11 Mar 24

VinFast sets new ambitions in the Middle East and beyond after missing the 2023 target

The Vietnamese electric vehicle (EV) manufacturer VinFast took another step in its global expansion strategy by signing an agreement with Bahwan Automobiles Trading (BAT) in Oman. The EV startup hopes to boost manufacturing and sales in 2024, including operations in other regions.

Backed by VinGroup, Vietnam's largest conglomerate, VinFast is a Vietnamese electric vehicle (EV) manufacturer continuing its ambitious expansion plan. Now, through an agreement with BAT to enter the Middle Eastern market, VinFast is focused on Oman. 

The deal follows an Initial Memorandum of Understanding for Cooperation signed at the COP 28 conference in the United Arab Emirates (UAE) in 2023. It makes BAT the official dealer of VinFast in Oman. Under the agreement, BAT is to establish 13 VinFast stores and service locations over the next three years. The initial sales are expected to start in mid-2024, with VinFast releasing its SUV lineup, including the VF 6, VF 7, VF 8, and VF 9. 

From VinFast's perspective, Oman represents a market with growing interest in sustainability and environmentally friendly transportation solutions. The partnership with BAT aims to establish a rapid presence in Oman by enriching the EV options available to customers. 

Is it too fast of an expansion? 

Like many global EV brands, VinFast is eager to catch consumers' attention by filling their demand with alternative, cost-effective models while grabbing large market shares in emerging markets. To that end, VinFast has unleashed a remarkably ambitious expansion strategy, a plan to reach a market presence in 50 markets worldwide by the end of 2024. Thus, since its establishment in 2018, VinFast has spread operations to North America, Europe, India, and now the Middle East. 

In May 2023, VinFast announced a SPAC (Special Purpose Acquisition Company) deal, a business combination agreement with Black Spade Acquisition, before its US IPO (initial public offering), reaching an equity value of over $23 billion. 

Following the SPAC merger, VinFast debuted on the Nasdaq exchange in August 2023, which spiked the brand's market capitalisation to $85 million, even higher than Ford's. Since then, this value has dropped to $12,7 billion. 

VinFast commenced construction of the $4 billion US plant in North Carolina in 2023, aiming to produce 150,000 EVs annually. In early 2024, VinFast announced the 'Wild' EV pickup concept for the US market and revealed plans to sell the ultra-compact VF 3 globally. 

Following a $1.2 billion cash infusion from its founder, Pham Nhat Vuong, in October 2023, VinFast began operations in India and announced the plant's construction in Tamul Nadil, India, at the beginning of this year. The Tamul Nadil plant, expected to become operational in 2026, also followed a Memorandum of Understanding with the local government, launching a $500 million investment to produce 150,000 EVs per year and providing thousands of jobs, just like the plan in the US. 

Sales figures are currently 'OK'

VinFast did not meet its 2023 goal of selling 40,000 EVs, falling 5,000 units short. The company attributed the shortcomings to slow EV adoption in some countries, increasing competition, and an uncertain economy. Nevertheless, the Vietnamese EV startup kicked up its performance in the last quarter of 2023, selling 13,513 units, an increase of 35% compared to Q3 2023. 

VinFast announced in February that Q4 2023 losses deepened by 3.4% compared to Q3 2023 and reached $650.1 million. This amount is 1.3% higher than the same period in 2022. 

The sales target in 2024 is 100,000 units, and VinFast will try to achieve this goal by expanding globally with all the vehicles the brand has to offer, including the right-hand drive model, chairwoman Le Thi Thu Thuy told Reuters. According to Thuy, VinFast expects to boost sales with new dealerships, especially in the North American market, where less than 1,000 units were sold in 2023. 

VinFast heavily depended on domestic sales, with almost 70% of the deliveries made to Green SM (or GSM), a leading provider in Vietnam owned by CEO Pham Nhat Vuong. VinGroup's vast financial backing aims to reverse this situation in the long term.

The following targets on the global expansion map include countries in the Middle East, Latin America, and Asia. India is the most crucial country, close to Chinese brands, and offers a vital chance for VinFast to conquer the market with Tesla. 

The main photo is courtesy of Shutterstock, 2234442561.

Authored by: Mufit Yilmaz Gokmen