The Ministry of Construction is currently drafting a new standard that would set a stringent target for average fuel consumption (CAFC) for all passenger cars in Vietnam. The proposal seeks to cap consumption at 4.83 liters per 100 kilometers by 2030, a figure VAMA claims is far stricter than the fuel efficiency of most models currently sold in the country.
According to an analysis conducted by VAMA's member businesses, if the standard is implemented, roughly 96 percent of internal combustion engine (ICE) models and 14 percent of hybrid vehicles currently on the market would fail to comply. As a result, these models would be barred from distribution beginning in 2030, unless they are replaced by fully electric alternatives.
To comply with the new fuel consumption standards within the next five years, companies will need to boost the production of electric vehicles by as much as 868 percent compared to the current levels - a target deemed impossible given the existing circumstances.
Alongside the technological and production cost challenges, Vietnam is still deficient in public charging infrastructure, and the electricity grid is insufficient to support large-scale electric vehicle development. Furthermore, consumers are not adequately prepared to embrace this type of vehicle.
VAMA has cautioned that if the stringent regulations are implemented too hastily, it could adversely affect the domestic automobile sector, impacting employment, workers' earnings, consumer options, and state budget revenues.
In light of these issues, VAMA has suggested revising the average fuel consumption goal to 6 liters per 100 kilometers by 2030, rather than the 4.83 liters per 100 kilometers proposed in the current draft. This modification would still allow Vietnam to meet its commitment to reduce 15.66 million tons of CO₂ by 2030, as outlined in the 2022 Nationally Determined Contribution (NDC), while lessening negative repercussions on the market and the populace.
Even with this more adaptable plan, businesses must still undertake a significant transition, which includes decreasing the production of gasoline-powered vehicles by approximately 34 percent and increasing the output of electric vehicles by at least 366 percent. According to VAMA, this represents a more practical and sustainable approach in the current context.
