Promising times ahead for local e-vehicle producers

PEGA’s deal with Cuba is sparking new interest in electric vehicles

Newcomer PEGA last week announced the deal, worth $3 million, with its partners in the Caribbean nation. Two types of electric motorbikes will be exported to the Cuban capital of Havana after the partner assessed the products’ overall quality.

The first contract includes an order of 1,260 PEGA XMEN electric motorbikes with a value of roughly VND20 billion ($870,000). The order is currently being completed and preparations are made to transport the bikes to Cuba.

The second deal is for the shipment of more than 2,500 PEGA XMEN and PEGA AURA electric motorbikes, worth more than VND40 billion ($1.74 million), with shipment scheduled for next month.

PEGA’s movement should place renewed interest in electric vehicles in Vietnam, with both local and foreign makers pushing plans forward.

Electric vehicles involve a complete chain of suppliers and associated services from power supply and distribution, to charging stations and batteries including their charging, recycling, and disposal. Developing a charging system for the products is expensive – and currently, such large investment may put a burden on manufacturers in Vietnam.

To date, Japan’s Mitsubishi has delivered four electric cars and two fast-charging stations to the central city of Danang and one electric car and charging station to the Ministry of Industry and Trade for testing. Mitsubishi has also partnered up with Power Electronic Measurement Equipment Manufacturing Centre to build the first electric-vehicle charging station in Danang using solar power and the grid.

Meanwhile, locally-invested VinFast has also entered into co-operation with Austria-based firm Kreisel Electric to manufacture battery for electric cars and buses. It provided 3,000 electric buses for Hanoi, Ho Chi Minh City, Haiphong, Danang, and Can Tho and wants to introduce 30,000-50,000 charging stations across Vietnam by next year.

The EuroCham suggested that Vietnam should not be applied import taxes on e-vehicles.

“Special consumption tax on electric vehicles should be removed,” read EuroCham’s Whitebook 2020 released two weeks ago. It also called for a series of tax incentives including 10 years’ corporate income tax exemption after the first electric vehicle is assembled locally; 50 per cent reduction in the tax for the subsequent decade; 50 per cent tax reduction for the subsequent five years; and 50 per cent reduction in registration fees.

To encourage environmentally-friendly vehicles, the government issued Decree No.57/2020/ND-CP, amending and supplementing a number of articles of Decree No.125/2017/ND-CP providing new regulations on import duties on automotive components and applied from January 1 this year.

The Ministry of Finance has submitted to the government a list of environmentally-friendly vehicles running on electricity, hybrid, fully biofuel-powered vehicles, and compressed natural gas vehicles in the preferential programme for the import of automotive components.

With 70 per cent import tax on electric vehicles and hybrids, and 18-20 per cent on complete knock-down kits plus special consumption tax rates of 15 per cent, electric vehicle import and manufacturing are not deemed feasible in Vietnam for customers, charge providers, or automotive companies. As a result, electric vehicle implementation needs the market to develop, as the lack of infrastructure and the high costs of electric vehicles are preventing success in the very near future.