The electric vehicle (EV) industry in Vietnam is at a major turning point regarding sustainable development. Building a circular EV battery supply chain is not only a global trend but also an urgent requirement to optimize resources. This model helps close the product lifecycle from raw material extraction to full recycling.
Supply chain managers and analysts need to clearly understand the structure of this system. It consists of five key stages to ensure economic efficiency and minimize environmental impact. Applying circular economy principles for EV batteries is becoming a top priority for many domestic enterprises.
Upstream: Raw material mining and supply
Vietnam possesses significant potential in minerals essential for battery production. Rare earth reserves are estimated at approximately 22 million tons, ranking second in the world, which creates a strategic advantage in the production of permanent magnets [4]. Additionally, clean nickel mining projects in Son La are contributing to building a stable supply of cathode materials.
However, the challenge lies in deep-processing capacity for battery-grade chemicals. Currently, we are still partially dependent on imported refined materials. Promoting mineral exploration and processing planning is a crucial step toward supply autonomy.
Midstream: Battery cell production and packaging
Domestic battery production has made significant strides with the participation of large conglomerates. The LFP battery cell manufacturing project in Ha Tinh is a clear testament to localization efforts [2]. LFP battery technology is prioritized for its high safety and optimal cost.
The commencement of the LFP battery cell factory helps significantly reduce pressure on the global supply chain. Businesses are actively collaborating on technology to improve charging efficiency. This helps Vietnamese electric vehicles compete more strongly in the international market.
Downstream: Usage and collection systems
The rapidly increasing number of electric vehicles in circulation requires a professional battery collection system. VinFast has established a widespread network of service stations to receive used batteries. The battery subscription policy plays a key role in controlling the product lifecycle [1].
Analysts forecast that the volume of end-of-life batteries will increase sharply from the 2028–2030 period. Therefore, building a database for battery management via Battery Management Systems (BMS) is extremely necessary. This is the foundation for businesses to be proactive in recovery and recycling efforts.
Reuse and closed-loop recycling
EV batteries, even when capacity degrades, still retain high utility value. They are often repurposed into stationary Battery Energy Storage Systems (BESS). The second-life EV battery solution helps optimize investment efficiency for renewable energy projects.
For batteries that can no longer be reused, hydrometallurgical technology is the top choice. The strategic partnership between VinFast and Li-Cycle allows for the recovery of over 95% of precious metals [1]. Global EV battery recycling helps create a sustainable material loop.
Legal framework and Extended Producer Responsibility
The 2020 Law on Environmental Protection has laid a solid legal foundation for the circular economy. Extended Producer Responsibility (EPR) regulations force manufacturers to take responsibility for collecting discarded products [3]. This is a driver for businesses to invest in modern recycling infrastructure.
Compliance with regulations on extended producer responsibility not only helps businesses avoid legal risks but also enhances brand reputation. These policies create a level and transparent playing field for the electric vehicle market.
Direction for managers and analysts
Supply chain managers need to focus on three main factors. The first is optimizing the logistics of collecting used batteries from consumers. The second is investing in recycling technology with high recovery efficiency. Finally, building a network of strategic partners both domestically and internationally is essential.
Analysts need to closely monitor the progress of EPR implementation in Vietnam. At the same time, assessing the impact of new battery technologies, such as solid-state batteries, is very important. Synchronized coordination between the government and businesses will determine the success of the circular supply chain.
More Information
- LFP Battery: A type of Lithium Iron Phosphate battery with advantages in high safety, long lifespan, and low production costs, without using precious metals like Cobalt or Nickel.
- Circular Economy: An economic model that focuses on designing, producing, and using products so that resources are reused to the maximum extent, minimizing waste to the environment.
- Extended Producer Responsibility (EPR): A policy requiring manufacturers and importers to take responsibility for collecting and recycling products after consumers discard them according to specified ratios.
- Hydrometallurgical Technology: A method using chemical solutions to dissolve and extract precious metals such as Lithium, Nickel, and Cobalt from used batteries with high recovery efficiency.
- Battery Energy Storage System (BESS): Large-scale battery complexes used to store electricity from renewable sources like solar and wind, helping to stabilize the national power grid.