Vietnam’s Path to Becoming a Lithium-Ion Battery Hub in Asia and the Pacific

The Asian Development Bank’s 2025 report, Lithium-Ion Battery Supply Chain Diversification, Repurposing, Recycling, and Job Creation Opportunities in Vietnam, prepared by Roland Berger with support from VinFast and Australia’s Department of Foreign Affairs and Trade, outlines how Vietnam can emerge as a formidable player in the lithium-ion battery (LiB) ecosystem. Drawing insights from global benchmarks, stakeholder consultations, and local industry data, the report paints a vivid picture of the opportunities and risks surrounding battery supply chains, and how Vietnam can position itself at the center of Southeast Asia’s clean energy future. With global demand for LiBs expected to exceed 4.4 terawatt-hours by 2040, and the People’s Republic of China (PRC) alone set to consume over 40% of that, there is mounting urgency for diversification and regional value creation.

The report emphasizes the importance of establishing robust upstream and midstream capabilities, noting that LiB manufacturing is highly dependent on critical raw materials such as lithium, nickel, cobalt, and graphite, resources largely concentrated in a few countries and increasingly subject to geopolitical dynamics. The PRC currently dominates both cathode and anode production, creating a bottleneck risk that Vietnam could help alleviate. Although global supply might broadly meet demand by 2030, minimal surpluses in lithium and nickel will leave the market vulnerable to disruption. In this context, Vietnam's role becomes pivotal: with access to Australian lithium, domestic phosphate and nickel deposits, and a network of free trade agreements, it has the potential to become a regional hub for battery production, particularly for lithium iron phosphate (LFP) batteries suited to light EVs and energy storage systems.

Charging Up the Domestic Electric Vehicle Market

Vietnam’s battery electric vehicle (BEV) sector is currently small but poised for significant growth. By 2030, BEVs are projected to make up 26% of all light vehicle sales in the country, with VinFast expected to account for roughly 45% of total production. Foreign OEMs are anticipated to enter the Vietnamese market from 2024 onwards, further driving adoption. The rise of renewable energy, particularly wind and solar, will also bolster demand for energy storage systems (ESS), especially in regions like the Central Highlands and Southeast Vietnam, where grid stability remains a concern.

This surge in domestic demand offers Vietnam a springboard to scale up battery cell and pack manufacturing. Imports of raw materials like lithium and cobalt from strategic partners, combined with clear BEV production targets and tax incentives, could help unlock foreign direct investment and stimulate local innovation. Vietnam could not only satisfy internal demand but also become a significant exporter to North America and Asia-Pacific markets, provided it strengthens institutional coordination and policy frameworks to support the sector’s maturation.

Turning Old Batteries into New Business

As the global EV fleet grows, the question of what happens to batteries at the end of their life becomes increasingly important. The report dedicates considerable attention to “Re-X” strategies, repurposing, reusing, and recycling batteries. Globally, regulations in the PRC and EU are already pushing recycling targets and material recovery standards higher. Meanwhile, the U.S. is lagging, revealing a policy gap that could affect global competitiveness.

In Vietnam, second-life battery applications are still nascent, but the report identifies enormous growth potential. By 2036, the country is projected to recycle 34 kilotons of LiB materials annually, up from just 3 kilotons in 2022. With targeted investments, Vietnam could accelerate profitability in this sector by up to three years by importing end-of-life batteries from neighboring countries. The recycling value chain, especially when built around hydrometallurgy, offers attractive margins and sustainability benefits, making it an ideal complement to local manufacturing growth. Although second-life batteries offer promise, especially in ESS applications, their shorter lifespan makes them 24% more expensive over 15 years than new batteries, an obstacle that will require innovation and cost-reduction efforts to overcome.

Employment Boom on the Battery Horizon

The LiB industry is not only an industrial and environmental opportunity, but it is a massive job engine. According to the report, Vietnam has already attracted about $7 billion in LiB-related investments, supporting 65,000 jobs. An additional $3–9 billion could generate between 22,000 and 65,000 more jobs, particularly in upstream and midstream segments like material extraction, component manufacturing, and pack assembly.

The most in-demand roles are expected to span from battery engineers and data scientists to logistics experts and industrial designers. Soft skills, English proficiency, and digital literacy will also be increasingly vital. Importantly, the report notes that Vietnam’s existing labor force shows strong baseline readiness for these jobs, although further coordination between industry and academia will be essential to align education with evolving skill requirements.

Building an Inclusive Workforce for a Greener Future

ADB and Roland Berger place a strong emphasis on ensuring that the transition to a battery-powered economy is inclusive. The report highlights the need to bring more women, youth, and people with disabilities into the battery workforce. Global benchmarks, such as hiring practices by Tesla, offer inspiration for how Vietnam can build more diverse and equitable labor pipelines. Increasing female representation and supporting STEM education will help future-proof the country’s battery sector against talent shortages.

The report positions the LiB supply chain as a cornerstone of Vietnam’s future economic strategy. It is a chance not only to industrialize and decarbonize simultaneously, but to do so in a way that is equitable, resilient, and globally integrated. With the right mix of policy, investment, and innovation, Vietnam could become one of Southeast Asia’s battery powerhouses, charging not only cars and grids, but the country’s long-term development ambitions.