Could the fumes of motorcycles soon be replaced with a gentle hum of electric vehicles?
If you have been fortunate enough to visit the major cities of Vietnam, you cannot help but have noticed the millions of motorcycles and scooters that cover the roads all day and night. However, with Vietnam committing to ambitious targets in line with the Sustainable Development Goals, and the advances in electric vehicles (EVs), it has quietly become the world’s second-largest electric motorbike market. Could the loud buzz of rush hour soon be replaced with the gentle hum of battery-powered personal transport?
Electric motorbikes produce zero emissions from the exhaust pipe (they haven’t got one) and, therefore, do not contribute to inner city air pollution but help to reduce emissions and use less energy than their gasoline-powered counterparts. Vietnam is a two-wheeled (2W) society, with motorbikes and scooters being by far the most popular mode of transport. Currently, 65 million two-wheelers are registered on the roads, which equates to two out of every three people having a motorbike!
Electrifying the two-wheeled fleet is increasingly looking like a promising approach to reducing greenhouse gas emissions and air pollution within the country. During COP27, Vietnam committed to ending the production, assembly, and import of cars and two-wheeled vehicles powered by fossil fuels and intended for domestic use by 2040, and to becoming entirely carbon neutral by 2050. These are ambitious targets, but trends in the electric two-wheeled (E2W) markets are heading in this direction.
Are people buying electric motorbikes in Vietnam?
In short, yes. Gasoline-fuelled motorbike sales in Vietnam have been declining in recent years, with annual sales now down around 20% from five years ago. The economy of Vietnam is growing, but the market is saturated, with two-thirds of the population already owning a motorbike.
The electric motorbike market, however, is bucking this trend, with the market share of E2Ws having increased significantly. E2Ws accounted for 10% of 2W sales in 2021, equating to 280,000 units and making Vietnam the second-largest E2W market globally (China taking the top spot). Sales have grown rapidly in recent years and represent a threat to gasoline-powered 2W manufacturers who do not diversify or transition to E2Ws.
Who is making the electric mopeds in Vietnam — and who isn’t?
Vietnamese domestic firms dominate the E2W market, unlike the gas-powered 2W market which has long been dominated by the international conglomerates. This shows a lot of potential for growth in the E2W market in Vietnam, not just to help the natural environment, but also to allow the country to specialise in a sustainable industry.
So why aren’t the large foreign conglomerates managing to also dominate the E2W market in Vietnam? Let’s take Honda and Yamaha as an example, who had a joint share of 87.6% of the Vietnamese 2W market in 2020. A movement towards electric-powered vehicles is definitely within their targets. Honda aims to become carbon-neutral by 2050, with electrification of motorcycles being part of this plan, and Honda E2W models are out there and being sold in other Southeast Asian countries. More details can be found in their Using Policy and Regulation to Pave the Way for Two-Wheeler Electrification in Vietnam report, which highlights Honda’s current projects and attempts to study the potential of the E2W market in Vietnam.
Yamaha is producing E2Ws in their Vietnamese factories for export, but they do not currently offer these vehicles in Vietnam. Yamaha has stated that they are first focusing on supplying E2Ws to Europe, due to a higher proportion of electricity production coming from renewable sources there. This allows Yamaha to better support their aim to become carbon neutral and have 90% of their bikes as E2Ws by 2050.
This has left room for local businesses to become key players in the E2W market. In 2020, local firms accounted for 70% of the E2Ws in Vietnam — these firms include VinFast, Pega, and Anbico.
Could this mean a future of ‘Made in Vietnam’ electric motorcycles?
There is definite potential for increased production of Vietnamese E2Ws. Total annual production of these domestic firms could exceed one million units per year, which is considerably higher than the current domestic sales of around 280,000 units sold in 2021. This growth in production will likely be supported by export opportunities for Vietnamese E2Ws to other Southeast Asian countries and beyond, as manufacturers become world leaders in the technology.
Is this transition government-backed?
Knowing the ambitious greenhouse gas emission targets in Vietnam and hearing of the growth in E2Ws, one might assume that this is a government-backed project. In fact, E2Ws and gas-powered alternatives are subject to the same taxes and fees for use and operation. There are also no incentives on the supply side to encourage firms to enter the electric market.
High vehicle prices are the top reason preventing people from buying E2Ws in Vietnam, along with the belief that the cheaper E2Ws available have a shorter lifespan than their equivalent gas-powered alternatives. Vinfast is perceived as producing the best quality E2Ws, and their 125cc-equivalent Feliz, with a maximum speed of 78 km/h and a range of 198 km per charge, costs VND29mn (US$1,225). This is around a 30% premium to the ubiquitous Honda Wave. Clearly, there is room for government policies that could reduce prices and boost demand — tax reductions, exemptions, and vehicle purchase subsidies are all options.
A point worth bearing, however, is that a change in regulations or incentives could encourage increased large-scale 2W manufacturers like Honda and Yamaha to join the party. This would decrease the market share for local Vietnamese companies, as has happened in the non-electrified market.
But price and durability are not the only factors preventing mass uptake of E2Ws — the lack of public charging points is also a factor that’s hindering their growth. The charging network and battery swapping system is very limited in Vietnam and requires improvement, most likely through some form of government support. Currently, VinFast is leading the game with plans to install 150,000 charging ports around the whole of the country.
What’s staggering is how even without government intervention Vietnam is still showing strong growth in the sector, but increased incentives for both consumers and producers could increase this further and allow Vietnam to become leading specialists in E2W production. If the government steps up, Vietnamese E2Ws could be amongst the most well known in the world.
What’s next?
In the current era of increasingly ambitious greenhouse gas reduction targets, each country should be looking for its own way to move towards net-zero. Vietnam has immense potential, not only to transform its own natural environment, but to specialise its economy, until the point where “Made in Vietnam” becomes synonymous with the electric motorbike market.