Vietnam’s Journey to a Green Future: Economic Growth and the Shift to E-Mobility

Viet Nam’s economy grew by 7.1% in 2024, driven by strong exports and investment, while the government plans a major shift to electric vehicles by 2050 to cut emissions, save fuel costs, and create millions of jobs. However, challenges like charging infrastructure, power grid readiness, and high EV costs must be addressed to ensure a smooth transition.

Research prepared by the World Bank, the General Statistics Office (GSO), and the Ministry of Planning and Investment (MPI), provides an in-depth look at Vietnam’s economic growth and its ambitious shift to electric vehicles (EVs). The country’s economy grew by an impressive 7.1% in 2024, making it one of the fastest-growing in East Asia. This was fueled by strong exports in electronics, motor vehicles, and machinery, combined with stable consumer spending and rising investments. However, challenges remain, including capital outflows, exchange rate pressures, and delays in public infrastructure spending. A major highlight of the report is Vietnam’s planned transition to electric mobility, which will reshape transportation, energy consumption, and environmental policies in the coming years.

Booming Trade and Investment Drive Growth

Exports surged by 15.5% in 2024, driven by increased global demand for electronics and machinery. At the same time, imports rose by 16.5%, reflecting Vietnam’s deepening ties with international supply chains. The manufacturing sector expanded by 9.8%, making it the strongest contributor to the economy. Foreign companies continued investing, with foreign direct investment (FDI) reaching 4.1% of GDP, most of it directed toward the manufacturing industry.

The real estate sector showed signs of improvement, with new housing projects and property transactions increasing, though the market has not fully recovered from past downturns. Employment levels also improved, with 550,000 new jobs added in 2024. However, youth unemployment remains high at 8%, signaling ongoing challenges in providing opportunities for young workers.

Despite strong trade performance, capital outflows led to a financial deficit of 2.3% of GDP. To stabilize the Vietnamese dong (VND), the State Bank of Viet Nam (SBV) sold $9.4 billion in foreign reserves, slowing down the currency’s depreciation. The government also encouraged bank lending, achieving a 15% increase in credit growth, benefiting businesses and consumers alike. However, public investment in infrastructure projects was lower than expected, leading to slower government spending even after a major increase in public sector wages.

Looking Ahead: Growth, Inflation, and Financial Stability

Vietnam’s economy is projected to grow by 6.8% in 2025 and 6.5% in 2026, a slight slowdown due to weaker global trade, particularly in China and the U.S., Vietnam’s largest trade partners. Inflation is expected to remain manageable at around 4%, but unexpected spikes in food and energy prices could pose risks. To sustain growth, the government plans to increase spending on transport and energy projects while strengthening financial regulations to manage risks in the banking sector.

A major challenge will be ensuring a stable electricity supply, as industrial demand grows. Vietnam’s power grid must be modernized to handle increasing energy consumption, especially with the expected rise in electric vehicles (EVs) and charging infrastructure.

Viet Nam’s Bold Move Toward Electric Vehicles

One of the most ambitious transformations in Vietnam is the shift toward electric mobility. Under Decision 876/QD-TTg, the government aims to transition 50% of urban vehicles and 100% of public buses and taxis to electric power by 2030, and all road vehicles by 2050. Currently, motorbikes dominate transportation, with 518 per 1,000 people, compared to just 22 passenger cars per 1,000 people. This means the transition will be led by electric motorbikes (E-2Ws), which are already gaining popularity. Vietnam is the world’s second-largest market for E-2Ws after China, with sales expected to reach 1.5 million units annually by 2030.

However, there are major obstacles to EV adoption, including a lack of charging stations, high upfront costs, and a power grid still reliant on coal and gas. The country’s Power Development Plan 8 (PDP8) does not yet account for the additional electricity demand from EVs, which could increase energy needs by 28% by 2050. Without proper planning, power shortages could slow down the transition to clean transportation.

The Economic and Environmental Benefits of Going Electric

Despite the challenges, the economic benefits of electric mobility are enormous. By 2050, Vietnam could save up to $498 billion by reducing its need for imported gasoline and diesel. The EV transition is also expected to create up to 6.5 million new jobs, especially in EV production, battery manufacturing, and charging station development. Additionally, carbon emissions could be reduced by 226 million tons, helping Viet Nam achieve its goal of net-zero emissions by 2050.

To accelerate this transition, the World Bank recommends several key actions:

• Establish a national agency to oversee EV policies and investments.
• Provide financial incentives for EV buyers, such as tax breaks, lower-interest loans, and registration discounts.
• Expand the charging network, starting with big cities like Hanoi, Ho Chi Minh City, and Da Nang, and then expanding nationwide.
• Ensure the electricity grid is ready for increased demand, by investing in smart grids and renewable energy sources.
• Promote public transport electrification, making buses and trains more efficient and accessible.
• Support local production of EVs and batteries, reducing dependence on imports and boosting domestic industries.

The shift to electric vehicles presents a massive opportunity for Vietnam, but it requires careful planning, strong government action, and private sector involvement. By investing in infrastructure, offering financial incentives, and supporting local industries, the country can lead Southeast Asia in green transportation.

The report makes it clear that Vietnam’s future success depends on how well it balances economic growth with sustainability. If the government and businesses take the right steps now, Vietnam could become a model for clean, efficient, and modern transportation, ensuring long-term economic and environmental benefits.