage the adoption of electric vehicles. Tapping influencers or celebrities who embrace electric mobility can further reinforce the idea that driving an EV is not just an environmental choice, but also an aspirational lifestyle statement.”  

Partner with like-minded industry leaders 

Vietnam EV Market - partnering with like-minded industry leaders - The future of mobility

As Vietnam targets carbon neutrality by 2050, the collaboration between local and international brands to introduce eco-friendly products like EVs is poised to grow. | Image source: Midjourney

Partnering with like-minded industry leaders offers a strategic pathway for EV brands to tap into the growing trend of ride-hailing services in Vietnam, which is especially popular among young consumers.  

By collaborating with local ride-hailing companies, EV brands can make their electric vehicles readily accessible for these services, providing consumers with an opportunity to experience and embrace the benefits of EVs firsthand during their daily commutes. 

VinFast’s successful partnership with another homegrown company, Be Group, exemplifies this approach, promising drivers and passengers a safe and quiet transportation experience at a reasonable rate. Such alliances not only expand the reach and visibility of EVs, but also foster positive associations, positioning them as an attractive and eco-conscious solution for modern urban transportation needs. 

“Vietnam’s transportation industry is currently undergoing a significant push towards a full green transition. This serves as a compelling call to action for industry players to prioritize sustainability in their supply chains. Anticipating a positive impact, we expect to witness more collaborations between local and international brands and suppliers that are aimed at introducing eco-friendly products, such as EVs, tailored to the needs of the local market. The prospect of these partnerships is truly exciting, as they will play a crucial role in advancing Vietnam’s pursuit of net-zero goals.” says Nguyen Lan Trang, Strategic Planner at Vero.

 

This is just the beginning

We hope this report proves useful to EV brands operating in — or looking to enter — the Vietnamese market. But of course, it is just an introduction to this ever-evolving “future industry.” For more in-depth information and strategic analysis tailored to your brand, we welcome you to contact the Vero mobility practice at mobility@vero-asean.com.