On Thursday, VinFast, a rather obscure automaker from Vietnam, revealed three new electric vehicle models at this year\’s CES in Las Vegas, the world\’s largest tech trade show. The move comes less than two months after the company unveiled two electric SUVs at the Los Angeles Auto Show.
It\’s a bold move by VinFast, a unit of Vietnam\’s largest conglomerate Vingroup, that was established less than five years ago. But in its home market of Vietnam, people are not surprised. Pham Nhat Vuong, founder and chairman of Vietnam’s biggest conglomerate Vingroup, has a solid track record to show that he means business.
VinFast, the first domestic automaker in Vietnam, was started in 2017 with the groundbreaking of a 335-hectare manufacturing complex in the Vietnamese northern port city of Hai Phong. About a year later, VinFast showcased its first car—the state-of-the-art VinFast LUX SA2.0 sedan—at the Paris Motor Show 2018. Less than two years after the groundbreaking of the factories, VinFast delivered its first vehicles to customers in Vietnam. VinFast is now the second best-selling automaker in Vietnam, after Toyota, with 25,527 cars sold in the first nine months of 2021.
Before starting VinFast, Pham has said that he planned to build the biggest car maker in Vietnam. Now Pham, the wealthiest person in Vietnam—with a net worth of $7.3 billion, according to Forbes’ World’s Billionaires list last year—has even bigger ambitions: to conquer the global automobile market by going all-in on EVs.
Last year, Pham decided to switch completely to EVs. Analysts, some of whom were skeptical of Vingroup’s venture into the automobile business, welcomed the decision, as the company could take advantage of the disruption in the auto industry caused by the shift to electric and self-driving vehicles. So far, Vingroup has invested a total of $5.4 billion in VinFast, according to the company.
“Envisioned to become a global EV brand since its inception, the advanced manufacturing factory was built based on a flexible concept,” says Vingroup vice chair Le Thi Thu Thuy, who was appointed CEO of VinFast Global last month. “In fact, the main difference between an internal combustion engine and an electric car is the engine. We thus have innovated our motor shop for EV production, including high-voltage systems.\ Le adds that VinFast will stop producing internal combustion engine cars by the end of 2022.
Last month, VinFast started constructing the VinES Battery Manufacturing Factory in the Vung Ang Economic Zone of Ha Tinh province in Vietnam, affirming its plan to turn VinFast into a global smart EV brand.
“The future of the automotive market is clearly moving toward zero-emissions vehicles, and as such for a new automaker like VinFast, it makes sense to focus all future development on electric powertrains instead of competing with legacy automakers in combustion engine technology which they’ve been developing for decades,” says Christopher Robinson senior analyst at Lux Research.
“However, VinFast is entering the market at a time in which the number of competitors is rapidly expanding,” notes Robinson. “Incumbent automakers such as Ford and GM are aggressively expanding portfolios of electric vehicles, with Ford announcing just the other day it would once again increase production capacity for its F-150 Lightning.”
To build up the VinFast brand, the company is working with major players in the automobile industry: renowned Italian car designer Pininfarina, German auto-parts maker Continental, battery makers CATL and Samsung SDI, German steel giant Thyssenkrupp in industrial technology, and the likes of Google, Nvidia and Qualcomm for smart technology.
In addition to Vietnam, one of the largest markets in Southeast Asia, VinFast is targeting customers in North America and Europe. The company already has offices in the U.S., Canada, France, Germany and the Netherlands in preparation to launch in those markets.
“Currently, production is concentrated in Vietnam, but VinFast would consider organizing production in other countries in the future, depending on market needs,” says Le, adding that the company is exploring the development of a production plant in the U.S., expected to be started in second half of 2024. “Of course, regardless of where they are manufactured, VinFast\’s products must meet the highest quality and safety standards and maintain reasonable pricing for customers.”
Many U.S. companies are also building domestic supply chains in the U.S., investing in cell production and even upstream raw materials to ensure supply for their products, notes Lux’s Robinson. “Vinfast will struggle to compete with these significant headwinds in the U.S.,” he says.
Le says the road map of phasing out internal combustion engine cars to EVs in North America is an excellent opportunity for VinFast to launch its brands in international markets. “These are large markets with open-minded consumers, strong development potential, and favorable economic conditions and policies,\ she says. \Which gives VinFast a solid foothold to establish itself in those markets.\