NATIONAL ECONOMICS UNIVERSITY

NEU BUSINESS SCHOOL

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MICROECONOMICS - FINAL GROUP PROJECT

TOPIC
THE ELECTRIC CAR INDUSTRY

Lecturer: Dr. Tran Thi Hong Viet

Group 10 – EBBA 15.1
Đỗ Mạnh Đức - 11230048
Nguyễn Minh Hiếu - 11230068
Lê Minh Hiếu - 11230067
Lê Quang Minh - 11230110
Nguyễn Đức Nghị - 11230121
Nguyễn Đăng Thành - 11230141
 Hanoi – May 2024
TABLE OF CONTENTS
A. Introduction......................................................................................................2
B. Body....................................................................................................................2
I. The electric car industry is oligopolistic competition (Is the industry the commodity is in,
closer to pure competition or monopoly? Explain your reasoning?)...................................................2

1 Definition...........................................................................................................2
2 Characteristics..................................................................................................4
2.1 Number of firms.............................................................................................................................. 4
2.2 Nature of products......................................................................................................................... 4
2.3 Market power.................................................................................................................................. 5
2.4 Barriers to entry............................................................................................................................. 7
2.5 Non-price competition................................................................................................................... 8
II. EFFECTS OF NON-PRICE FACTORS ON SUPPLY AN DEMAND (Explain the
main factors that have affected the supply and the demand of the commodity chosen over the last
years) ............................................................................................................................................................ 9

1 Overall.............................................................................................................10
2 Demand...........................................................................................................11
2.1 Income of consumers................................................................................................................... 11
2.1.1 Demand side..............................................................................................................................................11
2.1.2 Supply side.................................................................................................................................................11
2.2 Individual preferences and the number of consumers........................................................12
2.3 Expectations.................................................................................................................................. 15
2.4 International market................................................................................................................... 15

3 Supply..............................................................................................................17
3.1 Prices of input............................................................................................................................... 17
3.2 Technology..................................................................................................................................... 18
3.3 International market................................................................................................................... 20

4 Government interventions..........................................................................21
5 Potential and Challenge...............................................................................24
5.1 Potential......................................................................................................................................... 24
5.2 Challenge....................................................................................................................................... 25

C. Ending..............................................................................................................26
REFERENCE:.........................................................................................................27

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3
 A. Introduction
Global warming, ice melting, fires have increased, water pollution, the source of air is
clearly present every day due to the impact of economic and production development
not being stable. Electric cars are one of the global solutions to remedy the situation
where the environment is damaged due to direct impact or indirectly by humans over
the years via. Electric cars are currently a common concern of most countries around
the world from America to Europe, and major powers. Having a solid industrial and
economic base not even developing countries is beyond that concern. The interest
comes from many sides of society; issued by the state regulations and policies to limit
emissions of gas every year, encouraging people to move from using means of
transport run on electricity through active subsidy measures possible.
Obviously, the conversion from direction traditional convenience to electric cars is
included a specific roadmap, in addition to beneficial factors, is still available many
factors must be considered and needed must be resolved in the coming years. One
some concerns can be mentioned, on the technical side and technology also has
problems hinder the development of electric cars as a public issue battery technology,
energy storage capacity, range route traveled on a single charge, period one charge...
especially the cost of manufacturing a car electricity is still too large to make the cost
of electric cars are still very high compared to real demand user's. This is the real
situation common view of most countries in the world. In developed countries,
countries have high income, the cost of an electric car is also a consideration between
electric vehicles and cars traditional. These problems are huge obstacles in developing
countries like Vietnam. So possible route to export for cars in Vietnam any? What is
the solution for the electric car sector in Vietnam to become solid? Opportunity to
play electric car development in Vietnam is huge, however we must clearly analyze
actual and existing obstacles specific solutions for electric cars in Vietnam in the near
future for development to become real lasting.

B. Body
I. The electric car industry is oligopolistic competition (Is the
industry the commodity is in, closer to pure competition or
monopoly? Explain your reasoning?)

1 Definition
What is pure competition?

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 Pure competition is a marketing situation where many sellers offer similar products
for similar prices. In purely competitive markets, corporations have little control of a
product's price. Pure competition is the opposite of a monopoly, where one company
has complete price control because of little competition. Monopoly and pure
competition represent each end of the commerce spectrum that marketers can use to
evaluate existing industries. (According to Indeed - Career Guide).
What is monopoly?
A monopoly is a market structure where a single seller or producer assumes a dominant
position in an industry or a sector. Monopolies are discouraged in free-market
economies as they stifle competition and limit substitutes for consumers. (According to
Investopedia).
What is oligopoly?
An oligopoly is a type of market structure that exists within an economy. In an
oligopoly, there is a small number of firms that control the market. A key characteristic
of an oligopoly is that none of these firms can keep the other(s) from having significant
influence over the market. The concentration ratio measures the market share of the
largest firms. There is no precise upper limit to the number of firms in an oligopoly, but
the number must be low enough that the actions of one firm significantly influence the
others. An oligopoly is different from a monopoly, which is a market with only one
producer. (According to Investopedia)
The difference between pure, oligopoly and monopoly

Market Pure Oligopoly Monopoly

structures competition

Number of Many small A small number of large Single firm dominates

firms firms. firms dominate the market. the entire market.

Product Products are Products may be Unique product with no

Differentiation identical or very standardized or close substitutes.
similar. differentiated.

Entry and Exit Easy entry and Barriers to entry are Significant barriers to
exit for firms. relatively high, making it entry, making it difficult
difficult for new firms to for new firms to enter
enter the market. the market.

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Control over No individual Firms have some degree of The monopolist has
Price firm has control control over the market significant control over
over the market price; they may engage in the market price. It is a
price; they are price competition or collude price maker.
price takers. to set prices

Examples Agricultural Automobile industry, Public utilities (natural

markets where telecommunications, soft monopolies), such as
many farmers drinks. water and electricity
sell identical providers, or a company
products like with exclusive patent
wheat or corn. rights for a product.

2 Characteristics

2.1 Number of firms

Currently, Vietnam has two enterprises manufacturing and assembling electric cars,
including Vinfast (part of Vingroup) and TMT Automobile Joint Stock Company. In
addition, Thanh Cong Group Joint Stock Company and Truong Hai Auto Joint Stock
Company also introduced a number of electric car models from Hyundai and KIA to
customers to learn about the market and proceed to production and assembly. in the
country in the near future.

2.2 Nature of products

The electric car industry in Vietnam mainly focuses on the production and distribution
of vehicle models that use electric energy. These products include not only vehicle
models, but also supporting infrastructure systems such as batteries and energy storage
systems.
VinFast is one of the leading electric car manufacturers in Vietnam. VinFast's main
products include electric vehicle models and battery charging and rental solutions.
VinFast has applied 4.0 technology at its factories, helping equipment and parts/full
Lines in a factory are connected to each other through sensors connected via the
network and/or cloud computing. In addition, VinFast also has a battery factory,
producing LFP (Lithium) rechargeable battery cells. Iron Phosphate) is mainly used
for electric car batteries and energy storage systems (ESS).

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 Some electric cars in Vietnam
Case analysis: VinFast's main products include:
Electric motor cars: VinFast owns many electric car models in different vehicle
segments. VinFast's popular electric car models include VF e34, VF 5, VF 6, VF 8
and VF 9.
Batteries and charging stations: VinFast provides charging solutions and battery
rentals, helping customers use electric vehicles conveniently.
Meanwhile, TMT mainly focuses on manufacturing and distributing trucks. TMT
products include:
Trucks: TMT manufactures and assembles trucks from 900 kg to 40 tons. TMT
products are distributed through an exclusive agent system in 64 provinces and cities
nationwide.

2.3 Market power

Market power refers to a company's relative ability to manipulate the price of an item
in the marketplace by manipulating the level of supply, demand, or both. This power
allows the company either to charge higher prices than its costs justify or restrict
supply to keep prices artificially high. This can be achieved through various means,
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such as controlling a large share of the market, having unique products or services that
are difficult to replicate, or owning essential resources or infrastructure. As a result,
companies with market power can often earn above-average profits.
To be more specific, according to a recent report by SSI Research, Vietnam's green
car market is small but shows growth potential in recent years. In particular, electric
vehicles have become more popular in Vietnam (estimated to account for 6% of
passenger car sales in 2023), thanks to the outstanding development efforts of Vinfast
and some other importers.

In recent years, imported electrified vehicles have shown signs of entering the
Vietnamese electric car market. Specifically, in 2020, the number has nearly doubled
compared to the previous year with more than 400 vehicles and only after the first 3
months of 2021, there were nearly 600 vehicles imported into Vietnam (according to
Mr. Nguyen Van Phuong - Vietnam Register).
Owing to our policies, the price of operating electric cars in Vietnam has decreased
significantly, helping the sales volume of these vehicles increase. The "Made in
Vietnam'' electric car company Vinfast alone, accumulated from the beginning of the
year to August 2022, has handed over a total of 2,208 Vinfast VF e34 cars to
Vietnamese consumers (Industry and Trade Newspaper, 2022).

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2.4 Barriers to entry
The biggest challenge is the lack of charging infrastructure, causing range anxiety for
electric vehicles. Although VinFast is pursuing a roadmap to install hundreds of
thousands of charging stations nationwide, up to now the stations operating stably are
mainly concentrated in a few large urban areas. Since 2024, many charging service
providers will also actively participate in the new field, but the scale is still limited.
Power supply, variety of plug standards, charging ports... are big barriers.
Survey results just announced on August 16, 2023 by Vero, a brand communication
consultancy unit in ASEAN, show that limitations in charging station infrastructure
are still a big challenge that makes consumers afraid to switch to use electric cars.
Accordingly, the reason behind 90% of users not choosing to buy electric vehicles is
because they believe that the lack of charging station systems will affect the process of
using electric vehicles, especially when traveling long distances.
Promoting sustainable mobility in Vietnam requires a corresponding infrastructure,
including electricity supply, charging stations, batteries and battery treatment
processes.

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There is also a lack in the working environment. Our country does not really have
many workplaces with full equipment to fully exploit the available human potential.
Moreover, the high cost of an electric car is considered a hindrance to the adoption of
this product. GDP per capita in Vietnam in 2022 is estimated at 4.163 USD, still too
low for consumers to own a regular four-wheeled personal car, without considering
the higher cost of electric cars over their fossil-fuel burning rivals.

2.5 Non-price competition

According to experts, VinFast's activities are very coherent, methodical, on all fronts,
making the most of KOLs to orient public opinion, create identity, not yet because of
sales. Typically, 80-90% of marketing budgets are focused on the creation of content.
But Vinfast's ratio is 60:40, or 60% is the maximum set aside for the content creation
budget, and 40% is the media cost of that content.
Vinfast positions its brand as "The first automobile manufacturer in Vietnam". To
reinforce this brand positioning, Vinfast hired two famous Italian designers,
ItalDesign and Pininfarina (ItalDesign is a famous designer associated with the names
of Ferrari and Lamborghini), and collaborated with well-known companies in global
engineering and automobile production such as Magna Steyr and Bosch, AVL, ZF,
GROB, Thyssenkrupp, AVL and MAG. The cooperation with these famous brands
not only helps Vinfast have the same quality as other car manufacturers around the
world, but also strengthens the image of high-class Vietnamese cars in the hearts of
users.
A post on popular social media accounts can cost between $1,000 and $1 million.
KOLs at VinFast's booth can receive fees from several tens of thousands of dollars per
post, 3-7 USD/1,000 views on YouTube, not including the cost of inviting celebrities
to the event.

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In addition, the company also has a systematic communication in the style of
information leakage. Accordingly, this company leaks a series of information to
stimulate the curiosity, interest and talk of public opinion.

II.EFFECTS OF NON-PRICE FACTORS ON SUPPLY AN

DEMAND (Explain the main factors that have affected the
supply and the demand of the commodity chosen over the last
years)
The electric car industry in the Vietnamese market has been influenced by various
non-price factors that have affected both supply and demand. Let's examine the main
factors that have shaped the supply and demand of electric cars in Vietnam over the
last few years.

1 Overall
Government policies and regulations: Government policies play a crucial role in
shaping the electric car industry in Vietnam. The government has implemented
various measures to promote the adoption of electric vehicles (EVs), such as tax
incentives, subsidies, and investment in charging infrastructure. These policies have
had a positive impact on the supply of electric cars by encouraging manufacturers to
enter the market and invest in production facilities.
Technological advancements: Advances in electric vehicle technology have
significantly influenced the supply of electric cars in Vietnam. Improvements in

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battery technology, increased range, and enhanced charging infrastructure have made
electric cars more attractive to consumers. As technology continues to evolve, the
supply of electric cars is expected to increase, offering more options to consumers.
Infrastructure development: The availability and adequacy of infrastructure, including
charging stations and maintenance facilities, have a significant impact on the supply
and demand of electric cars. The expansion and development of charging
infrastructure across Vietnam have been key factors in increasing consumer
confidence in electric vehicles. As the charging network improves, it reduces concerns
about range anxiety and makes electric cars more practical for everyday use.
Public perception and awareness: Public perception and awareness of electric vehicles
have a considerable influence on both supply and demand. Positive perceptions
regarding the benefits of electric cars, such as reduced emissions and lower operating
costs, can drive consumer demand. Increasing media coverage, educational
campaigns, and demonstration projects have helped raise awareness and improve
public perception of electric vehicles in Vietnam.
Collaboration and partnerships: Collaboration between government agencies,
automakers, and other stakeholders plays a vital role in shaping the electric car
industry. Partnerships and collaborations can lead to joint investments in
infrastructure, research and development efforts, and market promotion initiatives.
Such collaborations are crucial in creating an enabling environment for the supply and
demand of electric cars to flourish.

2 Demand

2.1 Income of consumers

Consumer income plays a significant role in shaping the supply and demand dynamics
of Vietnam's electric car industry. Let's examine the impact of consumer income on
both the supply and demand sides individually:

2.1.1 Demand side

Consumer income directly affects the demand for electric cars in Vietnam in the
following ways:
 Affordability: Higher consumer income levels enable individuals to
afford electric cars, which are often priced higher than conventional
vehicles due to their advanced technology and production costs. As
income rises, more consumers have the purchasing power to buy electric
cars, increasing the overall demand.

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  Substitution Effect: As consumer income increases, people tend to shift
towards higher-quality and more sustainable products. Electric cars are
often considered a greener and more eco-friendly alternative to traditional
vehicles. Higher consumer income levels allow individuals to prioritize
sustainability and choose electric cars over conventional gasoline-
powered vehicles, thereby increasing demand.
 Infrastructure Investment: Consumer income influences the government's
ability to invest in charging infrastructure. As people's income rises,
governments may allocate more funds to build charging stations and
develop a robust electric vehicle charging network. Improved
infrastructure encourages more consumers to consider electric cars, thus
driving up demand.

2.1.2 Supply side

Consumer income also affects the supply of electric cars in Vietnam in the following
ways:
 Production Costs: Higher consumer income levels indicate a potentially larger
market for electric cars. This can incentivize automakers to invest in production
facilities within Vietnam or expand their existing operations. Increased
production leads to economies of scale, which can reduce the production costs
of electric cars. Lower production costs enable manufacturers to supply electric
vehicles at more competitive prices, further stimulating demand.
 Technological Advancements: Higher consumer income levels provide
automakers with more resources to invest in research and development. This
can lead to technological advancements in electric vehicle technology, such as
improved battery efficiency, longer driving ranges, and enhanced features.
Technological progress can positively influence the supply of electric cars,
making them more attractive to consumers and contributing to increased
demand.
 Government Incentives: Higher consumer income levels may enable the
government to introduce subsidies or tax incentives to promote the adoption of
electric vehicles. These incentives can stimulate the supply of electric cars by
reducing the manufacturing costs for automakers or encouraging investment in
the industry. Consequently, increased supply can meet the growing demand
from consumers with higher income levels.

In summary, higher consumer income levels in Vietnam can boost both the demand
and supply of electric cars. Increased affordability, preference for sustainable
products, infrastructure development, reduced production costs, technological

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advancements, and government incentives are some of the factors through which
consumer income influences the supply and demand dynamics of Vietnam's electric
car industry.

2.2 Individual preferences and the number of consumers

As gasoline-powered cars face competition from increasingly popular electric vehicles

(EVs), it's important to understand what features sway buyers' decisions. EVs offer

environmental benefits and freedom from fossil fuels, but consumers have diverse

preferences. By delving into the most important factors influencing EV purchases, this

article will explore what drivers seek in an electric car and its charging network. This

knowledge can guide the creation of new EV models and charging infrastructure that

better cater to consumer needs.

● Range: Range is one of the most important factors for EV buyers, and it refers

to the distance an electric car can travel on a single charge. Many buyers prefer

vehicles that can go farther without needing to recharge, especially for long-

distance travel. A longer range also gives buyers peace of mind that they won’t

run out of power during their daily commute or while on a road trip.

● Charging Infrastructure: EV buyers also consider the availability and

convenience of charging infrastructure. They want to know that they can easily

find charging stations, especially when traveling long distances. Many buyers

prefer fast-charging options that can recharge their cars quickly, such as DC

fast charging.

● Performance and Handling: While EVs are often associated with being eco-

friendly and efficient, buyers also want vehicles that offer good performance

and handling. They want cars that can accelerate quickly, handle well in

different driving conditions, and provide a comfortable ride.

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 ● Cost: Cost is always a significant factor for any vehicle purchase, and it’s no

different for EVs. While the price of electric cars has been dropping in recent

years, they are still generally more expensive than gasoline-powered cars.

Buyers often weigh the upfront cost of the vehicle against the long-term

savings they can achieve from lower fuel and maintenance costs.

● Safety Features: Safety is another important factor that EV buyers consider.

They want cars that are equipped with the latest safety features, such as blind-

spot monitoring, lane-departure warnings, and automatic emergency braking.

Many EVs also have a lower center of gravity, making them more stable and

less likely to roll over in an accident.

● Environmental Impact: One of the primary reasons why people choose to

purchase an EV is to reduce their environmental impact. EVs produce zero

emissions, which means they contribute less to air pollution and greenhouse

gas emissions than gasoline-powered cars. Many buyers consider the

environmental benefits of owning an EV when making their purchasing

decisions.

● Brand Reputation: The brand reputation of an automaker can also influence

the purchasing decisions of EV buyers. Many consumers are loyal to certain

brands and trust them to produce high-quality, reliable vehicles. In addition,

some automakers are known for their commitment to sustainability and

environmental responsibility, which can be a significant factor for buyers who

prioritize these values.

● Design and Style: While not as critical as other factors such as range and cost,

the design and style of an EV can also play a role in the purchasing decision.

Many buyers want a vehicle that looks stylish and modern, with sleek lines and

innovative features. In addition, some buyers may prefer a particular body

style, such as a sedan, SUV, or hatchback.

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 ● Battery Life and Durability: EV buyers also consider the lifespan and

durability of the battery when making a purchasing decision. Many buyers

want a battery that can last for several years without needing to be replaced,

and they want to know that the battery will maintain its performance over time.

In addition, some buyers are concerned about the environmental impact of

disposing of a used battery.

● Government Incentives and Rebates: Finally, government incentives and

rebates can also influence the purchasing decision of EV buyers. Many

governments offer tax credits, rebates, or other incentives to encourage

consumers to purchase EVs. These incentives can significantly reduce the

upfront cost of an EV, making it a more attractive option for buyers.

For the number of consumers using electric cars, we have found out that Almost 14

million new electric cars were registered globally in 2023, bringing their total number

on the roads to 40 million, closely tracking the sales forecast from the 2023 edition of

the Global EV Outlook (GEVO-2023). Electric car sales in 2023 were 3.5 million

higher than in 2022, a 35% year-on-year increase

2.3 Expectations
The expectation for the electric car market is overwhelmingly positive, pointing

to significant growth in the coming years. Here are some key trends:

● Soaring Sales: Sales are anticipated to be very strong in 2024, with

estimates suggesting over 17 million electric cars being sold worldwide

[IEA's Global EV Outlook]. This represents a major leap, with electric

cars potentially making up more than 20% of all new car sales this year.

● Rapid Growth Trajectory: The market is expected to continue on a fast

growth path throughout this decade. By 2030, the market size is projected
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 to nearly triple from current levels, reaching a value of nearly $1 trillion

[Markets and Markets report].

● Factors Driving Growth: Several factors are fueling this growth,

including decreasing battery costs, rising environmental concerns, and

supportive government policies that encourage electric vehicle adoption.

Overall, the electric car market is poised for a period of significant expansion,

transforming the global auto industry and impacting transportation on a large

scale.

2.4 International market

EVs are to play a central role in the ambitious objective of zero-emission targets set
for 2050, and the industry is gearing up for it.
The year 2022 came on strong, breaking records. EV sales exceeded 10 million, with
14% of all new cars sold being electric, quite the jump from 9% in 2021 and less than
5% in 2020. That resulted in more than 26 million electric cars roaming global roads
in 2022, representing a 60% uptake from 2021.

The market is growing. It’s growing fast. And it’s growing everywhere.
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Carried by a decarbonization challenge most leading nations now take seriously and
supported by various policies and incentives, global EV sales keep accelerating in
2023.
2.3 million EVs were sold only in the first quarter of the year. That is 25% more than
in the same time in 2022.
“We're predicted to see 14 million in sales by the end of 2023. Electric cars could
account for 18% of total car sales by then.”
How's the situation in Europe?
Europe experienced a downturn in EV sales in 2022 compared to the exceptional
growth seen in 2020 and 2021. But the continent still remained 2nd largest market for
electric vehicles. Electric car sales were more than 15% higher compared to 2021 and
reached 2.7 million.
Despite the downturn, the continent’s EV sales continue to increase steadily,
reflecting the recent implementation of stricter rules regarding CO2 emission
standards, such as the mandated 100% reduction in CO2 emissions for new cars and
vans from 2035.
Not to mention, EV sales growth can also be attributed to stimulus measures
introduced by many European governments and various tax benefits and subsidies put
in place in major markets.
Norway, Sweden, the Netherlands and Germany remain to be the largest European
markets, according to the 2023 Global EV Outlook by IEA.

3 Supply

3.1 Prices of input

Electric cars are manufactured from main materials: Lithium-ion batteries, aluminum
alloys, steel, rubber and polymer materials.

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 Compare the cost of manufacturing electric vehicles and vehicles using internal
combustion engines

Car input prices will reduce the following reasons: lithium-ion battery production
technology and electronic components have developed strongly, reducing the
production costs of key components in electric cars. Many companies are also
investing in research and development of new battery technology, helping to increase
performance and reduce costs. Currently, the cost of battery production is high (from
1/4 to 2/5 of the cost), electric cells are still made into traditional cells. "If each charge
can run over 320km and the charging network is good, it is a no-brainer for people to
buy electric cars" - Professor David Bailey of the University of Birmingham (UK) told
The Guardian newspaper. According to BNEF research, battery prices will decrease
by up to 58% between 2020 and 2030, down to about 58 USD per kWh (battery
capacity measurement unit). Car batteries today have an average capacity of 35 to
100kWh at a price of $137 per kWh, according to a 2020 Bloomberg survey. Pinning
the price below 100 USD per kWh will be a "historic" step for electric cars, marking
the end of internal combustion engine vehicles and hybrid vehicles. Furthermore,
electric cars are often more energy efficient than traditional cars with internal
combustion engines, which will reduce operating and maintenance fuel costs. Electric
cars typically have fewer moving parts and are less dependent on oil, gas and complex
power transmission systems, resulting in lower maintenance costs than traditional
cars. Along with that, currently car manufacturers, especially domestic enterprises, are
also increasing the speed of investment in electric vehicle production, installing
charging stations... to transform from internal combustion engine vehicles to electric
vehicles. However, in addition to launching electric cars and electric motorbikes,

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VinFast Company also cooperates with gasoline retail companies and some large
cities to develop charging station systems in parking lots and gates. convenience
stores, apartment basements, schools, dormitories, trees... Customers only need 15 to
30 minutes to fully charge the vehicle's battery. Many countries have adopted policies
to encourage the use of electric cars through financial support, tax exemptions and
other measures, helping to reduce costs for consumers and create favorable conditions
for development. develop the electric car industry. Therefore, it can be concluded that
input prices will greatly affect beer supply in Vietnam.

3.2 Technology

VinFast is one of the leading manufacturers in Vietnam, has launched electric car
models and is building electric charging infrastructure nationwide. VinFast has
directly produced electric cars using automatic robot technology lines, applying 4.0
technology at factories to help equipment and production lines be connected through
sensors and computing. cloud. A series of large-scale factories were established to
serve Vinfast's electric vehicle production process. A typical example is the battery
factory with a total investment of nearly 6,330 billion VND, scale of 14 hectares with
a design capacity of 5 GWh/year, the factory's product is LFP (Lithium Iron

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Phosphate) rechargeable battery cells used mainly for electric car batteries and energy
storage systems (ESS). VinFast also expanded cooperation with the world's largest
electric vehicle battery manufacturing company - Contemporary Amperex Technology
(CATL) of China to develop production of smart chassis integrated with CTC
batteries. With this technology, the battery system and important components will be
integrated into the vehicle chassis to help reduce weight, increase travel distance and
reduce costs for green car users. In addition, this cooperation also helps promote
research into breakthroughs in electric vehicle batteries and electrified mobility
solutions globally. This advanced technological equipment used in electric car
production help increase productivity, meaning manufacturers can produce more in a
short time, reducing labor costs. In addition, electric cars mainly use energy from
renewable power sources such as solar and wind power, helping to reduce carbon
dioxide emissions and environmental pollution compared to cars using internal
combustion engines.

3.3 International market

Over the past 5 years, China and Europe have been the two leading markets in electric
vehicle sales growth. But by 2022, Europe has surpassed China to become the largest
electric vehicle consumption market. Also, according to BloombergNEF (BNEF)
forecasts, the electric car trend will continue to explode in the near future with sales
expected to increase by 66% in 2021, exceeding the 5 million mark and equivalent to

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7% of the total number of new cars. sold globally. That number continues to increase
and will reach 30 million vehicles sold by 2028, the proportion of electric vehicles
will reach 48% of total commercial cars sold by 2030. Continued strong sales growth
is expected. is the driving force promoting the popularity of electric cars, aiming for
the goal of 100% zero-emission vehicles (electric and hybrid electric vehicles) by
2050.

After a journey with Vietnamese customers on every road, VinFast officially exported
the first batch of smart electric cars, including 999 VF 8s, to the international market.
The event of VinFast exporting electric vehicles is an important milestone marking a
special step forward for the Vietnamese car industry and is also a testament to
VinFast's production capacity:

999 VinFast VF8 electric cars exported to the US on November 25, 2022

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4 Government interventions

In recent years, the electric car industry has become more popular around the world
along with the many benefits it brings. The Vietnamese government recognizes this
trend and has contributed significantly to promoting this industry.

● Vietnam has issued Decision No. 876/Decision-TTg dated May 27, 2022
approving the Executive Program Initiatives on green energy conversion and
reduction of gas emissions carbon and methane of the transportation sector
with Specific goals and green transition roadmap for each type of
transportation:

- Period to 2030: Improve efficiency energy use, promoting the conversion of

electricity use, Green energy for all sectors transportation is ready in terms of
technology, institutions, resources to implement the level of commitment in the
Contribution Nationally Determined (NDC) and deflation target Vietnam's methane
emissions.

- Period to 2050: Reasonable development mode of transport, vigorously carry out the
transformation of all vehicles, equipment, and transportation infrastructure
transportation to use electricity, green energy, towards Net greenhouse gas emissions
will reach “zero” by 2050.

● Regarding tax and fee policies to promote production and use environmentally
friendly cars in general and Electric cars in particular:

- Special consumption tax policy for electric cars and environmentally friendly cars:
Expenditure tax Special allowances for electric cars are being regulated from 5 - 10%
while special consumption tax on powered cars Gasoline and oil fluctuate between 10
- 150% depending on the number seat and cylinder capacity;

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- Registration fee policy: Exemption from registration fee with public passenger
transport by car buses use clean energy, including running buses electricity (current
registration fee rates for all types of vehicles other buses is 2% according to Decree
No. 20/2019/ND-CP dated February 21, 2019, effective from April 10, 2019;

- Import tax policy: Automobile production projects, Auto parts are exempt from
import tax
Imported goods create fixed assets of the project according to regulations in Clause
11, Article 16 of the Law on Export Tax and Import Tax No. 107/2016/QH13
(effective from September 1, 2016); the electric cars, cars using fuel cells, hybrid cars
if they meet the Program's conditions 0% import tax will be imposed on raw materials
and supplies investment, imported auto components are of domestic type can be
produced, with an application period of 5 years (Decree No. 57/2020/ND-CP dated
May 25, 2020 amending and supplementing Decree No. Decree No. 122/2016/ND-CP
dated September 1, 2016 and Decree No.125/2017/ND-CP dated November 16,
2017);

- Corporate income tax policy: Income of enterprises from implementing new

investment projects in production, assembling cars in investment incentive areas
(including economic zones, high-tech parks, industrial parks...) enjoy advantages
Corporate income tax incentives (preferential tax rates and terms tax exemption, tax
reduction...) corresponding to the actual area Implement investment projects according
to the provisions of tax law enter a business;

- Policy on non-agricultural land use tax and land tax: Manufacturing and automobile
projects receive incentives on land rent and non-agricultural land use tax (Decree No.
31/2021/ND-CP dated March 26, 2021).

- To develop the electric vehicle market, Vietnam needs Research and promulgate
preferential policies as well as Other related planning. Some recommendations are
below can be referenced in accordance with Vietnam's market situation Nam aims to
increase electric vehicle market share:

- The Government sets specific goals and roadmaps for the development and transition
to self-driving vehicles environmental improvement.

- Issue policies to promote tax incentives, fees to promote the market for eco-friendly
vehicles environment in general and electric vehicles in particular:

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+ For manufacturers: Direct support from the budget State to reduce costs such as
investment and research costs research, development, and technology transfer for
production projects exporting and assembling electric cars...;

+ For buyers: Import duty and tax incentives environment, special consumption tax,
consideration of tax application CO2 emissions for each vehicle model.

5 Potential and Challenge

5.1 Potential

In Vietnam, there are many advantageous conditions for the development of the
electric vehicle market. The population of Vietnam is about 100 million people, which
occupies the 14th place in the world. The population aged 24 years to 64 years makes
up more than 69% of the total population of the country. From 2008 to 2018, the
annual GDP is constantly increasing from 5 % to 7 % per year. This population and
economic characteristic are the basis for the development of the automotive industry
in general and electric vehicles in particular.
Besides, automobile manufacturers in the world have long been working in the
Vietnamese market. In 2017, Mitsubishi Motors Vietnam completed the installation of
the first charging station for electric vehicles in Hanoi, located at the headquarters of
the Ministry of Industry and Trade, and also referred to the use of this agency's
electric car. Mitsubishi Motors Vietnam is developing new charging stations in Da
Nang and Hoi An (Quang Nam). In 2019, the Fuso trademark (Germany) introduced
light trucks using electric motors to the world market, including in Vietnam. This
electric vehicle only uses an electric motor and does not discharge pollutant emissions
into the environment. This vehicle can carry 2-3 tons of cargo and the range without

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recharging is about 100 km, charging time takes only one hour to charge 80% of the
battery capacity, battery life is 10 years.
In 2017, the participation of the automotive industry of VIN Group, the country's
largest private conglomerate, raised new hope for the industrialization of Vietnam.
VIN Group is chaired by Pham Nhat Vuong. The company aims to become a leading
automaker in Southeast Asia with an annual capacity of 500,000 units and a
localization rate of 60% by 2025.
Finally, following the ASEAN Free Trade Agreement (AFTA), import duties on
manufactured vehicles in ASEAN countries were abrogated from the beginning of
2018. Given the advantageous conditions outlined above, the Vietnamese government
and experts believe in a bright future for their automotive industry.

5.2 Challenge
In the future, the market for electric vehicles in Vietnam is in great demand and
development prospects, but there are still barriers to the expansion of the electric
vehicle market:
● Firstly, the traditional vehicle market in Vietnam has been developing for a
long time. But the infrastructure for servicing electric vehicles, such as electric
charging stations, service stations, is not keeping up with the growing demand.
● Secondly, vehicle manufacturers and builders in Vietnam have very little
experience in electric vehicles. The fact is that electric vehicles located in
Vietnam are imported from the USA, Japan, and China.
● Finally, the government does not have advantageous preferences to help
development for the electric vehicle market. In addition to import duties on
electric vehicles shipped to Vietnam, special consumption tax rates range from

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 15% to 70%, which raises the prices of vehicles to 20%. According to free
trade agreements in which Vietnam is a signatory to the Convention, some
electric vehicles are shielded from taxes since 2018. These include electric
vehicles from Korea and China. Electric vehicles from Japan are taxed at 4%,
while Tesla electric vehicles from the USA are taxed at 70% under the most
favored nation status.

C. Ending
In recent years, Vietnam's vehicle market has experienced significant growth. This is
the main reason leading to severe environmental pollution in large cities. Electric
vehicles are an excellent solution to the pressing problem of environmental pollution
and the depletion of fossil fuel reserves. Based on advantageous conditions for the
operation of electric vehicles, the market for electric vehicles in Vietnam will grow
rapidly in the near future. However, to successfully implement the electric vehicle
strategy in Vietnam, the electric vehicle market needs more preferential policies from
the Vietnamese government and better relations with vehicle manufacturers around
the world.

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