Emerging electric taxi operators like Mai Linh and Taxi 123 have sparked a fierce price competition in Vietnam, offering fares as low as VND6,000 (US$0.24) per kilometer, or 50 percent lower than gasoline-fueled taxis.

Following Indonesia’s Gojek exiting the Vietnamese market last month, Green SM’s affordable electric taxi service is pressuring competitors to quickly adapt to remain viable.

Mai Linh in Son La Province and Taxi 123 in Bac Ninh Province, northern Vietnam, recently launched VinFast VF 3 electric taxis. The initial fare is set at VND9,000 ($0.35), with rates averaging around VND6,000 ($0.24) per kilometer for trips between 15 and 26km.

This pricing starkly contrasts with conventional taxi service providers as well as ride-haling apps like Grab, be, and Vinasun, whose open-door fares typically range from VND12,000 ($0.47) to VND15,000 ($0.59), with VND7,000-12,000 ($0.28-0.47) per kilometer for shorter trips.

The significant difference in rates signals a major shift, prompting traditional taxi operators and ride-hailing apps to rethink their pricing models.

Tran Luu Van, CEO of Let’s Go Taxi in Phu Yen Province, south-central Vietnam, reported that their electric taxis charge roughly VND8,000 ($0.32) per kilometer -- significantly less than petrol-powered options.

He added that electric taxis, with their lower operating costs, are often cheaper than motorbike taxis for groups.

Minh Thu, a Ho Chi Minh City resident, said that her family now opts for electric taxis for longer trips owing to their convenience, affordability, and absence of gas fumes.

Electric taxis benefit from lower fares thanks to cheaper charging and maintenance costs.

A VinFast VF3 costs around VND60,000-80,000 ($2.36-3.15) per full charge, covering up to 200km, or roughly VND300-400 per kilometer.

In comparison, fuel-powered taxis cost about VND2,000 ($0.8) per kilometer, with fuel prices averaging VND25,000 ($1) per liter and annual maintenance costs of VND30-40 million ($1,181-1,575), double that of electric taxis.

Companies estimate that with a VND9,000 starting fare and long-distance rates of VND6,000 per kilometer, electric taxis are more cost-effective than petrol-powered taxis, which charge VND11,000-13,000 ($0.43-0.51) per kilometer.

Although charging downtime is a factor, the cost savings enable electric taxi services to offer competitive prices while staying profitable.

Traditional taxi services, like Vinasun, are feeling the heat.

In its third-quarter financial report, Vinasun recorded a 21 percent revenue drop to VND246 billion ($9.69 million) and a 36-percent decline in post-tax profits to VND21 billion ($826,918), attributed to the downturn of driver support costs and intensified competition from electric taxi firms like Green SM.

Vinasun plans to invest in 700-1,000 hybrid taxis to cut fuel costs by up to 50 percent.

Since launching in April 2023, Green SM experienced rapid growth and implemented aggressive revenue-sharing and financial support strategies that have expanded its fleet to over 30,000 vehicles across 45 provinces, backed by partnerships with 35 companies.

Green SM’s driver package includes a VND11 million ($433.15) monthly base income, which is comprised of VND7 million ($275.65) in base pay, a VND2 million ($78.75) support bonus, and a VND2 million customer rating incentive, and a 25-percent commission on revenue.

Upon being hired, drivers are required to contribute an VND8 million ($315) refundable responsibility fee instead of a vehicle deposit.

Alongside ride-hailing, the food delivery sector is also intensifying as ShopeeFood and GrabFood dominate with a 42.94 percent and 40.61 percent market share, respectively.

Both are expanding into more provinces and experimenting with discounts to attract restaurant partnerships.

Meanwhile, Vietnamese startup be continues to promote beFood with targeted media campaigns to capture more of the market.

Green SM also plans to enter food delivery, leveraging its existing electric fleet with a model similar to Ahamove’s to optimize profits and minimize operational costs.

Tech guru Le Minh Hung remarked that Green SM aims to broaden its ecosystem by integrating food delivery, optimizing fleet utilization, and providing users with a multi-service experience.

Competition is escalating as companies seek to become versatile 'super apps.'

Companies like Grab, be, and Green SM are adding services like food delivery, mobile payments, and financial offerings, giving consumers a range of affordable, convenient options.

Earlier this month, be partnered with VPBank and rebranded itself as a super app, integrating motorcycles, cars, and exclusive travel ticket options into its platform, thereby enhancing its competitive edge.

Alejandro Osorio, CEO of Grab Vietnam, expressed support for healthy competition.

“This is positive. A user might open the app to book a ride and then notice a promotional food deal, encouraging them to order,” he explained, adding that this strategy retains customers and boosts driver earnings.

This year, Grab’s two-wheeled drivers averaged 30 percent more trips per hour compared to 2014.

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