Vietnam’s electrical car market seems poised for fast growth within the subsequent decade, however there might be vital headwinds blunting that development.

In accordance with BMI Analysis, a Fitch Options analysis unit, passenger EV gross sales within the nation is predicted to a minimum of double this yr.

“In 2023, we count on passenger EV gross sales to increase by 114.8% year-on-year to achieve round 18,000 items,” stated BMI’s report revealed Thursday.

Particularly, gross sales for battery electrical car (BEV) may surge by 104.4% in comparison with the earlier yr to almost 17,000 items, the report stated. Plug-in hybrid car, or PHEV, may soar nine-fold year-over-year to nearly 1,100 items.

“We at present count on passenger EV gross sales in Vietnam to common annual development of 25.8% over 2023-2032 to achieve an annual gross sales quantity of round 65,000 items, up from 8,400 items in 2022,” stated BMI.

The penetration charge for passenger EVs — outlined as passenger EV gross sales as a share of the nation’s complete passenger car gross sales — is about to extend to 13.6% by 2030. That is an enormous soar from final yr’s 2.9%.

The Vietnam Car Producers Affiliation predicts that EV possession will attain 1 million by 2028, and three.5 million items by 2040.

Electrical automobiles solely accounted for a small share of the passenger automobile market in Vietnam final yr. Gross sales of passenger automobiles within the Southeast Asian nation had been at about 284,000, “with only some thousand of them being electrical automobiles,” based on Statista.

Nevertheless, a powerful EV development is predicted to be fueled by elevated deliveries of VinFast automobiles because the native EV maker steps up manufacturing all through 2023.

“The native manufacturing of VinFast, Wuling HongGuang, Skoda and Hyundai-branded EVs over our 2023-2032 forecast interval will drive sturdy development available in the market,” stated BMI.

Vietnam’s passenger EV market is at present dominated by VinFast, which holds greater than 50% market share in 2022, stated BMI. The remainder of the market is held by Chinese language manufacturers.

Elevated provide of inexpensive China-made EVs will even assist enhance development.

The inexpensive mini EV below Chinese language model Wuling HongGuang may assist elevate the passenger EV section, stated BMI. The Wuling Hongguang Mini EV is priced from 239 million Vietnamese dong ($10,065). As compared, VinFast debuted a funds electrical automobile at $23,000 for the Vietnam market in April.

The analysis agency identified that elevated EV manufacturing within the Affiliation of Southeast Asian Nations — comprising of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — to spice up development.

In January, Vietnam’s authorities stated it can proceed to exempt import tax on fully built-ups automobiles from the 10-member bloc till the tip of 2027.

Nonetheless, BMI expects EV adoption in Vietnam to be pulled down by low incomes and a scarcity of incentives, the report stated with out elaborating.

The battery leasing enterprise mannequin, which permits customers to lease batteries after they purchase new EVs, may assist customers decrease bills. This measure will more and more appeal to taxi fleet operators, stated the report.

In April, taxi fleet operator Inexperienced SM launched a pure EV taxi service in Vietnam with VinFast fashions.

“We count on this, and potential related developments from different native taxi fleet operators, to help EV adoption in Vietnam as it can elevate the notice of EVs amongst residents,” stated the analysis firm.

The present charging infrastructure may additionally restrict development in Vietnam’s electrical car market.

Many of the charging stations are at present catered for electrical two-wheelers, or bikes and scooters. BMI expects extra gamers to enter the market from 2023 to spice up the EV charging community.

Native EV charging operator EBOOST has pledged to increase Vietnam’s charging community and can deploy extra charging factors.

Taiwanese electronics big Foxconn stated it can make investments $250 million, partly to construct an EV charging gear and part manufacturing plant in Vietnam, based on Taiwanese media.

“This could assist facilitate a extra fast growth of the native, and the broader Southeast Asia regional EV charging networks,” stated BMI.