Vietnam ponders hybrid car tax shift

While hybrid electric vehicles (HEV) and plug-in alternatives (PHEV) are becoming trendy, the efficiency and contribution to environmental protection are not yet clear.

Vietnam ponders hybrid car tax shift - illustration photo

Truong Van Tien, living in Hanoi’s Cau Giay district, has used a Toyota Corolla Cross 1.8HV for more than a year. However, he feels the hybrid car has not helped to save as much petrol as expected. “The hybrid contributes to saving 20-25 per cent of petrol costs, instead of the 50-60 per cent as implied by the manufacturer,” he said.

Tien travels around 100km every day from Cau Giay district to Hoa Lac Hi-Tech Park for work, and goes to his hometown at the weekends. It costs Tien about $350 per month with his previous car, but he now saves around $90 a month.

Hybrid vehicles are of greater interest this year in the context of high gas prices. However, emission mitigation depends on users’ driving habits. Fossil fuel-powered vehicles often combust about 6-6.5 litres per 100km on expressways, and around seven litres in cities and towns, while hybrid figures are 4.5 and five litres, respectively.

Last week, the Vietnam Automobile Manufacturers’ Association (VAMA) wrote to the government proposing lowering the excise tax and registration fee on HEVs and PHEVs. The proposal is aimed at encouraging residents to use hybrid vehicles rather than fossil fuel-powered cars to protect the environment.

Vietnam’s traffic infrastructure is assessed as practical for the development of hybrid vehicles which are able to run in a long haul and emit a low volume of carbon dioxide, while charging stations do not require much investment, according to the VAMA.

In March, the National Assembly enacted a cut to the excise tax on electric vehicles with fewer than nine seats to 3 per cent from 15 per cent. After March 2027, the vehicles will be subject to an 11 per cent excise tax.

Hybrid vehicles are yet to be entitled to such a reduction but are subject to the excise tax of 15 per cent and registration fees of 10-12 per cent. The VAMA said that if hybrid vehicles are entitled to a lower excise tax and registration fee, their prices would be revised down, attracting customers and stimulating firms to invest in hybrid cars and charging stations.

Vu Tan Cong, deputy director of Vietnam Automobile Industry and Trade Consulting Co., Ltd., said it is necessary to carefully calculate the fuel efficiency of hybrid vehicles before issuing any new policy. “We should do a survey on fuel efficiency and emission reduction of hybrid cars based on responses of users or research, which will be the basis for policy-makers to make decisions,” emphasised Cong.

Based on the flexibility between conventional internal combustion engine systems and electric propulsion, they save costs on gasoline without plugging into any electrical outlets, according to Cong, noting, “Electric cars are facing more challenges with charging. With the lower tax like the proposal of the VAMA, at the same selling prices, vehicles that are much more attractive and convenient than electric cars will kill Vietnam’s fledgling electric car manufacturing industry, in spite of still emitting some carbon dioxide.”

Current hybrid models in Vietnam’s market include Toyota’s Cross 1.8HV, which costs around $41,000, Corolla Altis 1.8HEV at $37,000, and Camry 2.5HV at $63,000. Their fuel consumption figures are about 4.4, 4.6, and six litres per 100km respectively, according to the manufacturer.

In the premier segment, some HEV and PHEV Lexus and Volvo models have joined the market with very high engine capacity and fuel consumption at about 6-7 litres per 100km.