EV batteries are the “heart” of electric vehicles — and the hottest target in global trade-remedy actions. When Chinese investors apply for an IRC for a battery/component project in Vietnam, the first question isn’t “where to build” but: where will the products go, and what duties does that market impose on Chinese goods?
1. Context: Chinese batteries and EVs ringed by duties
- EU: since October 2024, the EU applies definitive 5-year countervailing duties on pure-electric cars from China — atop the standard 10% import duty: BYD 17%, Geely 18.8%, SAIC 35.3%, Tesla Shanghai 7.8%, other cooperating firms 20.7%, non-cooperating 35.3% (maximum total 45.3%);
- U.S.: roughly 100% tariffs on Chinese EVs;
- Trend: batteries and battery components are the next target — importing countries are widening probes into battery supply chains;
- Meaning for Vietnamese projects: a “Made in Vietnam” battery plant doing minor processing of Chinese inputs gets scrutinised first.
2. Why IRC applications must factor in trade defence
- What the IRC records: the investment registration certificate states the project’s objectives, scale and technology — the plant’s legal “résumé”;
- What reviewers read: a battery project with core technology from China and thin Vietnamese value-added will face substance questions;
- Later risk: in circumvention probes, investigators (U.S. DOC, European Commission) will re-read the IRC file to see what the project actually does in Vietnam;
- Conclusion: design the project as substantive from the IRC file onward — not “get approved first, figure it out later”.
3. Real value-added: the survival criterion
- Risky formula: importing battery cells from China → merely assembling packs in Vietnam → exporting to the U.S./EU = highest circumvention risk;
- Safer formula: manufacturing cells in Vietnam (from cathode/anode materials) → pack assembly → export — large value-added, hard to call “minor processing”;
- The Vina Solar lesson: Chinese wafers/cells + Vietnamese module assembly was found circumventing by DOC (Aug 2023) — EV batteries follow the same logic;
- In the IRC file: describe Vietnamese production steps in detail — detail evidences substance.
4. Battery-material supply chains
- Reality: cathode, anode, electrolytes, separators — mostly from China (China dominates global cell production);
- Strategy: bring material suppliers to Vietnam too (“chain-pulling”) — or find alternatives (Korea, Japan);
- Minerals: Vietnam has some relevant minerals (rare earths…) but processing chains are incomplete — don’t expect short-term “self-sufficiency”;
- Files: record the origin of every material — for future investigations.
5. Environmental assessment: the project’s hard gate
- Scale: battery manufacturing (chemicals, heavy metals) means major environmental impact — a full environmental impact assessment (EIA) is mandatory;
- Wastewater: battery effluent carries heavy metals — treatment must meet standards before connecting to the IP system;
- Hazardous waste: defective batteries, chemical waste — to licensed hazardous-waste handlers only;
- Timing: EIAs for battery projects take longer than ordinary ones — build into the IRC and construction schedule.
6. Fire safety for battery plants: special demands
- Risk: lithium batteries carry specific fire/explosion risk (thermal runaway) — ordinary fire protection won’t do;
- Design: battery warehouses, charge/discharge testing zones — need specialised fire-safety design;
- Approval: fire authorities will scrutinise — complete technical files, and a fire consultant experienced with battery plants;
- Insurance: fire insurance for battery plants — pricey, with tight conditions.
7. Technology and transfer: incentive conditions
- Investment incentives: hi-tech projects (batteries are prioritised) may earn CIT incentives — subject to conditions (hi-tech list, R&D ratios…);
- Technology transfer: parent-to-subsidiary tech-transfer contracts — register as required (where applicable);
- IP protection: battery tech is the crown jewel — patent in Vietnam, lock down staff and supplier confidentiality;
- Global minimum tax: note — incentives may be hit by Pillar 2 (see the global-minimum-tax article).
8. Export markets: choose and diversify
- Assess each market: the U.S. (~100% on Chinese EVs — batteries may follow), the EU (EV countervailing duties — batteries watched), others (Southeast Asia, Middle East, Latin America);
- Don’t depend on one: 100% exports to a market under investigation = concentration risk;
- Domestic market: Vietnam’s EVs (VinFast and others) are growing — domestic battery demand;
- Scenario: model finances if the main market imposes trade remedies — still viable?
9. The IRC file for battery projects: get these right
- Technology description: detailed Vietnamese production steps — evidencing value-added;
- Sourcing: the materials plan — import/localisation ratios on a roadmap;
- Environment: EIA completed before or alongside the IRC — don’t let it become the bottleneck;
- Fire safety: the lithium-specific fire plan — presented from the start;
- People: the battery-engineer training plan (a new industry in Vietnam — scarce talent).
10. Checklist: EV battery projects in Vietnam
- Strategy: which export markets — each market’s trade-remedy risk?
- Substance: which steps in Vietnam — what % value-added?
- Supply chain: materials from where — the “chain-pulling” plan?
- Environment: EIA — timeline and cost?
- Fire safety: lithium-specific design?
- Tax: hi-tech incentives + Pillar 2 — modelled in total?
- People: battery engineers from where, trained how?
- Legal: IRC, land, technology transfer — the full roadmap?
11. Battery passport and EU rules ahead
- EU Battery Regulation: the EU’s battery regulation adds carbon-footprint declarations, recycled-content minimums and a digital battery passport – phased in over the coming years;
- Impact: batteries sold in the EU will need documented supply-chain data – the same traceability muscle EUDR demands for wood;
- Prepare now: build carbon and material accounting into the plant’s systems from day one – retrofitting is far costlier;
- Competitive edge: compliant Vietnamese-made batteries become premium products in the EU – regulation as moat.
12. Partnering with Vietnamese firms
- Why partner: local partners bring land access, government relations and workforce networks – the three things foreigners find hardest;
- Structures: joint ventures for market access vs wholly foreign-owned for technology control – batteries usually favour control;
- Technology leakage: JV contracts need airtight IP and non-compete clauses – battery know-how is the crown jewel;
- Exit terms: agree buy-sell mechanisms upfront – unwinding a battery JV without them is brutal.
13. Quick answers
- Biggest IRC risk? A thin-substance application – describe real Vietnamese production steps in detail;
- Which export market first? Model trade-remedy risk per market before committing – the U.S. and EU are the toughest;
- Cells or packs in Vietnam? Cells wherever feasible – packs alone is the highest circumvention risk.
- One-line brief for HQ: build real cell-level substance in Vietnam, model each export market’s trade-remedy exposure, and let the IRC file tell that story from page one.
15. Working with trade counsel early
- When: engage international trade counsel before the IRC filing – not when the DOC questionnaire arrives;
- What they do: origin-risk mapping, value-added modelling, record-keeping design that survives verification visits;
- Cost vs risk: a trade-risk review costs a fraction of one year’s countervailing duties on a battery plant’s output.
14. Site selection for battery plants
- Power first: battery manufacturing is power-hungry – confirm dedicated capacity with the IP, not just “availability”;
- Hazardous-material zoning: not every IP accepts battery plants – check the IP’s sector approvals before shortlisting;
- Water and discharge: heavy-metal effluent needs pre-treatment and the IP’s inlet standards in writing;
- Buffer zones: fire-safety distances for battery storage affect usable plot area – survey with the fire consultant;
- Logistics: batteries are dangerous goods for transport – near ports with DG handling capability matters.
Contact us
FLAT Law Firm advises Chinese investors throughout the Vietnam investment cycle — from deal structuring and licensing to operations and compliance. Contact us for advice tailored to your project.
This article has been quality-reviewed by the FLAW AI Legal Council
