Following Directive 20, issued on 12/7, concerning urgent actions to address environmental pollution, Prime Minister Pham Minh Chinh has tasked Hanoi with exploring increased fees for registration, licensing, and parking in the city center for fossil fuel-powered vehicles. The plan will be developed starting in Quarter III of this year and adjusted annually.

This measure aims to limit gasoline and diesel vehicles, alongside the ban on fossil fuel-powered motorcycles within Ring Road 1 from 1/7/2026. From 1/1/2028, all motorcycles and gasoline-powered personal cars will be restricted within Ring Roads 1 and 2, expanding to Ring Road 3 from 2030.

Vehicles wait at a traffic light in Hanoi, 1/2025. Photo: Giang Huy

Beyond the vehicle's price, registration and licensing fees significantly contribute to the cost of car ownership. In Hanoi, the current registration fee for gasoline and diesel cars is 12% for passenger vehicles and 7.2% for pickup trucks, with a licensing fee of 20 million VND. Motorcycles have a lower registration fee of 2%.

Increasing these fees will substantially raise vehicle ownership costs. For example, a 3% increase in the registration fee for a 1 billion VND car would add 30 million VND to the purchase price.

Currently, electric vehicles in Vietnam are exempt from registration fees until 28/2/2027. Comparing gasoline and electric models in the same segment priced at 1 billion VND, the electric vehicle would be at least 120 million VND cheaper to own.

Furthermore, higher parking fees in Hanoi would increase the operating costs of gasoline cars compared to electric vehicles. For instance, parking two or three times a day in Hanoi's Old Quarter on a weekend could cost hundreds of thousands of VND more for gasoline cars.

Industry experts believe these rising costs will encourage a shift to electric vehicles. The Ministry of Industry and Trade aims for electric, hybrid, and green vehicles to account for 18-22% of total market sales by 2030, or 180,000-242,000 vehicles.

In the coming years, fossil fuel vehicles in Vietnam will face increasing restrictions. The Vietnam Association of Motorcycle Manufacturers (VAMM, comprising Honda, Yamaha, Piaggio, Suzuki, and SYM) sold 2,653,607 motorcycles in 2024. VAMA and Hyundai sold 407,310 cars.

VinFast, which exclusively sells electric motorcycles and cars, sold 87,000 electric cars and 70,977 electric motorcycles and bicycles in 2024.

Ho Tan