Rising oil prices could help speed climate action by accelerating the shift to electric vehicles, but in Vietnam that would depend much on the infrastructure.
The global average price of Brent crude oil so far this year has stood at around $116 per barrel by late last week. The historic high price reflects the uncertainties about disruptions to supply and additional sanctions related to the Russia-Ukraine situation, while, in Vietnam, after the latest adjustment, the price of RON95 petrol has approached record highs.
Optimists believe that the escalation of gas prices will convince consumers to switch to electric vehicles. The world’s largest electric automaker, Tesla, forecasted vehicle deliveries would comfortably grow by more than 50 per cent on-year in 2022.
The Vietnam Motorcycle Manufacturers Association, which boasts Honda, Piaggio, Suzuki, SYM, and Yamaha as members, announced the total sales for gasoline motorcycle models in 2021 stood at nearly 2.5 million vehicles, down 8.12 per cent compared to 2020 and down 16 per cent compared to 2019.
Meanwhile, domestic electric motorbikes are growing quite well at about 20 per cent per year, the consumption capacity is about 300,000 units per year, accounting for about 3 per cent of the total number of motorbikes sold.
Under the pressure of gas prices along with policy of greening the transport network, prioritising environmentally-friendly vehicles, 2-wheel electric vehicle dealers are expected to continue to grow in the near future, according to the association.
An employee of Dat Bike store, a brand of Vietnamese e-bikes based in Ho Chi Minh City, said that the company’s 2-wheel e-vehicles are currently receiving great attention from users and sales volume has increased by 35 per cent on-year so far this year. Since the Lunar New Year break, the demand has increased further, causing the company to often fall into a situation where there is no vehicle to deliver to customers on time.
According to the employee, cost-saving is a plus point for the current electric vehicle. After just three hours of charging, vehicles can travel around 200km. In addition, electric vehicles also do not need routine maintenance as much as gasoline ones, when the rechargeable battery has a life of 15 years (or 150,000km) and is warranted for up to three years.
Other Vietnamese manufacturers of electric two-wheeled vehicles include PEGA and VinFast. For example, the designed capacity of phase 1 of VinFast electric motorcycle factory is 250,000 vehicles per year, while phase 2 is expected to reach 500,000 vehicles per year and can be scaled up to one million vehicles per year.
After nearly three years since market launch, VinFast has developed eight models of electric scooters and expanded to more than 270 showrooms and agents, 233 service workshops, and a system of charging stations in all cities and provinces across the country.
The company has installed 40,000 charging stations for electric motorbikes and cars, and in 2022 will complete 150,000 charging stations nationwide. Early this year, VinFast announced to stop producing internal combustion engine cars and switch to all-electric vehicle production from the end of 2022.
In Vietnam, electric vehicles have also been a topic of interest for consumers in recent times. The number of electric vehicles on the road is still quite modest, but according to an on-going survey by VnExpress starting March about the solution to the price increase of gasoline, more than 5,000 people chose to “switch to electric vehicles”, accounting for 32 per cent. The rising gas prices and new products on offer are on the minds of some families.
Dang Thi Thuy, a mother of a first-year student in Hanoi, is surprised at the range of available e-motorbikes. “They seem to range from VND19 million ($825) to around VND50 million ($2,200) a unit,” she said. “I’m almost ready to buy a scooter for my daughter. The high gas price is one reason why I am thinking of an e-vehicle for my daughter, but guaranteed quality and convenience is the first condition for selection.”
Meanwhile, Dang Minh Thuan, a 35-year-old from the capital’s Ha Dong district, said, “I have to travel a lot by motorbike, averaging 40-50km a day. I also want to switch to electric vehicles to save money, but I am still wondering about the charging system. It may not yet be convenient enough where I live because there are no proper charging stations.”
Pham Tuan Anh, deputy director of the Department of Industry under the Ministry of Industry and Trade (MoIT), said that the development of electric vehicles depends on the legal framework, measures to encourage additional incentives for e-vehicle sales, and reduced battery prices, in which policy plays a leading role.
“The MoIT proposes solutions to promote the development of the electric vehicle industry in Vietnam. The excise tax rates for battery e-vehicles (BEVs) and hydrogen e-vehicles are kept at the lowest level. Also, renewable energy sources are to be developed to supply clean electricity to electric charging stations, as well as supporting industries to supply components and spare parts for production and assembly,” he said.
The Vietnam Automobile Manufacturers Association last year called on the government to stimulate consumer demand by offering preferential special consumption tax for the development of electric vehicles by cutting 50 per cent of registration fees for hybrid vehicles, 70 per cent for plug-in hybrids, and 100 per cent for BEVs.
The National Assembly and the government have decided to modify excise tax and registration fees for new electric vehicle registrations in the direction of reduction and exemption. Under Decree No.10/2022/ND-CP issued in January, the excise tax on electric cars with fewer than nine seats is softened from 9 to 3 per cent starting from March 1 and will be applied for the next five years.