VinFast Continues Assertive Expansion Plan
The Vietnam-based automaker seeks global presence – but may take a breath on planned IPO.
If the name VinFast seems unfamiliar, that’s no surprise. The Vietnamese automaker has been around for barely half a decade, its first product going on sale in its home market in 2019. But as the company’s name suggests, company founder Pham Nhat Vuong is a man in a hurry.
As a young Vietnamese college graduate, he took a $25,000 loan and created an instant-noodles company that, in 2010, was sold to Nestle for $150 million. Returning home, Pham parlayed his stake into an empire of malls, resorts, amusement parks, hospitals, even a university. Today, he’s the richest man in Vietnam, Forbes earlier this year estimating his fortune at $6.2 billion.
In 2017, he launched VinFast, quickly capturing the local market with a licensed and heavily modified version of the BMW X5. Now, Pham is ready to take on the world. If all goes according to plan, the company’s first two models will go on sale in the U.S. by late this year or early 2023, with a European debut to follow. In recent months, VinFast has laid out plans to set up a $6.5-billion manufacturing complex in North Carolina and it’s ready to help fund that move with a U.S. IPO.
“We are a young company but we have big ambitions,” said Pham during a rare meeting with reporters and investors in April, 2022 at VinFast headquarters in Haiphong, a two-hour drive to the east of Vietnam’s capitol in Hanoi.
The current worksheet calls for VinFast to start phasing out the BMW-based Lux SA2.0 this year. That wasn’t unexpected, the automaker planning to develop its own home-engineered replacements. What did come as a surprise was the decision to quickly phase out products using internal-combustion engines and shift to EVs.
The first phase of Vinfast’s product shift began in April when the automaker delivered the first 100 subcompact VF 4 crossover EVs to Vietnamese customers. Now, it’s tooling up for a pair of larger products, the VF 8 and VF 9 EVs introduced at the Los Angeles Auto Show last November. It revealed another three models during CES 2022 in January, with the compact VF7 to follow into the lineup in 2023. And a senior VinFast executive, speaking on background, revealed that yet another two EVs are under development.
At the moment, the Haiphong plant has the capacity to produce an average 38 vehicles per hour – about 250,000 annually – according to Deputy CEO Shaun Calvert. It also recently opened a facility at its headquarters complex to assemble EV battery packs and eventually expects to produce battery cells in Haiphong, as well. The long-term goal, Calvert said, is to boost capacity to as many as 1 million vehicles annually in Vietnam.
If all goes according to plan, the first of the VF 8 and VF 9 models will begin shipping from Vietnam to U.S. showrooms late this year – though the automaker has signaled that could be pushed back to sometime in 2023. The smaller, sportier VF 7 crossover is on tap for later in 2023.
Eventually, production of the two larger models will be added at a greenfield site in Chatham County, North Carolina, according to VinFast officials. The U.S. project is as ambitious as the automaker’s home operation and will start with a $2 billion assembly plant expected to create as many as 7500 local jobs. It’s set to begin operations in 2024.
But VinFast has outlined a long-term budget set to climb to $6.5 billion. That will cover not only production of the two crossovers, but electric buses, as well as battery cells and packs, said Le Thi Thu Thuy, the Vice Chairman of the Vingroup. Known to her team as Madame Thuy, she has been Pham’s long-time lieutenant, and replaced short-timer Michael Lohscheller as VinFast’s CEO last winter.
Even with Pham’s financial backing, that’s a substantial investment. Several options are being considered. Among other things, VinFast could try to tap into the $25 billion Advanced Technology Vehicles Manufacturing loan program the Biden administration has set up to encourage and assist EV manufacturers.
The Vietnamese automaker already is pursuing another funding option, though: an initial public offering in the U.S. that could generate at least $2 billion. “The IPO is not just for fundraising. It's also about marketing and claiming VinFast's position globally,” Chairman Pham explained during the company’s annual meeting.
VinFast had hoped to stage the IPO during the fourth quarter of this year. But Pham cautioned that the move might be delayed until 2023. He didn’t offer a reason for the possible shift in timing, but observers have floated several possibilities. With inflation running rampant and talk of recession in the air, VinFast may be wary of triggering a stock offering that could fall flat. It also may wish to wait until the VF 8 and VF 9 models are actually on sale in the U.S., several industry analysts have speculated.
Unique market approach
While it’s still uncertain when the first of those two EVs will be delivered to U.S. customers, the carmaker was moving forward with plans to open its first three retail stores in California this month. And it claims to have another 27 set to follow. It will focus, initially, on California and then expand to other key EV markets before eventually rolling out across the U.S., according to CEO Thuy.
Journalists were given a chance to drive the VF 8 during the VinFast visit. The midsize CUV features an attractive design largely crafted by Italian design house Pininfarina. In the U.S., it will come exclusively in all-wheel drive, with motors on each of the axles producing as much as a total 402 hp and 457 lb-ft (620 Nm), depending on the trim package. The prototypes clearly were clearly not ready for production, the program’s chief engineer acknowledging substantial work is left to be done, both mechanically and with the crossover’s onboard software. One prototype repeatedly lost power when taking corners at speed.
With the VF 9 further behind, it is far from clear the carmaker can meet its ambitious launch date. But whenever VinFast does debut in the U.S., it plans to take an unusual approach to sales. VinFast customers will pay $40,700 before delivery fees for the VF 8, the larger VF 9 going for $55,500. But that will only cover the vehicle itself.
Customers will lease their battery packs. There will be two leasing options, a basic plan at $35 a month for the VF 8, $44 monthly for the VF 9. Motorists will get up to 310 miles (499 km) of free use each month. Beyond that they’ll pay an additional 11 cents per mile for the VF 8, 15 cents with the VF 9. The alternative is an all-you-can-drive plan slated to run $110 a month for the VF 8 and $160 for the VF 9.
The leases initially run for three years. After that, motorists will have a choice of either buying the battery packs or continuing to lease them. Eventually, VinFast plans to offer buyers the choice of leasing or buying the battery pack, though that shift won’t go into effect until around the time the U.S. plant goes into operation. VinFast Battery Pack
There is no question that VinFast is laying out an aggressive strategy, with a goal of mirroring the success of the Korean and Japanese automakers that have now become fixtures in the American market. There are skeptics. “It’s going to be a dogfight,” said Joe Phillippi, senior analyst with AutoTrends Consulting, pointing to the wave of new products – and new brands – set to enter the American EV market.
Even the hard-driving Pham acknowledged that VinFast may have to slow itself down a bit. “There is no easy or fast way” to succeed in the U.S., he said through an interpreter. “But I believe we can do it.”
He’ll soon have a chance to prove it.