Vietnam's Richest Man Is Launching an Ambitious—and Controversial—Gambit to Sell Americans Electric Cars (building a factory in N Carolina too)

Northern Vietnam’s Red River Delta, the world’s most ambitious electric-vehicle (EV) upstart occupies a factory complex fringed with mango trees and palms. Outside VinFast’s plant by the port city of Haiphong, fishermen in conical hats still plumb mudflats for grass carp and tilapia; inside, each car negotiates an overhead ergonomic conveyor assembly line measuring 2.5 miles. A gauntlet of 1,250 robot arms twirl like pneumatic ballerinas, adding 3,000 components and welding rivet after rivet in a flurry of sparks.

Everything here is top of the line: machinery sourced from Germany, Japan, Sweden. Welding is 98% automated. Capacity is 250,000 cars a year. Impressively, instead of individual assembly lines tailored for each vehicle, the facility can simultaneously assemble multiple models on the same line. More impressively, Google Maps shows half of the 877-acre site sits beneath the South China Sea—a quirk because it was reclaimed from the waves and made operational in just 21 months.

VinFast CEO Le Thuy likes to joke that not even the Mountain View, Calif., behemoth can keep up with the EV maker’s lightning pace. “At the start, everybody said that building cars in two years was impossible. Some even called us crazy,” she says. “We launched three car models in 21 months.”

The global EV market was valued at $185 billion 2021 and is expected to rise by 24.5% annually to reach $980 billion by 2028. VinFast is not alone in craving a slice of that pie and is aggressively targeting the U.S. and European auto markets. To succeed, it needs to either unseat Tesla or persuade gasoline-car drivers to switch over. No small feat: China accounts for about half of the global market for EVs, yet still none of its firms have tried the U.S. despite plowing tens of millions of dollars into feasibility studies.

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Skepticism is natural when it comes to the congested global EV industry. No sooner does one startup steal a march on rivals than its latest funding round burns up and another overtakes it. Today, the U.S. industry has consolidated behind Tesla—worth some $750 billion and turning its co-founder, Elon Musk, into the world’s richest man—and legacy automakers are belatedly turning to a market whose importance is soaring alongside global oil prices. But how does a parvenu from the technological backwaters of Vietnam seriously expect to compete?

It’s a huge challenge. But VinFast’s parent VinGroup is no ordinary firm. Controlled by Vietnam’s richest man, Pham Nhat Vuong, VinGroup is the country’s largest conglomerate, with a total market value of $24.4 billion. Its 2020 revenue accounted for 2.2% of national GDP, and its reach is staggering. “It’s a remarkable story,” says Huong Le Thu, principal fellow at the Perth U.S. Asia Centre and adjunct fellow at the Center for Strategic and International Studies. “There has never been anything of this size in Vietnam. It’s overwhelming at one level because now you can do everything with VinGroup.”

It’s almost a state within a state, at least for the upscale. A well-to-do Vietnamese can be born in a VinMec hospital, study at a VinSchool, live in a VinHome, shop at a VinCom mall, graduate from VinUni, vacation at VinPearl resorts, and, perhaps, become one of the leviathan’s 40,000 employees.

And now, they can commute in a VinFast electric car, EVs having emerged as the vehicle for the firm’s ambitions to leap from domestic to international. In June 2018, VinFast purchased a GM factory outside Hanoi and, by licensing intellectual property from GM and other auto giants like BMW, began producing its first gasoline VinFast vehicles less than a year later. These initial offerings were essentially ciphers of Western brands—specifically a Chevrolet Spark compact and a BMW 5 Series sedan and X5 SUV. Because of clever marketing and low costs, they proved immensely popular, capturing 17% to 19% of each market segment’s share domestically. They were also essential learning steps.

Beginning in August, VinFast will switch to exclusively manufacturing EVs. The company is also set to build a $4 billion factory in North Carolina and is scouting for a European plant. The 2,000-acre site in Chatham County plans to start by producing 150,000 electric vehicles annually beginning in July 2024, creating 7,500 jobs. It’s the largest single foreign direct investment in the state’s history and indicative of the scale of VinFast’s ambition, which is “to become one of the top global EV makers in five to 10 years,” says Thuy, also a deputy chairperson of VinGroup. “We think that we can be as good as anybody in the world.” On July 14, VinFast opened its first six overseas showrooms in California, including a flagship store in Santa Monica. Its first two models set for the U.S. market are sleek-looking SUVs, the VF8 and VF9. “It’s a solid car, no rattles or anything that would indicate a problem,” says Michael Dunne, founder of the ZoZoGo EV market intelligence firm, after a test drive. “But the U.S. market is not for the fainthearted.”

Read More: Lithium Is Key to the Electric Vehicle Transition. It’s Also in Short Supply

VinFast wants to entice American EV shoppers with a unique proposition: a 10-year warranty and a sticker price that doesn’t include the cost of the battery—an EV’s most expensive component. Instead buyers will have the option to lease batteries from the company for a small monthly fee. Once the battery life degrades to 70%, Vin-Fast swaps in a new one, free of charge. “Investors really like this kind of business-model story,” says Yale Zhang, an auto-industry analyst based in Shanghai. “The question is you need to source more batteries to make it work.”

It’s a bold play in an extremely competitive field. But despite VinFast’s inexperience and lack of core technologies, it has much deeper pockets than many new entrants into the EV market. VinGroup has so far plowed $6.6 billion into VinFast and assembled a leadership team headhunted from firms like Ford, Renault, GM, and BMW. The styling is by Italy’s Pininfarina; the dashboard displays by LG; the batteries by Samsung. “We leased IP from BMW, and so that immediately became the standard we worked to,” says Shaun Calvert, VinFast deputy CEO in charge of manufacturing, formerly with GM.

The firm also has some rather influential champions. In late March, President Joe Biden tweeted that VinFast’s U.S. investment plans were “the latest example of my economic strategy at work.” Within days, VinFast says, it had almost 10,000 preorders from customers in the U.S. “We keep joking that President Biden is the best salesman that we’ve ever had, and we didn’t have to pay,” says Thuy. It doesn’t stop there. When Thuy attended the SelectUSA investment conference in late June, she was delighted when most of a five-minute speech by U.S. Commerce Secretary Gina Raimondo was dedicated to VinFast. “I’m amazed by the level of support that we’ve received from the U.S. government,” Thuy adds.

https://www.thedrive.com/news/what-i-learned-visiting-one-of-six-vinfast-dealers-in-america

What I Learned Visiting One of Six VinFast Dealers in America

BY KEVIN WILLIAMS
AUG 4, 2022 2:49 PM

VinFast has gotten further than a lot of newly founded car companies so far. The Vietnamese automaker has a few years of sales in its home country under its belt and the ball’s rolling on plans to build its EVs in North Carolina. You probably haven’t seen a VinFast on American roads yet but on July 14, it opened six stores to sell cars in California. Here's what it’s like to visit a VinFast showroom as a customer.

The VinFast store I visited was in the Hillsdale Shopping Center, in San Mateo, California. About 25 minutes south of San Fransisco, the retail store is right on the northern tip of Silicon Valley, not too far from the Facebook (Meta) offices. The mall itself is solidly mid-tier, and the outdoor promenade has storefronts that are updated. It’s a nice place to be, but not overly spendy, or as show-stopping as say, Union Square in San Fransisco. I am speculating that maybe this is intentional; the cheapest VinFast will cost about $40,000, a lot cheaper than the $100,000 Lucid Air. Lucid seems choosier with where it places its in-person studios, often in high-dollar, high-arts spaces, like the Meatpacking District in NYC.

According to VinFast, its stores are divided into “1S,” “2S,” and “3S” tiers. The 1S stores are small spaces in high-traffic areas focused entirely on vehicle display and sales. 2S is said to be on main thoroughfares, a little bit bigger, and offering service and parts as well. 3S is the largest of the three, offering a traditional dealer sales and service department. I was in a 1S store.

I walked into a small showroom, not unlike that you’d find in damn near any other tech store or tech adjacent space. The walls are mostly glass and let in a lot of light, and the walls and floors are white and grey. If you’ve been to an Apple, Tesla, or Windows Store, the VinFast store won’t feel super different. VinFast says “the spacious in-store ambiance blends modern features in harmony with Eastern heritage and beauty inspired by nature,” which is true, I guess. A wood, possibly bamboo, applique adorns an accent wall, and videos and imagery all over the showroom play and show images of the very pretty Vietnamese countryside. I found it less sterile than the typical Tesla store. There was a glassed-off waiting room, but I couldn’t get any salesman to tell me exactly what it was for.

In the middle of the showroom, sat one lone model—the VinFast VF8. VinFast’s PR department explained to me that only the Santa Monica location would have both the VF8 and VF9.

I took one look at the red VF8, and one of the ten or so salesmen in black polo shorts smiling and abuzz with enthusiasm with the brand, walked over to assist me. The room was full of wanderers and mall walkers who had stumbled into the showroom on a Saturday morning. Most seemed like random curious passersby, I think I may have been one of the few who came intentionally.

The salesman was helpful, giving me an overview of the vehicle’s specifications, pricing, and incentives. I prodded and poked around the VF8, but the salesman was adamant that it was a preproduction vehicle. It felt it, some trim pieces were not finished, and the salesman told me that some functions were disabled. I reserve full judgment for the actual vehicle when I can get my hands on a production model. From what I can tell sitting in a static, showroom vehicle, the VF8 seems to be about the same size as the Volkswagen ID.4, but with more legroom, softer seats, and a usable frunk.

I asked the salesman how one would go about purchasing a VinFast vehicle. He told me that it’s as simple as meeting with a salesman like him in a VinFast store, who will help you configure a new vehicle. I pressed the man further, asking if I could simply build and order online, and take delivery at home (or a VinFast store). He said “yes, but it might be best to order in person.” I assumed he was just being helpful, but he might be right.

VinFast has a configurator for the VF8 and VF9, but the configurator doesn’t have pricing. When the configurator launches, it displays a message that the configurator is for illustrative purposes, and does not currently apply to reservations. The configurator has no pricing, either. If you wish to purchase a VinFast, it requires a $200 reservation, in which you will be paired with a VinFast representative who will help you spec your vehicle. This isn’t unique to VinFast. Rivian does this with its “Rivian Guides,” but at least the Rivian configurator gives folks an idea of how much their dream truck will cost. Later, when I returned home to Ohio, I called the Vinfast customer service hotline, which informed me that the configurator’s pricing won’t be added until “a later date.” OK.

I reached out to Vinfast for clarification, and it seemingly seconded my “concierge,” somewhat in-favor-of in-store sales approach. A representative of Vinfast’s PR department said that the brand wants a “seamless online-to-offline sales experience.” Customers can make reservations online, yes, but “for direct sales at VinFast Stores, customers will receive detailed and specific consultation on product options and financial solutions,” wrote the VinFast representative, via email. “In-store customers will also be able to experience several options including colors, materials, and features in-person, allowing them to select and reserve VinFast cars more easily and enjoyably,” the representative continued.

I left the VinFast store with more questions than I came with. The salesman thanked me for my time, adding that his store would be getting a VF9 display in a few weeks. Deliveries of the VF8 could happen as soon as late September. That’s a tall order for a company that has a product with a lot of unanswered questions.

We’ve seen this before—new companies with deep pockets full of cash insist they can do the EV thing better than legacy automakers. But can they? Just think of the number of EV startups that have come, gone, and maybe stuck around, like Lucid, Arrival, Rivian, Tesla, Bollinger, SF Motors, Byton, Fisker, Kandi, Alpha Motors, Nikola, Faraday Future, Canoo, and dozens more that would exceed the word limit I had in mind for this paragraph. Many have struggled to make it past a handful of rolling prototypes, let alone open a store, allow potential customers to ogle a physical product, and accept reservations for said physical product.

On one hand, VinFast is far ahead of a lot of them with its physical stores. On the other, VinFast needs to clarify its plans if it ever expects to sell any vehicles in the United States.

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