On January 3, producing one million vehicles in three months is an impressive production rate for BYD, especially considering that their one million vehicles include electric vehicles.

At the end of November 2023, BYD achieved the milestone of producing the world’s first six million electric vehicles. On average, the company manufactures over 11,000 vehicles per day.

The six million vehicles from BYD include pure electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV). Plug-in hybrid vehicles are classified under electric vehicles rather than gasoline vehicles because this category utilizes electric motors as the primary driving force, with the internal combustion engine serving to recharge the battery.

BYD’s main competitor, Tesla, currently stands at five million vehicles. It can be said that BYD, following its announcement to completely stop selling traditional internal combustion engine vehicles in April 2022, is experiencing its most explosive growth phase to date.

With a production rate of 1 million vehicles every 3 months, BYD’s annual production could soon reach 4 million vehicles per year, equivalent to Hyundai’s global output in 2022.

The 6 millionth vehicle produced by BYD is the relatively new Fang Cheng Bao Leopard 5, announced in August 2023. This model employs a plug-in hybrid structure centered around a 31.8 kWh battery pack. The electric-only range of the heart brings about 125 km of pure electric operation. This figure increases to a maximum of 1,200 km with support from the generator, which acts as an engine.

BYD currently sells electric vehicles in 58 countries and territories worldwide, despite their export volume being relatively limited (just over 200,000 vehicles). Including various urban public electric vehicle models, the company is present in more than 400 cities across 70 different countries.

The 6 millionth vehicle model from BYD, named Fang Cheng Bao Leopard 5, features a design that bears a resemblance to the new Toyota Land Cruiser Prado.

Nearly 30 years ago, BYD took its initial steps in electric battery production. It wasn’t until 2003 that their automotive division was established. Five years later, the company introduced its first electric vehicle lineup.

In 2021, BYD reached a milestone of producing 1 million electric vehicles. By 2022, they achieved the 3 million mark, and it took only 9 months to reach 5 million. On November 24, just three months after hitting the 5 million mark, BYD announced the production of their 6 millionth electric vehicle.

In Vietnam, BYD has plans to build an electric vehicle assembly plant. Vehicles manufactured in Vietnam will not only be used domestically but can also be exported to other countries in the region.

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Yong Feng Yu, considering the evolving trends in the medium to long-term international economic and trade landscape, has decided to increase its investment by nearly 1 billion to participate in the proposed capital increase for its industrial paper and paper products business.

In light of the medium to long-term changes in the international economic and trade situation, Yong Feng Yu (YFY) has decided to increase its investment by nearly 1 billion to participate in the proposed capital increase for its industrial paper and paper products business. According to information available, there are two main focuses. First, in line with the ‘Mainland Plus One’ strategy, the company aims to expand the operation scale of its paper factory in Vietnam to seize the opportunities arising from the global shift of manufacturing industries to the south. Second, the company plans to enhance overall production efficiency in Taiwan and Vietnam, moving towards low-carbon, low-energy consumption, and smart manufacturing to continue expanding its market presence.

The industrial paper and paper products business contributed over 40% to YFY’s revenue in the first three quarters, making it a significant part of the company. Currently, the company has production and sales bases in both Taiwan and Vietnam. Given the increasing geopolitical tensions, the long-term growth potential in Vietnam is promising. Last year, the company established two new paper packaging companies, YFY Packaging (Nghe An) and YFY Packaging (Quang Ngai). Following the company’s tradition, it is speculated that at least two new paper factories will be established in Vietnam in the future.

During the analyst conference on the 14th, CEO Luo Bingzheng pointed out that the short-term economic downturn in Vietnam does not affect the overall economic growth trend, and the company remains optimistic about the medium to long-term prospects. The customer industrial clusters in Northern and Southern Vietnam are different, with Southern Vietnam being dominated by Taiwanese businesses and diverse industries, while Northern Vietnam focuses mainly on export and technology industry customers. YFY’s industrial paper will meet the needs of different customers and create distinctions.

As for the Chinese industrial paper and paper products market, after the price increase actions in September and October, terminal selling prices have risen, downstream inventories have been cleared, but whether this trend will continue needs further observation. The market share of industrial paper in Taiwan has not changed significantly. Besides paper boxes, YFY continues to optimize its product portfolio to improve resource efficiency.

YFY’s industrial paper revenue declined by about 10% in the first three quarters, with a low single-digit decline in revenue from Vietnam and a 10% decline across the Taiwan Strait.

Currently, YFY’s industrial paper segment in Taiwan consists of one paper mill and six paper product factories, making it one of the top three paper mills in Taiwan. In Vietnam, the company has six paper product factories, making it the largest paper box supplier in the country. The company is well-prepared with financial resources, and once demand becomes clear, it will establish new paper product factories. In mainland China, YFY has one paper mill and twelve paper product factories.

In the first three quarters, YFY faced a sluggish overall economic recovery, conservative consumer spending, and incurred a loss of 463 million in its core business. However, the main contribution to its income, around 2.293 billion, came from external investments. This was primarily due to the recognition of investment income benefiting from investments in companies like YFY Inc., and the inclusion of dividends from affiliated businesses such as Yong Feng Bank. The consolidated net profit after tax was approximately 1.327 billion, with earnings per share after tax being 0.8.”

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Vietnam’s semiconductor industry follows a pattern of manufacturing in the north and design in the south, with infrastructure development still being the focus. (Schematic diagram/Photo by Wu Shangzhe)

Vietnam has become a new manufacturing location for the United States in the semiconductor industry due to factors such as proximity to China. Analysts from the DIGITIMES Research Center observe that the Vietnamese semiconductor industry is adopting a pattern of manufacturing in the north and design in the south. Policies, infrastructure development including water and electricity supply, and talent are key areas that industry players need to continually focus on in the local landscape.

In the ongoing technological competition between China and the United States, the U.S. government aims to decentralize semiconductor manufacturing to mitigate concentrated risks, adopting a “China+1” investment strategy for the rise of the technology industry.

In response to the U.S. inclusion of Vietnam as a “Friendshore Outsourcing” target, the Vietnamese government actively upgraded its relationship with the U.S. to a “Comprehensive Strategic Partner” in September 2023, creating a favorable environment for semiconductor industry cooperation. The observation reveals that the Vietnamese semiconductor industry cluster is distributed, with memory testing and manufacturing prevalent in the north and testing and IC design dominant in the south. However, there is currently no significant trend of clustering due to limitations such as investment policies, production scale, land transportation, water and electricity infrastructure, and labor quality.

In terms of investment policies, constrained by a limited government budget and recent large-scale investments in water, electricity, and other infrastructure, Vietnam’s investment incentives primarily involve tax reductions for high-tech industries like semiconductors, including CIT tax rates and factory rent exemptions.

Regarding water supply, Vietnam’s tropical monsoon climate results in distinct dry and rainy seasons, with the northern region experiencing more noticeable differences. Economic development and increased industrial and domestic water demand, coupled with global climate change effects, require continuous expansion of reservoirs and water facilities to ensure stable water supply. Additionally, Vietnam’s pronounced dry and wet seasons, with concentrated rainfall during the wet season, necessitate careful consideration of flooding issues.

On the electricity supply front, Vietnam heavily relies on coal and hydropower, despite setting a net-zero goal for 2050. With the entry of power-intensive semiconductor industries and increased electricity demand from economic development and daily life, electricity supply has become a pressing issue, especially in the clearly defined dry and wet seasons of northern Vietnam. Urgent improvements in electricity infrastructure efficiency, especially in issues like slow construction of power plants and the 500kV grid, are needed.

Regarding talent supply, Vietnam boasts a populous and actively participating workforce, providing a good quantity of labor. However, efforts are needed to strengthen the quality of talent supply, particularly for STEM bachelor’s graduates and higher education levels.

Currently, the Vietnamese semiconductor industry is relatively smaller compared to Taiwanese, Japanese, Korean, and even Chinese companies. Northern Vietnamese semiconductor companies focus on testing, assembly, and manufacturing, primarily in memory products, while southern companies emphasize IC design, with only Intel having manufacturing facilities. In the short term, industries related to memory testing, and small-scale, diverse IoT applications in IC design may become the main drivers of Vietnam’s semiconductor industry development.

Amid the international trend of diversifying manufacturing risks with the “China+1” strategy, Vietnam has created a favorable external atmosphere for semiconductor industry development. However, from a medium to long-term perspective, DIGITIMES Research Center analyst Zhou Yan suggests that Vietnam needs to continue improving infrastructure related to policies, water, electricity, talent, and semiconductor industry development to sustain and expand the clustering effects of the semiconductor industry.

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According to statistics from the Ministry of Transport, as of July 2023, the Vietnamese market has only seen around 12,600 electric cars. This number is mainly contributed by the sales of VinFast, as globally renowned electric car brands are yet to establish a presence in Vietnam.

However, according to the predictions of the Vietnam Automobile Manufacturers Association (VAMA), the number of electric cars in Vietnam is expected to experience significant growth in the coming years, reaching 1 million units by 2028 and 3.5 million units by 2040.

The globally renowned electric car company, Tesla, has not yet made an official presence in the Vietnamese market

INFRASTRUCTURE BARRIERS TO CHARGING STATIONS

If the goal is to reach 1 million electric vehicles by 2028, the lack of charging infrastructure is one of the major barriers to the development of this type of vehicle. In the domestic market, the number of electric cars is still limited, and the charging station network has not been evenly developed. This makes the use of electric vehicles challenging, especially for those living in non-central areas.

In a discussion with the media on policy and institutional issues in the development of electric vehicles in Vietnam at the “Electric Vehicles” seminar organized by Hanoi University of Science and Technology at the end of March 2023.

Prof. Dr. Bui Van Ga, a thermal engine specialist, former Deputy Minister of Education and Training, believes that: “The use of electric vehicles is not a technological issue but is about the infrastructure for us to use it, so state investment and planning are crucial.”

The VinFast electric vehicle charging station system has many competitive advantages when widely deployed

In Vietnam, the electric vehicle charging station system mainly comes from VinFast. The Vietnamese brand has developed a charging station system with over 150,000 charging ports for electric motorcycles and electric cars across 63 provinces and cities. VinFast charging stations are equipped with various power capacities, ranging from 11kW to 250kW, located at parking lots, bus stations, residential buildings, offices, shopping centers, rest stops, and petrol stations along highways and national roads, enabling users to charge their vehicles quickly and conveniently.

Some luxury car brands such as Mercedes, Porsche, BMW, or Audi are also establishing charging station systems for customers, but the quantity is still limited, mostly installed at showrooms or the manufacturer’s facilities. This situation makes consumers interested in purchasing electric cars from these brands consider the charging issue.

Currently, VinFast has no intention of sharing its electric car charging stations. Billionaire Pham Nhat Vuong believes, “There is no reason for VinFast to invest millions of USD in building charging stations that can easily be used by competitors. Therefore, after 10 years, other companies can use them.”

Furthermore, the cost of electric cars is still higher than traditional gasoline vehicles. This is because the production cost of electric cars remains high, especially the cost of batteries. According to the General Statistics Office, the average GDP per capita in Vietnam in 2022 is estimated at around 4,110 USD. This is still a low figure for consumers to afford conventional four-wheel personal vehicles, making it even more challenging to own electric cars due to their higher prices compared to similar vehicles with internal combustion engines.

In general, according to the assessment of the Industrial Department, the Ministry of Industry and Trade, there are 7 factors influencing the development of the electric vehicle industry in Vietnam, including low average income, lack of charging station infrastructure, limited operating range of electric cars, preferential policies for electric cars, electricity source structure affecting the environment from the use of electric cars, environmental impact from the production of electric cars, and competition from neighboring countries in attracting electric vehicle manufacturing projects such as Thailand, Indonesia, and China.

SOLUTIONS NEEDED

To achieve the number of nearly 12,600 electric cars in Vietnam, the government’s incentives for electric cars have reduced the registration fee for electric cars to 0% for three years (from March 2022 to March 2025). The special consumption tax for battery-powered electric cars has also been reduced from 15% to 3% (effective until the end of February 2027), according to the Green Energy Conversion, Carbon, and Methane Emission Reduction Program for the transportation sector. For the road sector, from 2031 to 2050, by 2040, Vietnam will gradually restrict and move towards stopping the production, assembly, and import of fuel-consuming cars, motorcycles, and scooters for domestic use.

By 2050, 100% of road vehicles, construction vehicles, and motorcycles participating in traffic will transition to using electricity and green energy. For public transportation, from 2030, the proportion of electric and green energy vehicles will reach a minimum of 50%, with 100% of replaced and newly invested taxis using electricity and green energy. By 2050, 100% of buses and taxis will use electricity and green energy.

According to Prof. Dr. Bui Van Ga, Vietnam needs policies that encourage the use of electric cars. Currently, many countries around the world subsidize electric car costs for people to use. However, when these support policies are not enough, additional environmental policies are necessary.

“Alongside that is energy policy. Another problem is that if everyone switches to using electric cars and motorcycles, electricity consumption will increase significantly, at least 2-3 times more than now. Do we have enough electrical energy to supply or not?” emphasized Prof. Dr. Bui Van Ga.

In late August 2023, the Ministry of Transport proposed to send Deputy Prime Minister Tran Hong Ha a framework for supporting the conversion of gasoline cars to electric cars, including a recommendation to support $1,000 for electric car buyers.

At the same time, proposals for support on various taxes related to production, assembly, consumption, and the construction of electric car charging stations were suggested. The Ministry of Transport proposed that three types of electric cars, namely battery-powered electric cars, fuel cell electric cars, and solar-powered cars, would receive support and development incentives.

However, the Ministry of Finance has sent a document to the Ministry of Transport rejecting many preferential proposals for electric cars. According to the Ministry of Finance, addressing the issue of subsidies and direct financial support for electric vehicle manufacturers and consumers is not suitable because electric vehicle users, especially electric car users, are generally high-income individuals in society.

The Ministry of Finance noted that in the past period, tax and fee laws have been reviewed, amended, and supplemented to suit the country’s development in each period as well as the requirements for the development of important industries and sectors. Among them, there have been many policies to encourage the use of environmentally friendly vehicles, electrified vehicles, to a relatively high extent.

The Ministry of Finance also disagrees with some other proposals from the Ministry of Transport related to tax policies for electric cars. This includes the draft proposal to continue the preferential special consumption tax rate for domestically assembled electric cars carrying less than 9 passengers at 3%, even after February 28, 2027.”

We need breakthrough policies and solutions for electric vehicles

Heading towards the ambitious goal of one million electric vehicles by 2028 is a bold objective for the domestic electric car market compared to the current figure of nearly 12,600 cars.

Recently, during the discussion on the economic and social situation in the sixth session of the XV National Assembly, Mr. Nguyen Dai Thang, a National Assembly delegate from Hung Yen province, proposed that the National Assembly and the Government promptly study breakthrough policies and solutions, aligning them with countries in the region and around the world.

Thang emphasized the need to issue a separate resolution early to pilot specific preferential policies regarding taxes, land, and administrative procedures to promote investment in the production and assembly of electric vehicles. This aims to quickly position Vietnam as one of the world’s electric vehicle and parts manufacturing centers, meeting the domestic and export demands for electric vehicle production.

Vietnam needs a roadmap to transition from using conventional road motor vehicles fueled by fossil fuels to electric vehicles. It is crucial to invest in comprehensive infrastructure for electric charging stations to meet the increasing demand for electric vehicles, keeping pace with regional and global trends.

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