Hanoi (VNS/VNA) - The Ministry of Industry and Trade has just released a listof factors that are undermining the development of the electric car industry inVietnam.

Citing data from the Vietnam Register, the Ministry of Industry and Trade(MoIT) said that the number of electric cars in Vietnam is currently quitesmall with only 140 cars in 2019, 900 last year and 600 by the end of the firstquarter of this year.

Currently in Vietnam, there is no enterprise other than Vinfast Trading andProduction Limited Liability Company engaged in the production and assembly ofelectric cars.

First is the low average income. GDP per capita in Vietnam in 2020 is estimatedat 2,750 USD, still too low for consumers to own a regular four-wheeledpersonal car, without considering the higher cost of electric cars over theirfossil-fuel burning rivals.

There is also a lack of charging station infrastructure. Currently almost nocharging stations are available for electric cars in the country. There is alsoa lack of road traffic infrastructure, stationary parking spots, and land setaside to build charging stations for electric cars.

At the same time, the range of electric cars is still limited. Although recentelectric car models have significantly improved their range they still cannotmeet the travel needs of customers compared to fuel cars.

Moreover, a policy to encourage the development of electric cars in Vietnam isalmost nonexistent. Electric cars have so far only received special consumptiontax incentives, which are lower than petrol cars.

Power production is also an issue. For developing countries, hydroelectricityand thermal power account for a large proportion of the power generationinfrastructure. However, thermal power is one of the least clean types of powergeneration.

In this context, experts suggest that the first step to take is to deploy cleanenergy production and prepare the necessary infrastructure when considering thelarge-scale deployment of electric cars.

At the same time, electric cars also have an environmental impact at the pointof production. Because the battery pack is heavy, manufacturers have to lightenthe rest of the cars, resulting in electric cars components often using a lotof lightweight materials that require a lot of energy to manufacture and handle.

The materials used in the battery can also be harmful to the environment andrecycling of lithium-ion batteries is rarely done even in developed countries.

The MoIT said that the strategy for the development of Vietnam’s automobileindustry by 2025, with a vision to 2035, is determined to encourage theproduction of environmentally friendly cars, meeting the requirements ofemission standards according to a roadmap approved by the Prime Minister.

To develop effective mechanisms and policies to encourage the production anduse of electric cars in Vietnam, the Ministry of Industry and Trade stated thatthe electric cars industry needed to integrate and take advantage of theexisting capacity of traditional automobile manufacturers.

At the same time, the development of the electric car industry must beconsistent with the development of transport infrastructure and electriccharging station systems.

The MoIT has proposed developing electric car technology in Vietnam through theapplication of special consumption tax rates for electric cars on the basis oftheir carbon dioxide (CO2) emissions into the environment.

In addition, the MoIT is also coordinating with the Ministry of Finance tostudy and propose amendments to the Law on the Special Consumption Tax in thedirection of preferential excise tax rates applied within a certain period oftime (five years) to encourage the development of electric cars in Vietnam./.