...
Electric-motorbike-in-Vietnam-development-and-challenges

Electric motorbike in Vietnam – development and challenges

Electric motorbikes are on the rise around the world, and behind the heating up of the market is not only the encouragement of the policies, but also the demand of consumers. Vietnam is one of the fastest growing countries of motorbikes in the world, and electric motorbike in Vietnam has also seen the rise in recent years, but it also faces many challenges.

Table of Contents
YouTube_play_button_icon_(2013–2017).svg

Electric motorbike market status in Vietnam

Motorbikes are the most important means of transportation in Vietnam. With a population of nearly 100 million, the number of motorbikes in Vietnam has reached at least 45 million, and there is one motorbike for every two people on average.

According to the data, the sales growth rate of electric motorbike in Vietnam was 10% in 2021, while this figure only reached 2.9% three years before that. The electric motorbike in Vietnam shows great growth potential, increasing its market share from 5.4% in 2019 to 8.5% in 2020 and 10% in 2021.

Vietnam’s motorbike market has been one of the fastest growing in the world over the past few decades. Currently, Vietnam has more than 70 million registered motorbikes, and this number is expected to grow in the future. In the first four months of 2023 alone, more than 1 million new motorbikes was produced in the country.

Five major manufacturers: Honda, Yamaha, Suzuki, Piaggio and SYM account for more than 90% of the Vietnamese market, and manufacturers also export fully assembled models to the international market. Vietnam’s motorbike market has shown signs of saturation in recent years.

While annual motorbike production continues to rise, demand and purchasing power have largely failed to keep pace. This has forced manufacturers to start investing more in product diversification, especially in the premium segment, and to seek ways to increase exports of fully assembled models and spare parts to international markets.

electric-motorbike-in-vietnam

For example, Yamaha Motor Vietnam has been exporting models since 2019 to complement the Indonesian market. Last year, the company became the first foreign factory to produce NEO electric motorbikes and export them to the European market. In May 2023, Yamaha Motor Vietnam officially opened its fourth assembly line, dedicated to engine assembly for export. This move demonstrates the confidence and commitment of Japanese companies to Vietnam.

According to the company, the first phase of the new production line will produce engines for export to Thailand, with a localization rate as high as 95%. In the next three years, the company will expand exports to other markets such as the Philippines, Indonesia and Malaysia, with an estimated export volume of about 200,000 vehicles.

Likewise, Honda Vietnam has been promoting the export of fully assembled models and components. Last year, the company exported 207,000 motorbikes, more than $462 million in exports on total and a 25% increase in revenue compared to 2021, according to VAMM. The company said it has set a target to export nearly 250,000 models this year, a 9% increase from 2022.

According to industry experts, in order to maintain growth in the Vietnamese market, companies must start investing in the development of new product lines to meet customers’ changing preferences.

The rise of electric motorbike in Vietnam

Vietnam’s new two-wheeler market ranks second in Asia, after Indonesia, and fourth in the world, after India, China and Indonesia. However, judging from the trend, the annual sales of two-wheelers in Vietnam began to increase in 2016, reached a peak of 3.6 million in 2019. In 2021, the sales of new vehicles was only 2.8 million units, a new low in the past 15 years.

On the one hand, it was affected by COVID-19, and on the other hand, the market was also close to saturation. In 2020, the number of registered two-wheelers in Vietnam reached 65.2 million, and the number of vehicles per 100 people was 67, which means that every two people ou of three in Vietnam own two-wheelers, and the per capita ownership rate has reached the world’s top level.

Sales-volume-of-two-wheelers-in-Vietnam-2016-2021
Sales volume of two-wheelers in Vietnam 2016-2021

From the perspective of subdivision structure, the sales of electric motorbike in Vietnam have increased significantly in recent years, from 163,000 in 2019 to 237,000 in 2020, a growth rate of 45%. Looking at the world, Vietnam is currently the largest electric two-wheeler market in the ASEAN region and the second largest electric two-wheeler market in the world after China.

Compared with the other ASEAN countries, the market share of electric two-wheelers in Indonesia, Thailand and the Philippines is relatively small, accounting for no more than 1.5% of sales; while Vietnam has the largest share of electric two-wheelers and has grown significantly. Vietnam’s electric two-wheeler market is expected to reach $8 billion USD by 2025.

Market-share-of-electric-two-wheelers-in-major-ASEAN-countries-in-2019-2020
Market share of electric two-wheelers in major ASEAN countries in 2019-2020

Challenges facing electric motorbike in Vietnam

Purchase cost

The manufacture and assembly of electric motorbike in Vietnam requires relevant approval and certificates to enter the market. Before being put on the market, imported two-wheelers must obtain a technical safety and environmental protection inspection certificate issued by the Vietnam Registration Office (VR). Imported vehicles are subject to import duties and customs fees.

Import duties vary according to vehicle characteristics (such as engine displacement) and country of origin. The three import tax rates applicable to imported two-wheelers are ordinary tax (usually above 100%), preferential import tax (40% to 75%) and special preferential import tax (0%).

According to the most favored nation policy, preferential import duties apply to products originating in countries that have trade relations with Vietnam; special preferential import duties apply to products imported from countries that have bilateral or multilateral trade agreements with Vietnam.

For example, under the Asian Trade in Goods Agreement (ATIGA), import duties on two-wheelers produced in Asian countries have been 0% since 2018. However, imported electric two-wheelers and parts are not eligible for preferential treatment.

Therefore, the price of imported electric motorbike in Vietnam may be significantly higher than that of locally manufactured or assembled electric motorbike in Vietnam. This protects the development of Vietnam’s local electric two-wheeler industry, but also increases the cost of non-locally manufactured strategic components such as batteries.

Challenges-facing-electric-motorbike-in-Vietnam

Policy environment
The Vietnamese government has publicly stated its desire to promote cleaner modes of transportation, and has implemented policies such as reducing special consumption taxes and canceling registration fees, but these policies only apply to electric vehicles.

The Vietnamese government has issued a ban on motorbikes, that is, after 2030, motorbikes will be restricted or banned in some areas of the five centrally administered municipalities, but policies to support the sales and production of electric two-wheelers, as well as the promotion of motorcycle charging infrastructure and battery swapping systems measures are still lacking.

At present, the use and operation of electric two-wheelers still need to pay the same taxes and fees as gasoline two-wheelers, and there is a lack of incentives such as vehicle purchase subsidies, making high prices the main reason that restricts Vietnamese consumers from purchasing electric two-wheelers. The service life of electric two-wheelers is shorter than that of fuel two-wheelers at the same price, so high-quality electric two-wheelers require higher purchase costs.

Vietnam has no policies to support electric two-wheeler manufacturers and their supply chains, and high production costs (especially for lithium-ion battery electric two-wheelers) and low demand for electric two-wheelers may prevent manufacturers from switching to electric two-wheeler production.

Currently, electric two-wheelers powered by lead-acid batteries with a battery capacity of less than 4kW dominate the electric two-wheeler market in Vietnam (accounting for 75% of sales in 2020), and students and senior citizens are the main customers of this model because of the use of this model do not require a driver’s license and are much cheaper than motorbikes using lithium batteries.

For other consumer groups, lithium battery two-wheelers may be more attractive. However, due to the high price of the whole vehicle and limited models, most customers still choose to buy fuel two-wheelers.

Infrastructure

At present, Vietnam’s two-wheeler charging network and battery swap system are still limited, and users mainly charge at home. In 2021, VinFast, a Vietnamese charging network and battery exchange service provider, announced the deployment of 2,000 charging stations for electric cars and electric motorbike in Vietnam, with more than 40,000 charging ports.

The follow-up will continue to increase to 150,000 charging ports. Station locations will be located throughout commercial centers, gas stations, supermarkets, bus stops, public parking lots, apartment buildings, offices and universities, etc.

However, VinFast charging stations and exchange services are only available for its own-brand vehicles. As for other electric motorcycle manufacturers, they have yet to lay charging infrastructure and battery swap systems in Vietnam, and neither have other private companies.

According to the development experience of relevant countries, the electric two-wheeler industry cannot rely solely on customer demand in the early stage.

Electric-motorbike-industry-chain-development-in-Vietnam

Electric motorbike industry chain development in Vietnam

Vietnam internal combustion engine(ICE) two-wheelers have been produced for decades, and the localization rate is very high. Therefore, Vietnam can effectively utilize the existing internal combustion engine two-wheeler supply chain and unite enterprises capable of producing batteries and other components to manufacture and assemble electric two-wheelers to support the development of the electric two-wheeler supply chain.

At present, components such as batteries, controllers and motors mainly rely on imports, and a small part relies on local suppliers. In addition, Vingroup started construction of the Vin ES battery factory in Hanoi in December 2021.

The first phase of the factory covers an area of 8 hectares with a total investment of VND 4 trillion, aiming to provide lithium-ion batteries for VinFast’s electric two-wheelers and electric cars. Local production capacity for other components (controllers, electric motors) is still very limited.

When manufacturing and assembling electric two-wheelers, motors and controllers are usually provided by the same supplier, such as Pega and VinFast rely on imported motors from Bosch, and other manufacturers rely on motors imported from China. As the absolute leading brands in Vietnam’s two-wheeler market, Honda and Yamaha have a market share as high as 90%.

However, its current deployment of electric motorbike in Vietnam is still limited. The key reason may be the high profit of ICE two-wheeler products and the lack of policy support and regulations to promote electric two-wheelers. In general, the development of Vietnam’s electric two-wheeler industry is largely driven by the market, and the government’s preferential treatment policies for industrial development are relatively limited.

Two-wheeler brands in Vietnam

In 2020, more than 30 brands and 250 models of two-wheelers are on sale in the Vietnamese market. Honda, Yamaha, SYM, Suzuki and Piaggio are the top five internal combustion engine two-wheeler manufacturers in Vietnam, accounting for 90.8% of the Vietnamese two-wheeler market share in 2020. They are all members of the Vietnam Association of Motorbike Manufacturers (VAMM) and all have manufacturing plants in Vietnam.

In terms of production capacity, the total production capacity of the top five ICE manufacturers in Vietnam is about 5 million units per year. Among them, Honda has the largest production capacity. It has three local factories in Vietnam with an annual production capacity of 2.5 million units, followed by Yamaha with an annual production capacity of 1.5 million units.

Structure-of-two-wheeler-market-in-Vietnam-in-2020
Structure of two-wheeler market in Vietnam in 2020

Honda Vietnam
Honda Vietnam is a joint venture established jointly by Honda Motor Company of Japan, Honda Asia of Thailand and Vietnam Engine and Agricultural Machinery Company.After 25 years of intensive cultivation in Vietnam, as of October 2020, Honda has produced a total of 30 million two-wheelers in Vietnam, making it the largest two-wheeler manufacturer in Vietnam. In 2020, Honda has more than 30 models of two-wheelers on sale, of which 8 models have entered the top ten best-selling models.

The Vietnamese domestic market is the dominant market for Honda Vietnam, accounting for more than 90% of sales. However, due to the impact of the epidemic and the overall two-wheeler market environment in Vietnam, sales of Honda electric motorbike in Vietnam market have fallen sharply, but correspondingly, exports have shown a rapid growth trend. In 2021, the number of exports reached 210,000, a year-on-year increase of 32%.

Yamaha

Yamaha established its first factory in Vietnam in 1998 and its second one after a decade, both in Hanoi. At present, the company’s total production capacity in Vietnam is 1.5 million vehicles, with a total of more than 20 models, of which 2 are the top ten best-selling models, both of which are ICE models.

In line with Honda, Yamaha is committed to becoming carbon neutral by 2050 and has a strategy for the electrification of its two-wheelers. To this end, in 2019 Yamaha launched two electric two-wheeler models (E01 and E02 electric scooters), but they have not yet been mass-produced.

The sales promotion plan for electric two-wheelers will start in Europe and enter the ASEAN region from 2030 to 2035. Although sales plans are lagging, Yamaha is still using Vietnam as a production base for its electric two-wheelers.

In March 2022, Yamaha officially launched the assembly and production line of NEO electric scooter models at the Hanoi factory. Yamaha Vietnam is the first company in the ASEAN region to produce electric two-wheelers for the European market. Currently, Yamaha’s production capacity is 50 vehicles per day, and Yamaha may expand its production capacity in the future.

SYM, Suzuki and Piaggio

Although SYM, Suzuki and Piaggio rank among the top five ICE two-wheeler brands in Vietnam, their market shares are relatively small, accounting for only 3.2% in 2020.

SYM has two factories in Vietnam with a combined production capacity of 540,000 vehicles per year. It is worth mentioning that SYM has launched the electric power assist model Z1, the power has reached 800W.

Founded in 1995, Suzuki has a production capacity of 100,000 vehicles per year and a capacity utilization rate of about 60%. Currently, it mainly sells ICE models.

Piaggio entered the Vietnamese market late, with a market share of only 0.9% in 2020. In 2018, Piaggio launched the electric scooter model Vespa Elettrica, and in 2021 launched an innovative electric scooter Piaggio1 with a removable battery, however, Piaggio have not yet produced and sold these electric motorbike in Vietnam .

All in all, although the top five internal combustion engine two-wheeler manufacturers in Vietnam, represented by Honda, account for 90% of the market share, the sales decline is unstoppable, and their direction in the direction of electric two-wheelers is still in its infancy.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up for newsletter

Get latest news and update

Newsletter BG