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14 August 2023

Daily Newsletter

Vietnam should get US tax breaks, lobby group says

VinFast looking for ‘something in return’ after building EV plant in US

Dani Cole August 14 2023

The head of the main US business lobby for Southeast Asia has said that EV tax credits should be extended to Vietnam.

Tedd Osius, who heads up the US-ASEAN Business Council, said that VinFast, which has started building its $4 billion EV plant in North Carolina, could struggle to compete without the tax break.

The Inflation Reduction Act (IRA) wants to reduce US dependence on China. IRA rules currently benefit countries that have free trade agreements with the US, however Vietnam is not on the list.

Tax credits ($7,500) are given on EVs bought in the US, provided that the critical minerals that go into make the batteries are sourced from the US or a free trade partner.

Last year VinFast announced it had received $1.2 billion incentives package from the state of North Carolina and was the first automaker to locate in the state.

Following the news of VinFast building its EV plant in the US, President Joe Biden released a statement: “Our efforts to build a clean energy economy are driving companies to make more in America.”

On social media, VinFast thanked the president for the “amazing recognition”.

High upfront costs could be detrimental towards the growth of the off-highway EV market

The global off-highway electric market is expected to grow at a CAGR of 17.4% by 2030, per GlobalData estimates. Despite the strong growth, high upfront costs may pose a challenge. Due to the high capacity of these vehicles, they consume large amounts of power from a number of battery packs installed on the vehicle, whose high cost in turn adds to the cost of the vehicle, thereby increasing the initial cost. However, governments worldwide are offering subsidies and tax exemptions in order to help customers to counter the initial purchase cost.