The electric age has brought a flood of startups to the auto industry not seen for a century. Buoyed by the success of Tesla and the promise of government subsidies, small American companies like Rivian, Lucid, Lordstown, Fisker and others are vying to be the next big thing.
VinFast is a different sort of startup.
Like its startup contemporaries, VinFast — founded in 2017 — is young, hungry and determined to make its mark with electric SUVs. Unlike its U.S.-based rival, VinFast is headquartered in Hanoi and has access to the capital resources of the largest company in Vietnam: the $20.2 billion Vingroup.
Celebrating its 30th birthday this year, the company founded by Chairman Phạm Nhật Vượng has, like Hyundai and Toyota Asian multinationals before it, smelled the opportunity to offer an affordable auto alternative in the U.S. market. Like Chinese automakers GAC, Byton and Qiantu, which unveiled concepts for the U.S. market at major auto shows over the last five years, VinFast made a splash at the 2021 Los Angeles Auto Show with a stage-full of concept vehicles.
Unlike its Chinese competitors, however, VinFast has followed through on its promise. The VF 8 SUV is now on sale in California, America’s biggest EV market. VinFast says the midsize ute will be quickly followed by the large, three-row VF 9 — and then the VF 6 and VF 7 compact models later this year.
“Since Day One, we had a global strategy,” said VinFast CEO of North America Van Anh Nguyen in an interview at the VF 8’s media launch in California. “We want to become a global, fully-electric company and here we are. We’ve delivered vehicles to Vietnamese customers and now we are delivering the VF 8 to American customers.”
Nguyen emphasized a key to VinFast’s quick-strike strategy is working with partners to develop its vehicles rather than organically growing as an auto company from within. For example, it began in Vietnam in 2017 licensing chassis from BMW and building cars for its local market. VinFast completed its first manufacturing facility in 21 months in Haiphong and began producing its LUX A2.0 sedan and LUX SA2.0 SUV.
For its EVs, VinFast has designed its own skateboard chassis with a business model that follows in Tesla’s footsteps. Beginning in the California and Canadian markets, VinFast will operate through retail/service centers complemented by mobile units to service vehicles at customers’ homes.
“One of our models is connecting intelligence globally,” said Nguyen. “We chose to work with the best partners in styling, in engineering.”
Electric motors, batteries and exterior styling have been contracted to third parties. The VF 8’s designer? The legendary Italian design shop, Paninfarina. Like other startups, VinFast has poached talent from legacy manufacturers. Former General Motors Co. designer David Lyons, for example, has further refined the VF 8 design in-house.
“What sticks with me is how big Vingroup is,” said Paul Waatti, manager of industry analysis for AutoPacific, who visited the company’s headquarters last year. “They are 2.4% of Vietnam’s GDP. It’s a massive company with resources to back up VinFast. They are in this for the long haul.”
VinFast’s corporate parent that made its initial fortune selling ramen noodles in Ukraine before expanding into real estate, retail malls, hotels, energy services, and universities in Vietnam. Unlike European and Japanese automakers who forged their brands in highly competitive domestic markets before exporting to the United States, VinFast is Vietnam’s only car company — a symbol of national pride in an emerging economy were less than 10% of the population owns a vehicle.
“We get a lot of support from our parent company Vingroup, the largest company in Vietnam,” continued Nguyen. “We have a huge ecosystem in Vietnam where Vingroup has been in operation for 30 years.”
VinFast follows current corporate fashion in outlining a larger purpose to “create a better life for people” and “a sustainable future for everyone.” The VinFast premium product strategy has predecessors.
Toyota’s Lexus brand came to the U.S. market in the 1980s looking like a Mercedes knockoff — but for thousands less. So, too, the VF 8. Inside the model’s spare interior, Tesla’s influence is apparent as the SUV is run by a single, 15.8-inch screen. Basic functions like adjusting mirrors and the steering wheel column are controlled in the screen. And, like Lexus, the VF 8 can be had for thousands less than other market players.
“VinFast has set their sights on the toughest market in the world,” said AutoPacific’s Waatti. “They’ve got some issues to work through on the VF 8. The VF 7 looks gorgeous. It’s going to be about building brand equity and loyalty in a crowded market.”
The VF 8’s $46,000 sticker price is half that of a similarly-sized Tesla Model X. It’s $30k less than comparable Audi and Cadillac EVs. Its price is similar to a Kia EV6, which is also trying to compete for the EV market’s premium customer. The Vietnam-made VF 8 is initially offered only as a lease so that it can take advantage of a loophole in federal law that allows imported electrics to offer customers the full $7,500 tax credit.
To gain the $7,500 on purchase, an EV must be produced in the United States (ultimately, its battery must be produced here too). To that end VinFast is building a production facility in Chatham County, North Carolina, with production capacity of 150,000 vehicles. It would be the company’s second manufacturing facility after the Haiphong plant.
“We have looked at different states. We chose North Carolina,” said Nguyen, who has moved to Raleigh to oversee the facility’s construction on the 220-acre site. “Looking at the regulations, tax rebates, it makes so much sense to have manufacturing here so we can relate to our north America customers faster.”
VinFast has signed a memorandum of understanding with the state that includes an incentive package worth $1.2 billion.
As for building batteries, the company admits the challenges of contracting with Chinese manufacturers like CATL while at the same time promising a sustainable green model. CATL processes lithium in China, one of the world’s dirtiest manufacturing environments, while a majority of the world’s cobalt (a key ingredient of battery packs) comes from Congo, where child labor is often used in mining.
“It’s a challenge the whole industry is grappling with,” said Senor Director for Charging Sean Ackley.
Even before the $7,500 rebate, the midsize VF 8 will cost just $414 a month to lease — a figure more in line with a compact Audi A3 sedan than a midsize luxury EV from Tesla or BMW, which are generally north of $1,000 a month.
“There are three areas VinFast focuses on: 1) Quality, 2) Great styling and 3) service,” said Nguyen. The company backs up the latter with a best-in-industry, comprehensive, 10 year/125,000-mile warranty.
VinFast is the leading auto retailer in Vietnam, and sells electric buses and e-scooters in addition to its VF 8, VF 9 and VF e34 models. The latter was the first EV produced by VinFast (in 2021) but company marketing chief Robert Muller said the subcompact EV is too small for the U.S. market.
“We decided to start sales in California. The electric infrastructure and incentive program and EV adoption ratios are high here,” said Nguyen of a state that dangles HOV-lane privileges and another $7,500 for customers to purchase an EV. “From here, we will expand to other states as well.”
___
© 2023 www.detroitnews.com
Distributed by Tribune Content Agency, LLC.
