Electric revolution: VinFast zooms into Asian markets
VinFast factories in India, Indonesia in the works, Bangkon and Manila dealerships signed
Manila: VinFast is a new electric vehicle (EV) player, with big ambitions. It is a relatively new company, founded in 2017, but they've already made a name for themselves in Vietnam.
After starting deliveries in the US in 2023, VinFast is making forays into the larger Asian car market, building a factory in India, alongside another in Indonesia. It recently signed dealerships in Thailand and the Philippines.
VinFast in India
VinFast forms part of Vingroup, based in Hanoi. Motor Trend reported the Vietnamese EV maker is looking to replicate its success in India, the world's third-largest vehicle market.
Its founder Pham Nhat Vuong, Vietnam’s first billionaire, heads a conglomerate encompassing various sectors like real estate, retail, healthcare, education, and hospitality. Known as the Elon Musk of Vietnam, Vuong recently told Bloomberg that their India plant will open “ahead of schedule”.
The company is also looking to build a battery manufacturing plant in India, with a battery joint venture in Vietnam with Gotion High-tech Co. They haven’t started operations yet, but they're building a factory in Chennai that's expected to be up and running by mid-2025.
VinFast is taking advantage of a new Indian government policy designed to attract foreign investment and boost domestic production of EVs.
In January, VinFast signed an agreement with the Indian state of Tamil Nadu to invest up to $2 billion in the country, aiming to penetrate one of the world’s largest auto markets. Construction on the plant began in February with an initial investment of $500 million.
VinFast in Indonesia
VinFast Auto is forging ahead with its expansion further afield, with a factory set in Indonesia, a mineral-rich nation with 280 million inhabitants.
Production at the Indonesia site is scheduled to begin by the end of 2025, ahead of the original 2026 schedule. VinFast officially opened its first dealership in Indonesia on April 2, 2024. This marked a significant milestone following their successful debut at the Indonesia International Motor Show (IIMS) 2024 in February.
VinFast focuses on electric SUVs, and caters to the growing demand for EVs in Indonesia. Their first offering is the VF e34, a C-segment electric SUV with a right-hand drive configuration specifically designed for the Indonesian market.
Both factories will initially have a production capacity of 50,000 vehicles, with the potential to scale up to 300,000 annually based on market demand, Vuong said.
VinFast in the Philippines
VinFast officially entered the Philippine market in late May 2024, and recently signed agreements with four dealerships in Metro Manila and one from Iloilo City. The first VinFast showrooms in Manila are expected to open by the end of this month (June 2024).
VinFast isn't holding back when it comes to variety. They've showcased four electric vehicle models for the Philippine market: the VF e34 (C-segment SUV), VF 5 (compact SUV), VF 7 (mid-size SUV), and VF 9 (full-size SUV).
Official prices haven't been announced yet. VinFast vehicles sold in the Philippines won't be locally produced initially. However, with their commitment to the region, future local production facilities are a possibility.
VinFast in Thailand
VinFast has established a network of dealerships across Thailand, with 15 car dealers and 22 showrooms as of June 2024. This widespread presence allows Thai consumers easier access to the VinFast brand. Its efforts haven't gone unnoticed.
The EV maker recently secured two prestigious awards at the 2024 Bangkok International Motor Show (BIMS). These awards recognise the "Best Concept Commercial EV" and "Exhibit Design" for their booth at the event. This recognition adds to VinFast's credibility in the Thai market.
VinFast's strategic approach in Thailand positions them well to compete with established automakers and contribute to the country's growing EV landscape. Their focus on dealerships, diverse EV offerings, and emphasis on Thai consumer preferences are key factors to watch.
VinFast in the US
VinFast had a spectacular US market debut in August. It’s been facing an uphill battle to establish a strong presence in the highly-competitive North American market, where its stock surged over 700 per cent in just two weeks, before the shares plummeted more than 90 per cent from their peak.
The company delivered only 9,689 cars in the first quarter of the year, far below its annual target of 100,000 vehicles.
In 2023, it sold 34,855 vehicles, with most sales to related parties. VinFast is on track to begin car production at its North Carolina factory, with construction starting in July last year.
The plant is expected to have an initial capacity of 150,000 vehicles annually, with production starting in 2025. There are no plans to reduce the factory’s production capacity or scale down its footprint, Vuong added.
Challenges
VinFast faces challenges in becoming a profitable global EV brand. Chinese competitors are increasing exports of cheaper EVs, and Tesla has reduced prices amid waning interest.
Vuong is undeterred. He dismissed concerns about the slowing global demand for EVs, which has affected established rivals like Tesla and Volkswagen.
“I’m not worried about electric vehicle sales,” he said in an interview. “The growth of electric vehicles will be inevitable.”
Finances
VinFast had net debt of about $2.9 billion at the end of March, according to a company filing. Cash and cash equivalents stood at $123.3 million. The company estimates 2024 capital expenditures will be between $1 billion and $1.5 billion, funded through a combination of debt and equity financing.
The company is in discussions with financial investors and would consider an industry partner to aid its growth, Vuong said. However, he is cautious about raising funds "carelessly" and will not accept high-interest financing.
Domestically, VinFast has a state-of-the-art factory in Haiphong, a northern port city in Vietnam.