Scenario: A Chinese battery maker wants a Southeast Asian base to hedge tariff risks and stay close to EV customers. It hesitates between two options: a large cell plant or a mid-size pack assembly plant. A wrong choice here costs multiples more than in other industries, because batteries are a “scale decides everything” business. This article draws the line between the two games.
Cell gigafactories: a game for the few
Cell manufacturing is capital- and technology-heavy: a gigafactory needs billions of dollars, advanced electrode-coating technology and humidity control, plus a materials supply chain (cathode, anode, separator, electrolyte) that Vietnam does not yet have. Globally, only a handful of groups can play this game, and they have already picked sites for the current cycle.
The blunt conclusion: for newcomers arriving in Vietnam in 2026–2027, the cell-gigafactory window is essentially closed — unless arriving with a vehicle brand or OEM committing to offtake volumes. Do not let “Vietnam as a battery hub” media images blur this capital-and-technology equation.
Packs and ESS: the window for the many
Pack assembly (from cells to complete battery packs for EVs, e-motorbikes and devices) is a different business: moderate capital, accessible technology, and existing customers — EV and e-motorbike brands in Vietnam currently import packs or assemble manually. This is the clearest battery-segment window in 2026–2027.
The second segment is ESS (energy storage systems) for industrial rooftop solar and industrial parks seeking power stability. Demand comes from a practical equation: peak-hour power prices and manufacturing continuity requirements. A pack investor can extend into ESS on a shared technology platform — one arrow, two markets.
Barriers: fire safety and recycling
Lithium batteries are high fire-risk goods, so pack assembly plants face strict fire-prevention, electrical-safety and storage management. Fire-design approval dossiers for cell and battery warehouses are mandatory and time-consuming, and must start at the design stage.
The second, less-noticed barrier: end-of-life battery take-back and recycling responsibility. Environmental regulation increasingly requires producers to have collection and recycling plans. Investors should price this into financial models from day one rather than react when rules tighten.
Investment procedures and the cell supply chain
Pack assembly projects follow procedures under the Investment Law 143/2025/QH15 (effective 1 March 2026): IRC from the industrial-park management board (if inside a park), then ERC under the Enterprise Law 59/2020/QH14. Supporting-industry and technology projects may be considered for CIT incentives under the Corporate Income Tax Law 67/2025/QH15 (effective 1 October 2025).
The key supply-chain point: cells will still be imported for the foreseeable future. Long-term cell supply contracts with two or three makers, plus buffer-stock plans, are survival conditions — a pack plant without stable cells is just an empty workshop.
Recommended roadmap for pack/ESS investors
Phase one (6 months): lock customers — sign framework agreements with one or two EV/e-motorbike brands or rooftop-solar EPC contractors, defining pack/ESS types and first-year volumes. Phase two: pick an industrial park near the largest customer, complete IRC, ERC and fire-prevention dossiers. Phase three: import module/pack assembly lines (moderate capital, expandable with orders) while recruiting electrical and electronics engineers. Avoid cell lines unless technology partners and offtake are clear.
Frequently asked questions
Can foreign investors manufacture batteries in Vietnam?
Yes. Battery manufacturing and assembly are not on the market-access restriction list; foreign investors may hold 100% equity.
Do imported cells for pack assembly face import duties?
Cells imported as production inputs may be considered for import-duty exemption or reduction for fixed-asset formation or manufacturing materials under current policy. Dossiers must prove cells are production inputs, not mere trading goods.
Do battery plants have special fire-prevention requirements?
Yes. Storing and assembling lithium batteries faces strict fire-prevention management: warehouses must meet compartmentalization standards, automatic fire alarm and suppression systems, and incident-response plans. Fire-design approval should start early.
How are end-of-life batteries handled, and who is responsible?
The regulatory trend requires producers and importers to take back and recycle waste batteries. Investors should build recycling plans and partner with licensed waste-treatment firms at the project-formation stage rather than wait for mandatory rules.
This article has been quality-reviewed by the FLAW AI Legal Council