Vietnam ranks fourth in Asia (after China, India and Indonesia) for its use of two-wheelers (motorcycles and scooters) for transportation. The majority of these vehicles run on gasoline and contribute to greenhouse gas emissions and pollution. The national government is counting on the transition to electric two-wheelers to achieve its goals of reducing greenhouse gas emissions. By 2040, it aims to end the production, assembly, and import of fossil fuel-powered cars, motorcycles, and scooters, and by 2050, it wants all road vehicles with electric motors to be powered by green energy. Vietnam leads the ASEAN region in electrification of two-wheeled vehicles and is second in the world after China. As recently reported, the world is on track to have 100 million two-wheeled electric bikes by 2027.
A briefing paper prepared by the International Council on Clean Transportation (ICCT) highlights the long and bumpy road that Vietnam must travel to achieve this. In 2020, there were more than 65 million two-wheelers – that’s two for every three people in the country. There might be more now. However, some feel that Vietnam has reached saturation point. Nearly 3 million have been sold annually over the past 15 years. During COVID, sales of two-wheeled electric vehicles have skyrocketed in a contracting market. In 2019, two-wheeled electric vehicles accounted for 5.4% of the market share; in 2020, it was 8.5%; it was 10% in 2021; And it was probably going to be 14% in 2022. So, the path is there.
Two Japanese manufacturers, Honda and Yamaha, dominate the Vietnamese two-wheeler market. Ironically, they both make electric two-wheelers, but mainly for export. It is the local manufacturers – VinFast, Pega, Yadea and Anbico – that bring electric two-wheelers to the people of Vietnam, with VinFast and Pega holding 60% of the electric two-wheeler (E2W) market. Will Honda respond to this market opportunity and introduce its two-wheeled electric vehicle to the local market? Yamaha introduced the E01 and it appears to be available in Vietnam. It contains a lithium-ion battery and has a range of 80 km.
Honda has a global goal of becoming carbon neutral by 2050. One of the company’s stated strategies is the electrification of motorcycles. ICCT writes: “The first Honda E2W model was introduced to the market in 1994, and in 2018 Honda introduced its PCX electric motorcycle in Japan and several ASEAN countries (eg, Indonesia: 1,353 vehicles in 2020; Philippines: 228 vehicles in 2020; Thailand: 19 vehicles in 2020), but not in Vietnam.” In 2020, Honda introduced three electric models. for commercial use (to deliver goods), including BENLY e, E2W; GYRO e, and E3W; and GYRO CANOPY e, E3W. Although Honda has not demonstrated its E2Ws in Vietnam, it has taken several measures to investigate the potential deployment of E2Ws in Vietnam.” These include: a research program to evaluate the performance of E2Ws in Vietnamese traffic conditions over a three-year period, and the lease of 70 E2Ws to Vietnam Post Corporation with battery exchange capability, allowing several exclusive authorized Honda dealers to rent E2Ws to collect customer feedback.
Yamaha also aims to achieve carbon neutrality by 2050. When you consider that Yamaha’s goals for two-wheeler electrification are 2.6% by 2030, 20% by 2035, and 90% by 2050, it sure is a slow march. Let’s hope the E01 can pick up speed.
VinFast’s current annual production capacity is 250,000 vehicles, with plans to expand to 1 million vehicles. This may mean that exports to other ASEAN countries are possible. It should be noted that the majority of E2W models from all manufacturers are e-scooters (54 models); Only 14 e-bikes (8 of these are VinFast models).
Only 12 of the 68 models are equipped with lithium-ion batteries. These are mostly from VinFast. Many of VinFast’s E2W models are powered by LFP (Lithium Ferrous Phosphate) batteries developed by VinFast (in cooperation with Gotion High Tech from China). “VinES Energy Solutions, a unit of Vietnam’s largest conglomerate Vingroup JSC, and China’s Gotion High-Tech, have begun construction of a $275 million battery plant in the Southeast Asian country,” Vingroup reported in late November.
“The plant, located in the central province of Ha Tinh, will annually produce 30 million LFP battery cells.” Production is expected to start at the end of 2023.
VinFast also plans to build a battery factory in North Carolina.
“The prices of E2Ws equipped with lithium-ion batteries are much higher than those equipped with lead-acid batteries,” the ICCT writes. “However, E2Ws powered by lithium-ion batteries have a longer life, and are lighter, than E2Ws powered by lead-acid batteries, and their batteries are replaced less frequently. Top speeds for most electric vehicle models range from 40 km/h to 50 km/h, with the fastest electric motorcycle (Theon S 200 from VinFast) recording a top speed of 99 km/h.”
Without government subsidies to encourage E2W uptake, prices could range from $580 for the cheapest model, the Espero 133I from Detech, to around $3,820 for the most expensive model, the Theon S from VinFast.
Vietnam faces similar problems for all emerging electric vehicle markets. Charging networks and battery exchange locations are limited. Most charging takes place at home. VinFast appears to be the leading provider of charging infrastructure, planning to install 150,000 charging outlets across the country in malls, gas stations (such as PV Oil), supermarkets, bus stations, public parking spaces, residential buildings, offices and universities. Partners are being sought for this enterprise. No other E2W manufacturer seems to have plans to follow suit.
Batteries, controllers and electric motors still need to be imported, but it is believed that there is capacity to produce them locally. Vietnamese companies such as Pinaco and 365 Creative Joint Stock Company have the capacity to produce E2Ws batteries. Motors are currently imported from Bosch or Chinese and Taiwanese manufacturers.
Why do Honda and Yamaha slip their clutches? Why are they restricting themselves? The lack of government support for E2Ws and the high profits from ICE vehicles are two possible answers.
There is government support for the introduction of electric cars: such as the reduction of the special consumption tax and the abolition of registration fees. But there is no political support for E2Ws. They are still subject to the same taxes and fees as a two-wheeled ICE. Safety concerns, range and price are the top 3 reasons not to buy E2W in Vietnam.
“(P) Policies that provide financial incentives to owning and operating E2Ws, such as auto purchase subsidies, tax credits, or tax rebates, can increase purchases of E2Ws. Non-financial incentives such as priority parking spaces or the implementation of low-emission zones can also increase the attractiveness of E2Ws over ICE 2Ws. In addition, public campaigns to raise awareness and win people’s trust in E2W technology are also essential to increasing E2W uptake.”
Manufacturers need to be incentivized to produce affordable, high-quality electric wheels. Tighter emissions standards will play a role, as will setting targets for E2W production. Thailand and Indonesia have set targets for electric cars. For example, Indonesia aims to achieve a stockpile of 2 million electric passenger cars and 13 million E2Ws by 2030.
Currently, the E2W market in Vietnam is dominated by E2Ws powered by lead-acid batteries and a battery of less than 4 kW, with a market share of 75%. They are mainly sold to the elderly and students. It’s cheap and requires a driver’s license. In other ASEAN countries, including Thailand and Indonesia, E2Ws with lithium-ion batteries dominate the E2W market.
Until there is government support for policies – targets set in combination with emissions standards and widespread re-education of the population – it will remain difficult to accelerate the uptake of E2Ws. Perhaps the shining star on the horizon is VinFast.
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