Vietnam needs about $12.3 billion to invest in electric vehicle (EV) infrastructure by 2040 if it is to meet the increasingly vigorous development of the EV market in the country, the HSBC has said in a report.

The UK-based HSBC, one of the world’s largest banks, has recently released a report highlighting Vietnamese EV makers’ particular success in electrifying two-wheelers in recent times. 

Currently, Vietnam’s electric two-wheeler (E2W) market is the largest in ASEAN and second-largest worldwide, only behind China, the report said. 

Meanwhile, the country also has a great potential for electric cars since over 60 percent of its population owning motorbikes in 2020, while the car ownership rate stands at only 5.7 percent.

With the same view, the International Trade Administration under the U.S. Department of Commerce recently pointed out Vietnam's great but untapped potential for the electric car market, with nearly 73 percent of the population owning motorbikes by 2023, but only about 5.5 percent own a car.

The Vietnam Automobile Manufacturers’ Association (VAMA) recently predicted that there would be 3.5 million electric cars on the roads in the Southeast Asian country by 2040.

However, domestic Vietnamese EV makers will face challenges in replicating E2W success for the electric car segment, as Vietnamese consumers often raise such concerns as high prices, range anxiety, battery worries, and insufficient charging stations, HSBC commented. 

The bank therefore believes that infrastructure development is the key to the growth of the market of electric cars and EVs in general in Vietnam. 

HSBC estimated that Vietnam will need around $12.3 billion in investment and 14 terawatt-hours of cumulative energy by the 2040 period to ensure an adequate number of charging stations and renewable energy capacity for EVs.

The country now has nearly 150,000 electric vehicle charging points nationwide, mainly located in apartment buildings, shopping centers, parking lots, and gas stations, according to the Vietnam Electricity (EVN). 

Meanwhile, charging stations along highways are sparse, so increased investment in charging stations in these areas would contribute to encouraging users to choose EVs as their primary means of transport. 

Along with infrastructure investment, price barriers should be addressed through tax policies and subsidies for buyers, the report recommended.

Vietnam has so far waived registration fee for EV buyers, reduced import tax on EVs and exempted corporate income tax for investors in EV projects to boost the local EV market development.

To be successful in greening the domestic auto industry, Vietnam needs to maintain foreign investment and strengthen cooperation between foreign and local businesses in EV development, HSBC advised, adding that multinational companies from Japan and South Korea are playing an important role in Vietnam’s automobile sector. 

Some industry observers predict that VinFast, a multinational automotive company established by Vietnam's prominent private conglomerate Vingroup, would eventually become the leading exporter of electric vehicles to the rest of ASEAN, with its plan to increase annual capacity from 250,000 to one million vehicles. 

HSBC experts forecast that the combined annual sales of electric cars and E2Ws in Vietnam would increase to 2.5 million units in 2036 from less than one million currently.

Like us on Facebook or  follow us on Twitter to get the latest news about Vietnam!