Founded in 2017, VinFast recently achieved public listing through a merger with a special-purpose acquisition company (SPAC). At the helm of this automotive disruptor is Pham Nhat Vuong, Vietnam's wealthiest individual. Vuong embarked on his entrepreneurial expedition in Ukraine during the 1990s when he introduced the popular Mivina noodle dish. In 2010, he sold the Mivina noodle-based Technocom culinary business to Nestlé for a staggering US$150 million. Subsequently, he established Vingroup in Vietnam—a conglomerate spanning diverse industries, including technology, manufacturing, real estate development, retail, healthcare, and sports.
In its early years, VinFast made waves in Vietnam's auto industry by launching fossil fuel cars equipped with BMW chassis and powertrain. Collaborating with the renowned car design company Pininfarina, VinFast introduced the LUX A2.0 sedan and the LUX SA2.0 crossover SUV, establishing its presence. However, the company has shifted its focus toward the purely electric field in recent years. Notable VinFast electric car models include the VF e34, VF 8, and VF 9, alongside product lines such as purely electric buses and two-wheelers. Dubbed "the pride of Vietnam", VinFast strode into the CES (Consumer Electronics Show) 2024 in January, unveiling an impressive lineup of electric mobility vehicles: Wild, an all-electric pickup truck; VF 3, a mini-eSUV; and DrgnFly, an electric bike. These creations demonstrate VinFast's commitment to robustly expanding its product portfolio in the age of electrification.
Despite actual sales volume in 2023 reaching only 34,855 vehicles (72,468 electric motorcycles), less than 70% of the 50,000-unit target, VinFast made significant strides. In Q4 2023, the company delivered 13,513 cars (24,309 electric motorcycles), representing a remarkable 444% increase from Q1. Moreover, the loss of over US$550 million in 2023 narrowed to US$150 million, a 12.3% reduction from Q1. Undeterred, VinFast maintains its ambitious sales target of 100,000 units for this year. Beyond Vietnam, the company aims to expand its market share in the US. Currently operating 13 retail stores and service centers in California, VinFast signed partnership agreements with five dealers in North Carolina, New York, Texas, and Kansas earlier this year. These collaborations will enable local customers to experience VinFast EVs firsthand, starting with the VF 8 and followed by the VF 6, VF 7, and VF 9.
To instill confidence in American consumers, VinFast offers a 10-year or 200,000-kilometer warranty coupled with a 10-year unlimited mileage battery warranty for all purchasers and lessees of VinFast EVs. This move not only accentuates the company's commitment to product quality but also signals its determination to conquer the US auto market. To accomplish the sales goal of 100,000 vehicles in 2024, VinFast is actively planning to set up 125 sales points across the US. The company already invested US$4 billion to build an EV manufacturing plant in North Carolina in July 2023, slated for completion and operation in 2025. The initial phase aims for an annual production capacity of 150,000 vehicles.
VinFast's global reach is not confined to the US. In October 2023, VinFast announced an investment of US$400 million in building an EV factory in Indonesia. It is a strategic move aimed at entering the world's fourth most populous country. Simultaneously, in India, the world's most populous nation, VinFast revealed its intention to invest a whopping US$2 billion in constructing an EV factory in the southern state of Tamil Nadu. Setting sights on selling in 50 markets by the end of 2024, VinFast aims for an invincible global presence in the electric mobility landscape.
Pham Nhat Vuong, the founder of VinFast, strategically launched V-Green Global Charging Station Development Company. V-Green's mission is twofold: first, to invest in a comprehensive charging infrastructure system that prioritizes supporting VinFast vehicles globally; second, to position Vietnam as a global leader in EV charging station density. Billionaire Vuong, who owns 90% of V-Green, announced V-Green's role as VinFast's global charging network partner. In a statement to Reuters, Vuong emphasized V-Green's proactive approach, stating, "V-Green will directly search for land and partners to establish and expand its charging network in key markets of VinFast." This holistic strategy positions V-Green as a beachhead for emerging countries to navigate the once-in-a-century transformation of the auto industry.
In early November 2023, during a trip to Vietnam, I encountered VinFast electric cars displayed in shopping malls. Just outside, a line of taxis emblazoned with the VinFast logo awaited customers. VinFast charging stations were also found at gas stations along major roads. These initiatives reflect the startup's determination to carve a niche in the market.
Despite some divergence between actual sales and financial forecasts, by April 24, 2024, VinFast's share price on Nasdaq had plummeted from its peak of US$93.5 to approximately US$2.5—less than 3% of its highest value. Initially listed at around US$37 per share, VinFast had surged to become the third-largest automobile company by market capitalization. Even though it is facing insurmountable challenges, VinFast continues its global expansion by establishing factories worldwide and directly addressing the lack of charging infrastructure in emerging markets. The unfaltering commitment to charting its own course serves as an inspiring example for Taiwan's related industries. At present, numerous companies in Taiwan's electronics and machinery industries are flourishing in the development of three essential EV technologies: motor, battery, and electronic control. As they steer through this critical moment, it becomes imperative to formulate a proactive strategic plan to expand and fortify the EV industry. The sector holds immense business potential for the future.
Hon Hai has publicly asserted its ambition to capture 5% of the global EV OEM market by 2025. In November 2021, the company acquired the factory of the startup Lordstown Motors in Ohio, USA, and signed an OEM contract. Just six months later, in June 2022, Hon Hai established a joint venture, Horizon Plus, with Thailand's energy company PTT to set up an auto factory in the Eastern Economic Corridor of Thailand. Production of EVs at this facility is expected to commence by the end of 2024. In November 2022, Hon Hai announced the formal establishment of CEER, the first EV company in Saudi Arabia, with Saudi Arabia's Public Investment Fund (PIF). CEER aims to build Saudi Arabia's own auto brand, leveraging spare parts and technologies licensed from BMW. Meanwhile, Hon Hai focuses on developing the vehicle's electronic and electrical architecture as well as providing engineering services to CEER in areas such as intelligent cabin design, networking, and automated driving assistance.
We can see that Hon Hai has chosen a unique path. Rather than creating its own global EV brand from scratch, as companies like Vinfast have done, Hon Hai is replicating the EMS model from its successful electronics manufacturing business. While VinFast is aggressively building its own brand and distribution network worldwide, Hon Hai is providing indispensable components, architecture, and services to emerging EV companies. Which approach is better will ultimately depend on the actual sales results in the coming years. We can only wait and see.
About the author - Kenny Liu
Graduated from Dept. of Aeronautics and Astronautics, Cheng Kung University in 1988, started his auto industry career since July 1990 after two year military service. Starting as a service engineer and a temp technician, product marketing specialist in Peugeot/ Daihatsu, marketing and dealer channel specialist in VW LCV from March 1992, then field manager in GM Taiwan from Feb. 1994, sales and service / parts head in Ford Lio-Ho from Sep. 1998 till retirement in May 2019. Kenny then started to work for JLR Taiwan as sales/service head and consultant/ lecturer. After that, he was invited to work at a Suzuki dealer of Taipei as the general manager until April 2022.