Vinfast: US and EU orders to start mid-2022
The Vietnamese car industry was, until recently, limited to a parts and assembly plants, but the ambitions of Vingroup, the country’s largest business conglomerate, are about to change the status quo. Locally, the group’s automotive branch “VinFast” has become iconic for the country’s can-do attitude; the carmaker has started from zero to become an EV manufacturer in a record time.
VinFast will be debuting 2 EVs at the L.A. Auto Show in December, continuing its campaign to steal some market share in the Western markets. As such, the Vietnamese OEM is following the roadmap of Chinese brands SAIC and XPeng.
Brand recognition is a key element of VinFast’s strategy; the brand might be relatively well known by the people who are either born in Vietnam or have Vietnamese ancestry, but outside of this limited group, Vingroup is not a name that rings bells. An IPO is also on the table, as a listing in the U.S. could be a means of raising funds and gain brand recognition.
Interestingly, in order to be able to compete with household brands such as VW, it is expected that VinFast will be priced extremely competitively – regardless of the impact on the bottomline.
VinFast is backed by a very successful Vingroup that is active in different markets (real estate, education, healthcare, retail…). Nonetheless, becoming a global car brand costs money, as is demonstrated by VinFast’s results of H12021: a loss of 11.3 trillion VND (close to USD 500M), having sold only 30.000 units, versus a production capacity of 250.000 units per year.
Another USD 400M will be spent on a battery plant, to open in September 2022, with a capacity of 5 GWh by 2025
VinFast is hitting the market right before the global adoption of EVs and hopes to benefit from an early entry to achieve its ambitious targets. The company is not shy to claim that, in the near future, 1% of the total U.S. car sales will be VinFast EVs – whether this target is realistic or a stretch, will be clear in a few years. Fact is, however, that the traditional carmakers will have to find a way of dealing with a newcomer that’s willing to compete on pricing.
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