LG Energy Solution (373220.KS) is partnering with Honda to enter Vietnam’s motorcycle market.
LG Energy Solution said Wednesday it has signed a memorandum of understanding with Honda and the city of Hanoi for cooperation in establishing public battery swap stations for electric motorcycles.
Under the agreement, the parties will build electric motorcycle battery swap stations in central Hanoi and develop battery standardization and safety management systems. They also signaled wide-ranging cooperation to foster the related industrial ecosystem, including jointly developing an electric motorcycle platform business model.
Starting in the third quarter of this year, LG Energy Solution, Honda and the Hanoi city government will set up about 50 battery swap stations in major areas of Hanoi and deploy a total of 500 electric motorcycles for a pilot program. The motorcycles will be powered by LG Energy Solution’s cylindrical 2170 batteries. LG Energy Solution will be responsible for building the safety management system, operating the swap system and providing operational solutions.
Honda will be in charge of the battery packs and swappers as well as supplying the electric motorcycles. According to the Vietnam Association of Motorcycle Manufacturers, Honda commanded an overwhelming 86% share of Vietnam’s motorcycle market last year.
With Honda having pulled back from its electric vehicle strategy in North America, Vietnam has emerged as a key market, and Vietnamese two-wheelers have become a new growth driver for LG Energy Solution as well. Hanoi is rushing to introduce electric motorcycles to address air pollution caused by more than 6 million motorcycles in the city. To that end, the city will restrict the operation of internal combustion engine motorcycles by time zone and district starting in July this year, with the scope to be expanded through 2030.
Vietnam has a total of 80 million motorcycles, but electric motorcycles account for only about 4%, or 3.2 million units, suggesting strong growth potential. RMIT University in Melbourne, Australia, projects that Vietnam’s electric motorcycle market will grow at an average annual rate of more than 18%.
“Vietnam is the most pivotal country in Southeast Asia’s transition to electric motorcycles,” an LG Energy Solution official said. “Based on differentiated technology that is safe and dramatically extends usage period and lifespan in the motorcycle battery field, we will continue to contribute to building Vietnam’s eco-friendly transportation infrastructure.”