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July 18, 2025

Vietnam’s Legal Framework on Electric Vehicles Offers New Opportunities for Investors

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Vietnam’s electric vehicle (EV) industry is experiencing rapid growth, driven by a strong wave of new legislation, strategic plans, and government incentives. The government’s clear commitment to electrification is attracting foreign investment, supporting advanced production, and reducing reliance on internal combustion engine (ICE) imports. Recent national strategies, sector regulations, and technical standards demonstrate a rare level of regulatory momentum in Southeast Asia, positioning Vietnam as a competitive player in the global EV supply chain and an attractive market for foreign investors.

An overview of legal developments for the EV sector in Vietnam is presented below.

National Action Program for Green Transportation

A key driver of Vietnam’s EV growth has been the National Action Program for Green Transportation through 2050 stipulated in Decision No. 876/QD-TTg of the prime minister dated July 22, 2022. The National Action Program sets a detailed roadmap for the green energy transition in road transport.

For the period 2022–2030, the focus is on promoting the manufacturing, assembly, import, and conversion of road motor vehicles to electric power, expanding the use of 100% E5 gasoline for road vehicles, developing charging infrastructure to meet the needs of residents and businesses, and encouraging both new and existing bus stations and rest stops to meet green criteria.

For the period 2031–2050, the roadmap aims to gradually restrict and ultimately cease by 2040 the manufacturing, assembly, and import of fossil fuel-powered cars, motorcycles, and mopeds for domestic use. By 2050, the goal is for 100% of road motor vehicles and construction vehicles participating in traffic to use electricity or green energy, for all bus stations and rest stops to meet green criteria, and for all machinery and equipment for loading and unloading to transition from fossil fuels to electricity or green energy.

The program also calls for the completion of nationwide charging and green energy supply infrastructure to fully meet the needs of residents and businesses.

These measures provide regulatory certainty and a stable pathway for original equipment manufacturers (OEMs), suppliers, and charging-station operators to invest in nationwide electrification.

Policies to Support EV Adoption

Vietnam has also established a forward-looking policy framework to support the development, manufacturing, and commercialization of EVs. Official Letter No. 8685/VPCP-CN (2024) from the Government Office emphasizes the urgency of implementing policies to support EV adoption. These policies, expected to be issued in 2025, include:

  • Facilitating the replacement of fossil fuel vehicles.
  • Encouraging individuals and businesses to adopt EVs.
  • Issuing national technical regulations for EVs and their components.
  • Developing the EV manufacturing industry and supporting industries.
  • Expanding charging infrastructure.
  • Providing preferential electricity pricing for public charging stations.
  • Establishing national technical standards for charging and hydrogen stations.
  • Ensuring electricity supply for charging stations.
  • Promulgating tax and fee incentives.
  • Implementing policies for public procurement of EVs.
  • Offering direct and indirect financial support for users transitioning to EVs.
  • Attracting investment in EV manufacturing and supporting technologies.

More recently, on July 12, 2025, the prime minister issued Directive No. 20/CT-TTg on urgent and decisive tasks to prevent and address environmental pollution, which assigns specific responsibilities to key agencies, including the Ministry of Agriculture and Environment, Ministry of Public Security, and local governments, with clear deadlines and an emphasis on strict accountability, technological application, and public engagement to achieve sustainable development goals.

Specifically, in Hanoi, starting July 1, 2026, fossil fuel-powered motorcycles and mopeds will be banned from operating within the area of Ring Road 1; from January 1, 2028, this ban will extend to the area within Ring Roads 1 and 2 and include restrictions on private fossil fuel-powered cars; and from 2030 onward, the policy will be further expanded to Ring Road 3. Ring Road 1 is the innermost and most central of Hanoi’s ring roads, encircling the city’s historic urban core, while Ring Roads 2 and 3 extend outward to cover broader metropolitan and suburban areas.

Decision on Emission Standards Roadmap

Vietnam is actively promoting a shift from ICE vehicles to EVs as part of its broader green energy transition. One major legal development is a draft decision of the prime minister on the roadmap for implementing the national technical standards on emissions for automobiles in circulation in Vietnam, which sets out the roadmap below. (It is anticipated that carbon monoxide emission limits will be progressively reduced from Emission Level 1 to Emission Level 5; however, the specifications for each level are still being developed by the Ministry of Agriculture and Environment.)

For the effective date of the decision:

  • Automobiles manufactured before 1999 must comply with Emission Level 1.
  • Automobiles manufactured from 1999 onward must comply with Emission Level 2.

From January 1, 2026:

  • Automobiles with spark-ignition or compression-ignition engines manufactured from 2017 and registered in Hanoi and Ho Chi Minh City must comply with Emission Level 4.
  • Automobiles with spark-ignition or compression-ignition engines manufactured from 2017 and registered in other areas must comply with Emission Level 3.
  • Automobiles with spark-ignition or compression-ignition engines manufactured from 2022 must comply with Emission Level 4.

From January 1, 2027:

  • Automobiles with spark-ignition or compression-ignition engines manufactured from 2022 and registered in Hanoi and Ho Chi Minh City must comply with Emission Level 5

From January 1, 2028:

  • Automobiles with spark-ignition or compression-ignition engines manufactured from 2022 and registered in the remaining areas must comply with Emission Level 5

Opportunities for Foreign Investors in EV Manufacturing and Trading

Vietnam is actively opening its doors to foreign investment in the EV sector, offering a supportive legal framework and a range of investment incentives.

Investors in EV manufacturing in Vietnam may qualify for several incentives, including corporate income tax incentives such as lower tax rates, tax holidays, and tax reductions; import tax exemptions for goods imported to create fixed assets or for manufacturing; exemptions or reductions in land use fees, land rent, and land use tax; and accelerated depreciation to increase deductible expenses. The availability and extent of these incentives depend on factors such as project location, number of employees, and project scale.

Vietnamese law allows foreign investors to engage in import and distribution of EVs and related services, but the foreign investors are required to obtain necessary licenses, such as an import license, and comply with strict regulatory requirements. Common business structures include authorized distributors, exclusive dealerships, and domestic importers of completely built units. Additionally, the registration fee for EVs is exempt until the end of February 2027, and the special consumption tax for EVs is significantly lower than that for ICE cars. For EVs with up to 9 seats, this tax is 3% through February 28, 2027, increasing to 11% thereafter. ICE cars in the same category are subject to rates ranging from 35% to 150%, depending on engine size.

Outlook

Investors should monitor the changing legal landscape in Vietnam to ensure they are ready to enter the rapidly developing EV sector. With Vietnam’s ambitious roadmap to develop green transport infrastructure and phase out ICE vehicles, the market for EV manufacturing, trading, and relevant services presents attractive growth opportunities for foreign investors seeking to enter this emerging sector.

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