The World Bank's report, "Vietnam: Recommendations to the National Roadmap and Action Plan for the Electric Mobility Transition", highlighted that successful implementation of this transition could reduce CO2 emissions by 5.3 million tons by 2030 (8% of Vietnam's target) and 226 million tons by 2050 (60% of the target). The roadmap for Vietnam’s electric vehicle transition and transport sector decarbonization should focus on five key pillars: vehicle production, consumption stimulation, charging infrastructure development, electricity supply, and training skilled human resources.

Positive development prospects

Mr. Bowen Wang, a transport specialist at the World Bank, said that two-wheeled vehicles are expected to dominate the Vietnamese market until 2035, despite an overall decline in demand. Vietnam is currently the world’s second-largest market for electric two-wheelers, after China, with electric models making up 12% of total two-wheeler sales. The market for electric two-wheelers in Vietnam is diverse and competitive, with many suppliers offering varying quality and price options. Consumer acceptance is high, particularly in urban areas.

The market for electric two-wheelers in Vietnam is projected to reach 12 million units between 2024 and 2035 if support policies are implemented at the target pace, or 16 million units with a faster implementation, representing 42% and 56% of total two-wheeler sales in Vietnam during this period.

The report suggested several policies to promote the transition, including financial support for consumers, improving safety standards and inspection procedures, encouraging the production of electric motorbikes with larger capacities and longer ranges, and gradually phasing out gasoline motorbikes. With these measures, the market share of electric two-wheelers in Vietnam could rise from 12% to 75% by 2035.

After 2035, private cars are expected to become more popular in Vietnam. While car ownership remains a luxury for many, electric cars are already an attractive alternative to gasoline and diesel vehicles for those who can afford them. As electric vehicle performance improves, their price will become increasingly competitive with traditional cars. With a fully developed charging station network, electric cars could become the top choice for first-time car buyers. By 2036-2050, electric vehicles are projected to account for 93% of car sales in Vietnam.

Investment in upgrading electricity infrastructure is needed

The transition to electric vehicles is important for public and commercial transport. Although buses and trucks make up just 2% of registered vehicles, they contribute to 65% of emissions. To promote electric buses, the World Bank recommended strong policies to boost passenger numbers, update technical standards, and ensure financial feasibility. For trucks, developing electric models under 5 tons is a promising solution, while for heavy trucks, improving fuel standards and shifting freight transport to rail and waterways will help reduce emissions.

The World Bank acknowledged that the rise in electric vehicle charging will increase electricity consumption in Vietnam. However, their forecast indicated that before 2030, this demand will not significantly impact electricity production. The effect on the electricity sector is expected to become clearer after 2030.

To accommodate the electric vehicle (EV) charging demand after 2030, the World Bank estimated that Vietnam will need to increase grid capacity by 3-5% annually and add up to 15% additional transmission capacity by 2050 to enable full electrification of road transport. To mitigate the impact on the electricity sector, Vietnam must enhance grid efficiency, utilize batteries, and encourage the shift of EV charging to public stations during off-peak hours. To support these needs, Vietnam will require investments of up to US$9 billion in the electricity sector by 2030 and US$14 billion annually from 2031-2050 to expand capacity. The EV transition is expected to save Vietnam up to US$498 billion in oil imports by 2050, create 6.5 million new manufacturing jobs, and reduce environmental costs from local air pollution by US$30 million in 2030 and US$6.4 billion in 2050.

The transition to electric vehicles is a complex process that requires a multi-sectoral ecosystem, with a focus on developing electric public transport. An important first step is the establishment of an intergovernmental body to lead and coordinate the transition. According to the World Bank, the Ministry of Industry and Trade, the Ministry of Transport, the Ministry of Planning and Investment, the Ministry of Science and Technology, and the Ministry of Finance will take a leading role in their respective areas within this body. The effectiveness of this coordination will be important in optimizing the speed and costs of the transition.

“The transition to green transport with EVs is a significant challenge, but Vietnam’s commitment is an important first step. Success requires close coordination between ministries, private investors, and the public in reshaping the vehicle market, transportation habits, and energy usage,” said Mariam J. Sherman, World Bank Country Director for Vietnam, Cambodia, and Lao PDR.