Economic assessment and the impact of policy instruments on electric two-wheelers in Vietnam

Abstract

This study analyzes the total cost of ownership (TCO) of electric two-wheelers (E2Ws) versus internal combustion engine two-wheelers (ICE-2Ws) in Vietnam, assessing their economic viability and adoption factors. It examines the impact of policy instruments like subsidies on affordability and market competitiveness while evaluating E2Ws' practicality in supporting Vietnam's clean energy transition. This study indicates that while E-Motorcycle has the highest TCO, followed by ICE-A motorcycles, E-Bikes have the lowest TCO. The E-motorcycle's high TCO indicates that premium electric models still face financial challenges in terms of overall affordability. Reduction in sticker price emerges as the most effective incentive, offering the largest decrease in TCO. Lower cost electric two-wheelers, such as E-Bikes, which have lower performance, are currently less expensive than two-wheelers running on internal combustion engines. Mid-range electric two-wheelers, such as E-Mopeds, which offer moderate performance, are priced similarly to manual motorbikes, the most popular model in Vietnam. Within the same segment, E2Ws offer better economic performance for owners compared to their ICE counterparts over time due to its lower fuel and maintenance costs accumulate and offset the battery replacement expenses. The analysis in this study indicates that while E2Ws are cost-effective for short-range travel, their economic viability diminishes with increasing travel distance due to lower fuel and maintenance costs accumulate and offset the battery replacement expenses. This underscores the need for targeted incentives and technological advancements to make E2Ws more competitive for broader use cases. Moreover, higher battery capacity helps reduce operating costs, significantly impacting the reduction of their TCO.