This paper evaluates potential costs of implementing financial incentives for electric vehicles (EVs); specifically purchase subsidies and registration rebates offered in HCMC and the benefits related to individual savings and GHG emissions reductions. The analysis indicates that implementation could deliver net-positive benefits during the early stages of EV adoption in HCMC. Overall, the analysis shows that incentives to make EVs more cost-competitive, along with support for the deployment of charging stations, will be crucial for increasing EV adoption in HCMC.

Key Findings:

  • Electric mobility is a key strategy to mitigate greenhouse gas (GHG) emissions and generate individual and social benefits, especially in large cities like Ho Chi Minh City (HCMC).
  • Our analysis and evidence from leading EV markets show that incentives to make EVs more cost-competitive, along with support for the deployment of charging stations, will be crucial for deterring the use of ICE vehicles and increasing the purchase or use of EVs in HCMC.
  • Analysis indicates that implementation could deliver net positive benefits during the early stages of EV adoption in HCMC, with a benefit-cost ratio estimated at 1.86 (discounted at 2 percent) and 1.69 (discounted at 6 percent) over a period of eight years, which is equal to a net present value (NPV) of $275 million (discounted at 2 percent) and $190 million (discounted at 6 percent).
  • Each EV may generate around $76/year in net benefits (1.7 million VND) and $65/year in net benefits (1.4 million VND) using a discount rate of 2 percent and 6 percent, respectively.
  • HCMC officials should carefully evaluate the local vehicle market and consider budget feasibility when designing and implementing effective incentives to overcome the main barriers restricting EV uptake in the city.
  • Local policy needs the support of higher government levels, and the linkage between national and local policy is a key consideration as national policy can provide financial support to subnational governments to develop demand-based incentives.