In a significant shift for the automotive industry, Vietnam is set to reintroduce registration fees for electric vehicles (EVs) starting in March 2025. This move, which will require EV owners to pay a fee based on the number of seats—50% of what gasoline vehicle owners pay—is expected to impact both pricing and market demand. Analysts predict that while there may be a short-term surge in EV purchases before the new policy takes effect, the overall growth of Vietnam's EV market could slow down or even decline this year. The government had previously introduced incentives, including registration fee exemptions, in 2022, which fueled rapid growth for domestic manufacturers like VinFast, often referred to as "Vietnam's Tesla."

Details of the Policy Change and Its Impact on the Market

In the heart of Southeast Asia, Vietnam’s decision to reinstate registration fees for electric vehicles marks a pivotal moment for the country’s automotive sector. Beginning in March 2025, EV owners will no longer enjoy the exemption they have benefited from since 2022. Instead, they will now be required to pay a registration fee that varies by location and ranges between 5% to 6% of the vehicle's listed price. For example, the budget-friendly Wuling Hongguang MINI EV would incur a registration fee of approximately 9.85 million VND (around $388), while luxury models like the Rolls-Royce Spectre would face a fee of about 89.5 million VND ($35,000).

The Vietnamese government's decision to phase out these incentives comes after a period of rapid growth in the EV market, driven largely by the success of VinFast, the country’s only domestic EV manufacturer. In just a few years, VinFast has become a symbol of Vietnam’s ambition to compete in the global EV race. However, with the expiration of the three-year decree at the end of February, industry experts are concerned about the potential slowdown in market expansion. Some predict a short-term rush to purchase EVs before the new fees take effect, but long-term sales could suffer as consumers reassess their willingness to pay higher upfront costs.

Beyond local manufacturers, Chinese automakers have also made significant inroads into Vietnam’s market. Brands such as Wuling, BYD, and Chery have gained considerable attention with their competitive pricing, modern designs, and advanced technology. However, concerns remain about the depreciation rates of Chinese-made EVs in the used car market, raising questions about the durability and quality of these vehicles over time.

The World Bank projects that despite these challenges, Vietnam’s EV sales could still reach 160,000 units in 2025, with nearly 1.3 million units forecasted by 2035. Nevertheless, many companies argue that further incentives, such as tax reductions and lower interest rates, are necessary to sustain this growth trajectory.

From a broader perspective, the reintroduction of registration fees highlights the ongoing debate between fostering innovation and maintaining fiscal discipline. While the government seeks to balance its budget, it must also consider the long-term benefits of supporting a cleaner, more sustainable transportation system. The coming months will reveal how this policy shift impacts consumer behavior and the overall direction of Vietnam’s EV market.