The global market is witnessing a rapid growth of electric vehicles (EV) and according to forecasts there will be around the world one billion EV by 2040. Looking at Vietnam, currently around 58 million motorcycles and around 3 million cars are registered. And the numbers are increasing as sale rates show 8.500 motorbikes were bought each day in the first half of 2019. 2018 500,000 units were sold which was an increase of 30% to 2017. For 2019 is a total increase of 40% estimated in comparison to the previous year.
Vietnam is the sixth country most affected by climate change and is confronted with acute air pollution generated by the transportation sector in big cities like Hanoi and Ho Chi Minh City. The change from fuel-based to electric based vehicles provides a lot of opportunities to tackle climate change and to improve the current situation in the cities as e-mobility helps to reduce GHG emissions and especially the PM2.5 concentration. EV makes in comparison to fuel-based vehicles nearly no noise and will also help to reduce the noise level within the cities.
A main problem of the EV production is the domestic manufacturing local supply chain. Nearly every component comes from abroad and has been shipped around the world several times and has therefore a high GHG impact until it reaches Vietnam. Even the heart of an EV, the battery, needs to be imported, as there is no local producer of Lithium batteries in Vietnam. Furthermore, there is an overflow of cheap Chinese products.
Another big problem is the unstable power supply in the countryside or during high time in the city. Additionally, an EV four-wheeler needs in comparison to an EV two-wheeler high voltage, which requires high trained workers who now how to maintain the batteries.
The rising extends of cars on the streets of large cities as well as the expanding urban population are creating further pressure on the pollution and environmental issues. The current emission standards are quite outdated and the enforcement of periodical checks for motorcycles has been ineffective. But the potential development of e-mobility also faces significant difficulties. Until now the recycling of lithium seems to be economically unviable as the associated cost roughly equals the production cost of a new one. Therefore, it is necessary to invest into knowledge and high-quality production to enhance the domestic recycling capacity for components such as the cells, the plastic and the aluminum. The emissions standards need to be updated and the enforcement of compulsory periodical inspection needs to be strengthened. and controlled to lower the pollution and the tackle climate change.
The Vietnamese market promises many opportunities for e-mobility. But it also requires a big package of supporting policies. It is important to introduce standards for fuel-based powered vehicles which regulate engines, fine dust fumes, carbon dioxide and yearly checks and emission controls. As EV is still too expensive for most of the Vietnamese population it is important to localize the product to utilize the tax advantage and reduce the sale price. To achieve the goal to promote and to introduce EV it is recommendable to establish a national working group to develop a transparent standard development system. Dialogues with market leaders in the automobile and motorbike industries are necessary to encourage them to offer more varieties of electrical vehicles.
The dialogue contributed to fruitful discussions and a high output of recommendations and activities and commitments. All the comments and contribution will be incorporated into a policy paper which is expected to be released early 2020. A follow up dialogue will potentially be held in HUE City in 2020.