You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

July 18, 2025

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

Subscribe to Updates

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.

Related Professionals

Industries

Automotive

Energy

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

June 4, 2024
As Vietnam continues its rapid economic development, the demand for sustainable and reliable energy sources has never been more critical. Solar power has emerged as a key component of Vietnam’s strategy to diversify its energy portfolio and reduce its carbon footprint. Recent developments of the regulatory framework governing solar power projects in Vietnam, as discussed below, highlight the country’s commitment to renewable energy and its efforts to create a conducive environment for solar power investments. Objectives for the Development of Solar Power Projects On May 15, 2023, the Prime Minister issued Decision No. 500/QD-TTg, approving the National Power Development Plan for 2021-2030 with a vision to 2050 (“PDP VIII”). Following this, on April 1, 2024, the Prime Minister promulgated the Implementation Plan for PDP VIII (“Implementation Plan”). These documents underscore Vietnam’s commitment to promoting renewable energy, particularly solar. They emphasize self-production and self-consumption of solar power, the development of rooftop solar systems, and the promulgation of the direct power purchase mechanism. The integration of solar power with battery storage is also encouraged, contingent upon economic viability. PDP VIII sets ambitious capacity targets for solar power. By 2030, the capacity is projected to reach approximately 12,836 MW, accounting for 8.5% of the total power capacity. This includes 10,236 MW from concentrated solar power and 2,600 MW from self-production and self-consumption solar power. By 2050, the capacity is expected to rise to between 168,594 MW and 189,294 MW, representing 33.0-34.4% of the total power capacity. Additionally, PDP VIII and the Implementation Plan list 27 solar power projects, totaling 4,136.25 MW, slated for implementation after 2030. However, these projects may be advanced under self-production and self-consumption arrangements. Draft Decree on Direct Power Purchase Agreements On April 15, 2024, the Ministry of Industry and Trade (“MOIT”) released a draft decree on direct power
Read More
June 3, 2024
Nearly a year after Vietnam’s issuance of its National Power Development Plan for 2021-2030, with a vision to 2050 (“PDP VIII”), the Prime Minister issued Decision No. 262/QD-TTg dated April 1, 2024, approving the Implementation Plan for PDP VIII (“Implementation Plan”). Among other contents, the Implementation Plan sets forth the list of prioritized power source projects through 2030, and the capacity of renewable energy sources through 2030, as detailed below. Prioritized Power Source Projects through 2030 The Implementation Plan lists out six types of power source projects prioritized for development through 2023 according to the capacity approved under PDP VIII. They include: Domestic gas-fired power (14,930 MW) LNG-fired power (22,400 MW) Coal-fired power (30,127 MW) Cogeneration power using residual heat, blast furnace gas, and by-products of technological lines in industrial facilities (2,700 MW) Hydropower (29,346 MW) Pumped storage hydropower (2,400 MW) With respect to each type, the Implementation Plan provides details of projects by location and their operational progress. Such information is set out in Schedule III of the Implementation Plan. For power source projects not included in this list, the provincial People’s Committees will consult with the Ministry of Industry and Trade (“MOIT”) and relevant agencies on compliance with the planning prior to appraisal and issuance of in-principle investment approval. Renewable Energy Projects through 2030 The Implementation Plan allocates the capacity of the following renewable energy sources by locality/region: Offshore wind power (6,000 MW) Onshore wind power (21,880 MW) Hydroelectric power (29,346 MW) Biomass electricity (1,088 MW) Electricity produced from waste (1,182 MW) Rooftop solar power for self-production and self-consumption (2,600 MW) Battery storage (300 MW) With respect to each renewable energy source, the Implementation Plan provides a list of certain renewable energy projects through 2030, including the expected life cycle of the projects, and the allocated capacity
Read More
April 29, 2024
On November 4, 2021, Cambodia’s Ministry of Mines and Energy (MME) issued a Prakas No. 0305 on Management of the Steam Energy Subsector within the Energy Sector. The prakas aims to regulate steam energy operations, and requires companies wishing to develop, build, install, or operate steam energy to apply for a steam energy license. As this is the first prakas regulating steam energy operations in Cambodia, all relevant companies operating in steam energy must apply for a steam energy license with the MME. Prakas 0305 discusses permits for three types of activities: Development, Construction, Installation, and Operation of Steam Energy. Companies wishing to develop, build, install, and operate steam energy production facilities must first apply for a permit from the MME. Steam Energy Service Provision. Companies wishing to develop, build, install, and operate steam energy for the purpose of supplying steam energy to consumers must apply for a permit for steam energy service provider in addition to a permit for development, construction, installation, and operation of steam energy. Two-in-One Steam Energy and Electricity Production. Companies wishing to develop and operate both steam energy and electricity production activities must also apply for a permit for two-in-one steam energy and electricity production. Companies operating without the necessary permits are subject to a daily fine of KHR 400,000–4,000,000 (approx. USD 100–1,000). In addition, they may face other penalties, including: An order to halt business activities; Permit suspension; Permit revocation; Judicial action; and Other legal measures as the MME deems fit. For more information on regulations and requirements for steam energy licenses in Cambodia, please contact Tilleke & Gibbins at [email protected].
Read More
January 25, 2024
Thailand’s Department of Mineral Fuels (DMF) has developed a framework to regulate carbon capture and storage (CCS) and related activities by introducing “carbon business” to the draft amendment to the Petroleum Act B.E. 2514 (1971). CCS involves the capture, treatment, transport, and underground storage of carbon dioxide produced from industrial power generation. The captured carbon can be used to enhance oil recovery, converted into fuel such as methane or DME (dimethyl ether), or converted to higher-value products. In Thailand, various companies have carried out CCS feasibility studies. Carbon Business and Licensing Under the draft amendment to the Petroleum Act, “carbon business” is defined as exploration for purposes of carbon storage or compression of carbon into carbon storage, while “carbon” is defined as carbon dioxide in the state of gas or supercritical fluid generated as a byproduct or captured from other sources and transported for storage. Any concessionaire, product-sharing contractor, or service contract holder that has been granted permission to explore for or produce petroleum under the Petroleum Act can apply for a carbon business license from the director-general of the DMF with the approval of the Petroleum Committee. Licenses are also available to any other parties who meet the eligibility criteria to be prescribed later by a ministerial regulation. Licenses for these parties will be allocated through competitive bidding according to procedures to be announced by the minister of the Ministry of Energy (MOE). In granting a license, the minister of the MOE and the director-general of the DMF will consider the geological suitability of carbon storage, storage systems, surrounding areas of carbon storage, risk of carbon leakage and movement, environmental impacts, and the applicant’s financial potential and ability in environmental management. Responsibilities of Carbon Business Operators Carbon business operators are required to monitor and inspect their installations, structures,
Read More