Despite the potential seen in Vietnam's 100 million-strong market, Chinese electric vehicles (EVs) face significant challenges that hinder their dominance.

VinFast, Vietnam's own electric vehicle brand, has a substantial head start with a nationwide network of about 160,000 charging ports of various capacities. This extensive infrastructure, coupled with a robust network of service and sales workshops, presents a formidable barrier for new entrants.

At the 2023 Annual General Meeting of Shareholders, VinFast CEO Pham Nhat Vuong revealed plans to potentially share VinFast charging stations with other brands after a decade, but until then, VinFast aims to maintain a monopoly.

According to Associate Professor, Dr. Dam Hoang Phuc, Director of the Automotive Engineering Program at Hanoi University of Science and Technology, the future of EV charging will see independent service providers rather than manufacturers. Therefore, Chinese EV brands need a strategy to either invest in charging infrastructure or partner with existing providers.

Currently, third-party charging services like Eboost, Charge+, EV One, EverCharge, EVN, DatCharge, Rabbit EVC, Porsche, VuPhong Energy, … are available, but their network is nowhere near as extensive as VinFast’s. Achieving a comparable infrastructure will require significant time and investment.

Chinese EV brands are forming joint ventures with Vietnamese companies to establish production and distribution networks. For instance, SGMW (General Motors - SAIC Motor - Wuling Motors) has partnered with TMT Motor, while Chery collaborates with Geleximco Group, and BYD with Gelex Group. These partnerships aim to build a dealer system, although the current number of dealers is modest compared to VinFast's 91 dealers or the thousands seen with gasoline car brands.

However, these partnerships are not always smooth. For example, New Energy Holdings (NEH) unexpectedly ceased distributing BYD vehicles in May, highlighting potential instability in such ventures.

Associate Professor Dr. Dam Hoang Phuc stresses the need for a reliable network of service workshops and a widespread sales network for any EV brand to survive in Vietnam. He warns against short-term strategies focused solely on revenue, which are likely to fail without systematic investment.

While Chinese cars are generally perceived as affordable, import taxes on Chinese cars to Vietnam, currently at 47-70%, pose a challenge. In contrast, import taxes on cars from ASEAN markets have been 0% since 2018. To remain competitive, Chinese EVs might have to be assembled in Vietnam or imported via third countries like Thailand and Indonesia.

Furthermore, most Chinese EVs entering Vietnam are mid-range to high-end models, with prices ranging from 700-900 million VND, and some models like Lynk & Co priced in the billions. This pricing strategy aims to shift the perception of Chinese cars from low-cost to high-quality, modern vehicles.

Despite these efforts, Vietnamese consumers still show a preference for American and Japanese cars, often viewing Chinese cars with skepticism. This brand prejudice means Chinese EV manufacturers must work hard to improve their image through quality products and reliable after-sales service, according to Dr. Phuc.

Historically, Chinese gasoline cars have not been successful in Vietnam, and the first commercially sold Chinese electric car, Wuling, also struggled with poor sales, selling nearly 600 units in 2023, just 12% of the original target.

Vo Tam – Pham Huyen