 "Hoi An Streetlife" by pilko77 is licensed under CC BY 2.0. In Vietnam, the rapid growth in electric vehicle (EV) purchases reflects the government’s efforts to reduce air pollution. However, experts have pointed out that the EV transition continues to have significant limitations, particularly its reliance on fossil-fuel-based charging infrastructure, which nullifies many of its environmental benefits. The Vietnamese government has responded by launching a new renewable energy policy known as the DPPA (Direct Power Purchase Agreement) to promote clean-energy-based charging infrastructure for the EV industry. However, it is still too early to label it a definitive success.
Why EVs now? Vietnam’s economy is on the rise, positioning the country as a regional economic leader. As Vietnamese incomes rise, demand for personal transportation also increases, which worsens daily traffic congestion. Many older personal vehicles lack effective emission control technology, making transportation one of the main contributors to air pollution in Vietnam. Generally, air pollution in Vietnam has a PM2.5 (particulate matter ≤ 2.5 µm) concentration of 28.7 μg/m³, significantly above the WHO guideline of 5 μg/m³. This reduces life expectancy by one year and costs the country about 5 per cent of GDP per year. In 2016, there were around 60,000 air pollution-related deaths in Vietnam. To address this crisis, the Vietnamese government is increasing support for EVs to reduce greenhouse gas emissions from gasoline-powered vehicles. However, challenges remain. Most EV charging infrastructure relies on electricity from the national grid, solely owned by EVN (Vietnam Electricity). A significant portion of EVN’s electricity still comes from fossil fuels, especially coal. Thus, while EVs reduce direct emissions in urban areas, they can indirectly contribute to air pollution through the coal used to power them. Vietnam’s Response Vietnam hopes to promote renewable energy for EV charging through the DPPA policy. To achieve this goal, the new policy will allow direct cooperation between energy providers and EV charging firms, making the renewable energy market more accessible. The DPPA mechanism offers two models to accommodate different consumer needs: the private grid model and the grid-connected model. The private grid model allows renewable energy producers to construct and operate transmission infrastructure in their own facilities, then connect directly to large consumers without involving the national grid system. Under this model, pricing is determined through negotiation between the parties and is subject only to ceiling rates of the market-based electricity sector. This model will be attractive to EV charging providers located near renewable generation sites. The grid-connected model allows renewable energy producers and consumers to make direct agreements while still using EVN's existing national grid for electricity transmission. The consumers will then pay EVN an additional cost for the use of its grid. This model supports EV charging providers who are not located near generation sources. Therefore, regardless of whether EV charging providers are located near or far from renewable energy generation sites, they can still buy renewable energy directly, thereby decreasing reliance on fossil fuels. Because the DPPA allows direct price negotiation and long-term contracting between parties, renewable energy prices become more stable and less dependent on EVN market prices. In this way, DPPA offers a new path for competition and potentially better pricing. As clean-energy charging prices become more stable, this will significantly support the robust growth of EV consumption. Vietnam hopes to attract more foreign investors in the green sector to develop charging infrastructure ecosystems and address the problem of EV adoption outpacing charging infrastructure development. Early Results and Challenges DPPA was implemented in March 2025. After eight months of the program, there has been little sign of change. The findings from Vietnam’s commerce and industry sector suggest that DPPA’s lengthy and complex administrative processes have complicated renewable energy project rollouts. For instance, existing electricity contracts with EVN are not allowed to switch to DPPA directly. Most projects must go through competitive bidding, which exposes renewable energy producers to higher risks and slows the growth of the private grid DPPA – the very mechanism intended to benefit EV charging providers. Proponents of EV stimulus and renewable energy argue that these policies had a positive influence on investment in clean-energy-based charging infrastructure. The data support the idea that the DPPA mechanism has primarily supported domestic EV firms. In particular, via DPPA, VinEnergo, the energy arm of VinGroup, installed 43 MWp of rooftop solar and 45 MWh of storage capacity, generating around 50 million kWh annually. This infrastructure then supplies power to VinFast’s EV ecosystem. The project is expected to reduce carbon emissions by 33,000 tons per year. The Vietnamese government has also incentivized EV purchases by announcing a ban on gasoline vehicles in Ha Noi and Ho Chi Minh City in 2026. However, the support ends there. Foreign investment is notably absent in Vietnam's EV sector, largely due to many major obstacles stalling the DPPA implementation. How DPPA could improve To optimize the DPPA mechanism’s potential, the Vietnamese government must consider further policy refinements. Authorities should finalize the legal framework by issuing implementation guidelines on who can register, how pricing works, and how EV charging providers will be dispatched through the grid-connected model. The government should also provide clear instructions for existing electricity projects with EVN to switch to DPPA, and streamline the DPPA’s registration process from its current 13 steps to reduce administrative burdens and encourage participation. Furthermore, renewable energy agencies, EV manufacturers, and investors should collaborate to determine appropriate pricing structures and the maximum discounts that all parties can sustain. This collaboration will help establish clear response mechanisms for situations when market prices drop and investor returns cannot be guaranteed. Selecting the right partner is also a critical factor for success and dealing with uncertainty. Partner selection should be based on actual usage needs. For example, consumers who primarily use electricity during daytime hours should partner with solar energy providers, while those who require electricity 24/7 should partner with wind energy providers. Although prices may be higher, this approach ensures that energy supply aligns with usage patterns. Conclusion In sum, Vietnam has vast potential in EV development, but the country still faces critical challenges in its transition. The DPPA mechanism offers a promising pathway to address these concerns by enabling the development of clean-energy-based charging infrastructure. However, policy gaps and legal hurdles stalling progress must be resolved. Only then will the country be able to fully address environmental concerns from EV development. Hailey is studying International Studies at the University of Washington. She is interested in cross-cultural studies, international diplomacy, the environment, and sustainability.
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