Vietnam's food trade industry is one of the most dynamic sectors in the country. Fueled by an expanding middle class, rising disposable incomes, and shifting consumer preferences, the increasing demand for high-quality food products is undeniable. From bustling markets in Ho Chi Minh City to modern supermarkets in other major cities, the opportunity for both […]
The explosion of electric vehicles has created a rare opportunity for Vietnam to strengthen its position in the global automotive value chain.
Recently, the United Nations Development Programme (UNDP) in Vietnam has conducted a report on the supply chain of the automobile - electric vehicle industry to re-evaluate the impact of the COVID-19 epidemic on it, and recommend policies for Vietnam to increase its participation in the global supply chain.
Exhausting automotive industry
According to the Ministry of Industry and Trade, there are more than 40 automobile manufacturing and assembly enterprises in the country, with a total design assembly capacity of about 680,000 vehicles per year. In which, there are a number of domestic enterprises that have been deeply involved in the global automobile production chain.
However, the Ministry of Industry and Trade has pointed out that Vietnam's automotive industry is currently only participating in the low segment of the automotive value chain such as tubes, tires, seats, mirrors, glasses, wiring harnesses, batteries, plastic products, etc., heavily dependent on the production assignment of global automobile corporations, and has not yet mastered core technologies such as engines, control systems, and powertrains. Therefore, it has not yet met the criteria of a true automobile manufacturing industry.
The selling price is high, but the quality is still inferior to imported cars. The localization rate for personal cars with up to 9 seats only reaches about 7 - 10% on average, of which Thaco reaches 15 - 18%, Toyota Vietnam reaches 37% for Innova cars alone, much lower than the set target.
80 - 90% of the main raw materials for the production of components such as alloy steel, aluminum alloy, plastic beads, high-tech rubber are currently imported. Mold materials are mainly imported. Every year, enterprises have to import about 2-3.5 billion USD of components and spare parts for vehicle production, assembly and repair.
The localization rate of countries in the region has reached 65-70% on average, Thailand has reached 80%. Thus, if domestic car manufacturers do not soon have effective solutions to improve the localization rate, it will certainly be difficult to compete in the domestic and regional markets.
The opportunity of electric vehicles
The International Energy Agency (IEA) said there will be about 3 million new registered electric cars in 2020, a record increase of more than 41% compared to 2019. They also forecast that by 2030, the number of electric cars, buses, trucks and heavy trucks in traffic will reach 145 million.
More than 3 million electric vehicles sold make up only 5% of total car sales, but according to UBS's forecast, by 2025, 20% of new cars sold globally will be electric. This number will soar to 40% by 2030; and by 2040, almost every new car sold globally will be electric. In countries with high living standards like Norway, sales of electric vehicles in 2020 have accounted for 54%, outstripped those powered by petrol and diesel.
The automotive industry is showing signs of transitioning into an electric vehicle era.
Different from the traditional automotive industry that has formed for hundreds of years with the domination of superpowers such as the US, Europe, and Japan. The starting point of enterprises in the electric vehicle industry is now almost the same.
It is an opportunity for new entrants to the industry and countries like Vietnam to strengthen position in the global automotive value chain by attracting investment from multinationals and participation of domestic small and medium enterprises in the electric vehicle ecosystem.
To create opportunities, according to UNDP, Vietnam needs to develop a national roadmap for electric vehicle deployment and application with a balance between supply and demand factors. The roadmap identifies incentive policies to promote the participation of domestic enterprises in the parts of the global electric vehicle supply chain that Vietnam has the potential.
The main goal of the roadmap is to replace imports, even to engage in export activities. Specifically, this includes setting up an agency at the central level to take responsibility for and coordinate relevant ministries and sectors in developing and implementing the roadmap, developing a set of standards and requiring manufacturers to comply with the standards to encourage domestic production, developing specialized emission standards for vehicles on the market.
At the same time, the Ministry of Transport conducts a comprehensive analysis of usage, vehicle density, traffic patterns and congestion, coordinates with the Ministry of Industry and Trade to develop a plan to develop charging infrastructure, and determines the location to ensure the charging stations are located in convenient locations, in accordance with the electrical infrastructure and electricity network.
The explosion of electric vehicles really creates a rare opportunity for Vietnam to strengthen its position in the global automotive value chain.
Source : Tapchitaichinh
