Vietnam’s EV push fails to bring automakers aboard as sales falter

VinFast’s lackluster performance discourages foreign rivals from entering market

Despite Vietnam’s ambitious plans to expand its electric vehicle market with tax incentives, overseas automakers remain reluctant to make forays in light of the struggles by domestic peer VinFast.

At late October’s Vietnam Motor Show in Ho Chi Minh City, only German automakers Mercedes-Benz and Audi unveiled plans to offer electric cars in the Southeast Asian country.

Vietnam’s market conditions are “such that we cannot release EVs for a while,” said a senior official at a multinational automaker.

The country is offering tax incentives to spur electrification. In March, the special consumption tax at the time of purchase on EVs that seat up to nine people was slashed from 15% to 3%, lowering the rate to less than a tenth that of their gasoline-powered counterparts. Car registration fees have also been reduced for EV buyers.

These measures aim to lower the initial cost of owning electric vehicles, which, according to local reports, carry prices 50% above gasoline automobiles. The shift to electrics has the potential to develop Vietnam’s auto industry and alter its industrial landscape.

Still, global automakers hesitate to take the plunge. VinFast, the country’s sole homegrown EV manufacturer, is facing tepid demand. While the Vingroup unit is aggressively building an American foothold in an ambitious attempt to challenge Tesla, it sold just roughly 2,200 units of EVs in the first eight months of this year back home.

“Unless VinFast’s sales grow, others won’t follow,” an industry watcher said.

Vietnam has been slow to set up necessary infrastructure for electric vehicles, and charging stations are rarely found even in big cities. There are calls for the Communist Party to make the most of its monopoly on power and throw its weight behind the auto industry to promote electrification.

By Tomoya Onishi – Nikkei Asia – November 15, 2022