Vietnam MoF proposes halved registration fee to encourage manufacture, uptake of electric vehicles

The ministry of finance of Vietnam has drafted a decree on the amendment of registration fees which will be halved for electric vehicles compared to conventional internal combustion engined vehicles, according to the Vietnam Investment Review.

This is in order to encourage automaker’s to manufacture, as well as for consumers to use electric vehicles in the country, in line with Vietnam’s environmental protection law and the direction given by deputy prime minister of Vietnam, Le Minh Khai, according to the report.

First-time registration of passenger vehicles with up to nine seats costs 10-15% of the vehicle’s value, which is set by the relevant local government. The draft decree proposes that this be halved to 5-7.1% for electric vehicles while subsequent registrations will be at 2%, or the same as comparable petrol-powered cars, the report said.

For instance, an electric car that costs VND 600 million (RM110,697) will currently be subject to VND60-90 million (RM11,069-16,603) in first-time registration fees, however this will be reduced to around VND30-45 million (RM5,534-8,301) should the draft decree be approved.

The Vietnam Investment Review cites the country’s Law on State Budget as saying that the registration fee goes towards local authorities’ budgets, with cars comprising a growing proportion of this revenue; this has risen steadily from 69% in 2017 to 79% in 2020, it says.

Vietnamese carmaker VinFast currently produces vehicles at an annual volume of 250,000 units, reports the Vietnam Investment Review, though just 1,000 EVs were registered in the country as of the end of last year, comprising only 0.16% of the Vietnamese car market, it said.

Among the factors limiting the growth of electric vehicles in Vietnam is the lack of infrastructure such as charging stations, as well as land for the construction of these charging stations, according to the report.

For those reasons, the country’s finance ministry’s assessment is that electric cars will only grow their presence slowly and in large cities to begin with, therefore the drop in revenue from the reduction in registration fees “will not be significant,” the report wrote.

In May, VinGroup proposed to the country’s government agencies to pilot special consumption tax incentives and registration fees for electric vehicles for a period of five years, the report added. On this matter, Vingroup CEO Nguyen Viet Quang said that synchronous policies are necessary to encourage manufacturers, distributors and consumers for the growth of the electric vehicle market and ecosystem.

Earlier this week, VinFast parent firm VinGroup unveiled its future battery strategy for upcoming EVs from its automotive brand, where VinFast will be partnering with ProLogium for the research and manufacture of full-solid-state batteries.

These aren’t the carmaker’s sole focus, however, as it has also signed an MoU with Gotion High-Tech for the development and production of lithium iron phosphate (LFP) batteries which are more stable, cheaper to manufacture and more sustainable compared to lithium-ion batteries. At the same time, VinFast has ongoing in-house R&D activities, where a subsidiary is working with other research intitutes.

VinFast revealed a trio of electric SUVs at the beginning of this year – the VF31, VF32, VF33, later renamed to be known as VF e34, VF e35 and VF e36 respectively. The most compact of these, the VF e34 boasts of a claimed 300 km in battery range, and is scheduled to enter production in November.

GALLERY: VinFast VF e34
GALLERY: VinFast VF e35
GALLERY: VinFast VF e36