Vietnam's mandatory recycling rate for electric vehicle batteries — covering both lithium and nickel-metal hydride chemistries — would rise from the current zero to 8 per cent of volumes placed on the market each year from 2029, under a draft decree discussed by the National Assembly's Committee on Science, Technology and Environment on September 29.

The rate would hold at 8 per cent through 2031, then climb to 15 per cent for the following three years. The obligations would fall on organisations and individuals that manufacture or import products containing EV batteries, extending the extended producer responsibility (EPR) regime already established under the 2020 Law on Environmental Protection.

The proposed schedule aligns with the review mechanism in Decree No. 110/2026/ND-CP, which mandates a reassessment of recycling rates every three years. The first adjustment for lithium and NiMH batteries used in transport vehicles is scheduled for 2029 — the same year the 8 per cent obligation would bite.

Compliance pathways and a softened landing

Producers would have flexibility on how they meet the target. They can recycle batteries domestically or export used batteries overseas for recycling, alongside direct collection and recycling or hiring and authorising third parties to perform these activities under the existing 2020 law.

One option is off the table, according to the drafting agency: financial contributions to support recycling. The agency said such payments were inconsistent with the 'polluter pays' principle.

The draft decree also builds in a compliance buffer. Businesses that fail to meet the 8 per cent rate in 2029 could carry the shortfall forward for a maximum of five years, and exporters of used batteries to third countries for recycling would not face full domestic compliance obligations until 2033. The drafting agency said special cases would be studied and addressed in the decree guiding implementation of the amended law.

Industry warns of a capacity gap

The proposal has already drawn pushback from manufacturers. The Vietnam Association of Motorcycle Manufacturers and the Vietnam Automobile Manufacturers' Association told regulators the country's recycling infrastructure cannot yet meet the demand the mandate would create, and domestic technology cannot recover lithium or nickel from end-of-life packs.

That leaves producers in a bind: they may be unable to collect end-of-life vehicles themselves while also struggling to find recycling partners with sufficient capacity.

The scale of the problem grows fast from a low base. The Ministry of Industry and Trade forecasts Vietnam will have between one million and three million electric vehicles in operation by 2030, generating anywhere from hundreds of thousands of tonnes to more than one million tonnes of batteries requiring treatment after their useful lives.

Dinh Trong Khang, deputy director of the Environment Specialised Institute under the Institute of Transport Science and Technology, said Vietnam needs a legal framework and technical standards for battery recycling at an early stage.

"As soon as manufacturers put EVs on the market, some vehicles will inevitably experience battery failures or other problems requiring batteries to be discarded, posing significant environmental risks," Khang said.

He argued properly managed EV batteries could become a resource for renewable energy storage and help cut the cost of producing new batteries. "With the EV market expanding rapidly, Vietnam needs to anticipate this trend to protect the environment in the long term and contribute to the development of a circular economy," he said.

Degradation data cuts the other way

Battery degradation does not necessarily turn an EV battery into immediate waste, and the industry has data to prove it. Austrian battery diagnostics firm Aviloo, which provides independent battery health analysis and certification, found many EV models lose less than 5 per cent of their driving range after 150,000 km. Its findings draw on more than 500,000 independent tests across North America, South America, Europe, Australia and Asia.

Geotab's analysis of more than 22,700 electric vehicles across 21 models, published as "How long do electric car batteries last? The updated guide to real-world EV battery health," found average battery capacity degradation of 2.3 per cent a year. At that rate, an EV would retain roughly 81.6 per cent of its original battery capacity after eight years — extending the window before packs enter the recycling stream.

Assoc. Prof. Dr Nguyen Thuong Lang, senior lecturer at the National Economics University's Institute for International Trade and Economics, said the environmental impact of EV batteries should be assessed alongside their potential benefits, with producer responsibilities framed as part of a broader approach to products generating environmental waste.

"Technical solutions, clear environmental standards, and a comprehensive approach are needed to manage this issue effectively while balancing development with environmental protection," Lang said.

The American Chamber of Commerce in Vietnam has separately proposed policies to encourage reusing EV batteries as energy-storage systems once they are no longer suitable for vehicles, extending their useful lives and reducing waste volumes.

What happens next

The draft law amending and supplementing several provisions of the Law on Environmental Protection was reviewed by the National Assembly Standing Committee last week. It goes to the full National Assembly at its second session next month. The enabling decree — which will fix the final recycling rates, carry-over rules and export conditions — is the document producers and would-be recyclers will be watching, because it determines whether Vietnam has any licensed domestic lithium recovery capacity at all by the time the 8 per cent obligation takes effect in 2029.