'Make in Vietnam' electric cars make billionaire Pham Nhat Vuong's dream of 'planting the flag on American soil' come true

At the end of 2022, the Vietnamese online community was abuzz with the image of a giant ship appearing off the coast of Dinh Vu Port (Hai Phong). For workers working in the port area, the shape of this ship is not unfamiliar to them. Every year, at least dozens of times they witness such ships docking at the port, to deliver imported cars from a series of major brands to the Vietnamese market. But this time, the giant ship named Silver Queen did not come to deliver cars. It came to Vietnam with a mission to create a turning point for the domestic automobile industry. The 183m long ship was the ship carrying 999 VinFast VF8 cars to California (USA) for sale in the most demanding market in the world. On November 25, 2022, VinFast officially exported cars to the US under the witness of the head of the Vietnamese government - Prime Minister Pham Minh Chinh. These 999 VF8s are just the first orders out of a total of 65,000 orders VinFast has received globally. Witnessing this moment, many people exclaimed: "Mr. Pham Nhat Vuong has realized his dream of planting a flag on American soil after 6 years".

"Vingroup's foreign expansion is not oriented towards profit, but towards planting a flag. If it is planted in Myanmar, Cambodia and Laos, it is not very 'impressive'. Instead, it is planted in the most impressive place that can still do business" - this is a classic saying of Mr. Pham Nhat Vuong in 2016 during a meeting between the richest billionaire in Vietnam and Viettel 's leaders. For the past 6 years, people have been waiting for the day Mr. Vuong "plants the flag" in the US and now, everything has become a reality. 999 VinFast VF8 electric cars exported to the US are just the first step in a rapid, bold preparation process that also costs VinFast a lot of effort and money to officially lay the foundation for electric car business in the US market - which is considered the measure of success for all high-tech products in the world. On November 17, 2021, VinFast attended the Los Angeles Autoshow, introducing its first two electric car models, VF8 and VF9 (then called VinFast VF e45 and VF e36), announcing its transformation into a global brand. In January 2022, the company continued to appear at CES 2022 with a complete product line of 5 electric car models in segments A, B, C, D, E, and announced that it would completely stop producing cars using internal combustion engines to become an electric car company - about 3-5 years earlier than many other manufacturers. Then, in the middle of the year, the company announced the opening of 6 showrooms in California (USA) - considered an "electric car paradise" in the US market with a popularity several times higher than the general level in the US. These showrooms are all located in prime locations, where consumers in this country can come to experience and directly order products, without going through a third-party dealer system like the business method of traditional car companies. Not to mention that the Vietnamese car company has also completed the procedures to open a factory worth up to 4 billion USD in North Carolina, expected to create about 7,500 jobs for workers in the US when it comes into operation in 2024.

“Closing” 2022 with a series of events, the company announced that it had filed for an IPO with the US Securities and Exchange Commission, planning to list on the Nasdaq under the code VFS. Of course, the first VinFast VF8 “Make in Vietnam” will also reach US consumers this December, marking a year with many major events for the Vietnamese car brand. “VinFast opens the era of electric car production in Vietnam with enough quality to export to demanding markets such as the US and Europe, leaving a strong mark on the map of the world’s automobile manufacturing industry,” Prime Minister Pham Minh Chinh commented.

Looking back at history, the Vietnamese automobile industry began to develop about 20 years ago (in 1991) - that is, about 30 years later than other countries in the region. After a long period of "marking time", the Vietnamese automobile industry has only developed rapidly in the past 3-4 years. According to data from the Vietnam Register in the years from 2018 to 2021, the number of domestically produced and assembled vehicles reached 287,586 vehicles in 2018, 339,151 vehicles in 2019, 323,892 vehicles in 2020 and 346,876 vehicles in 2021, respectively.

The Vietnamese automobile industry has about 40 enterprises operating in the production and assembly of automobiles, meeting about 70% of the domestic demand for vehicles under 9 seats. However, if looking at the general development situation of automobile manufacturing powers in the region and the world, the Vietnamese automobile industry is still considered scattered and fragmented. The appearance of Vinaxuki by Mr. Bui Ngoc Huyen in 2004 and strong development in the period of 2006-2008 brought many expectations for a new force in the Vietnamese automobile industry. However, wrong strategies and capital burden caused Vinaxuki to gradually "fall" and disappear from the map of the domestic automobile industry.

It is a fact that any car manufacturing enterprise that wants to succeed cannot only focus on the domestic market but needs to focus on exports, thereby increasing production, optimizing costs and improving competitiveness, and that is the path VinFast is choosing. According to many experts, VinFast's export of the first electric cars to the US has "fueled" the dream of bringing Vietnamese cars to the world.

“ Although VinFast is behind in the automobile manufacturing industry, it has a huge advantage in that it has quickly accessed the newest, most automated, and most intelligent technologies, the most unique customer approach, and the gathering of many global talents,” Prime Minister Pham Minh Chinh said. The potential of the Vietnamese automobile manufacturer is also not small when the company is supported by Vingroup - the largest private economic group in Vietnam. VinFast's factory complex in Dinh Vu - Cat Hai industrial park has an area of ​​335 hectares, with a capacity of 250,000-500,000 vehicles/year. VinFast is also ready to join hands with the world's leading prestigious partners such as Pinifarina, Bosch, BMW, CATL, etc. to quickly move towards its original goal while still establishing a solid foundation for each step. “VinFast is realizing its dream of becoming an important electric car manufacturing center in Southeast Asia in the next 5 years, supplying the North American and European markets ,” Reuters wrote.

But exporting cars is just the first step in Mr. Pham Nhat Vuong's plan to "plant the flag" in the US. In the near future, the Vietnamese car brand hopes to create "made in USD" cars for sale in the North American market. On March 29, 2022, VinFast signed a preliminary agreement to invest an initial $2 billion to build an electric vehicle and battery factory in North Carolina (USA). This agreement is part of VinFast's plan to invest $4 billion in its first manufacturing complex in the US market. Phase one of the factory will start construction in 2022, after completing the necessary procedures. The factory is expected to be operational from July 2024 with an initial capacity of 150,000 vehicles/year. Also on the same day, the White House announced that VinFast's factory in North Carolina will help create more than 7,000 jobs. The North Carolina Governor's Office also issued a statement emphasizing that this is the first automobile manufacturing facility and the largest project in the history of the state. "By locating the factory right in the US market, VinFast can stabilize prices and shorten delivery times, making it easier for our electric vehicles to reach customers," said Ms. Le Thi Thu Thuy - Vice President of Vingroup and General Director of VinFast Global.

VinFast's determination to open an electric vehicle and battery factory in the US is considered wise because shortly after, the US approved a law called the Inflation Reduction Act, which sets out stricter regulations on providing a subsidy of $7,500 for electric vehicle buyers. Accordingly, only cars that are manufactured/assembled in the US, cost less than $55,000 for sedans, less than $80,000 for pickup trucks and SUVs, and the electric vehicle battery must have components from the US or a country with which the US has signed a trade agreement, are eligible to receive the above subsidy. When put into production in the US, VinFast's electric cars will meet all of the above criteria to receive subsidies, helping to increase their competitive advantage over competitors and reach customers more easily, as Ms. Le Thi Thu Thuy shared. “2023 marks the 10th anniversary of the Vietnam-US Comprehensive Partnership and I cannot think of a better gift than this: the first Vietnamese-branded cars, the first electric cars to be exported to the United States, and these cars will be manufactured in the United States, by American workers,” Mr. Marc Knapper - Ambassador of the United States of America to Vietnam - shared at the VinFast car export event.

2022 is definitely a golden time to enter the electric car market. According to EV-Volume statistics, global electric car sales increased by 62% in the first half of 2022 compared to the same period in 2021, reaching 4.3 million vehicles (including battery electric vehicles and plug-in hybrid vehicles). Of which, the Chinese market recorded a growth of 113%, VinFast's two important markets, the EU and the US + Canada, recorded growth of 9 and 49%, respectively. Meanwhile, according to JATO Dynamics statistics, the growth in demand for electric vehicles in the US and Europe is extremely promising. In the US, the electric vehicle market share has reached 5.1% - considered a "golden" milestone for demand to skyrocket in the near future, while in Europe, 1 in 10 vehicles sold is an electric vehicle (equivalent to about 10%). According to InsideEV, the growth trend in the US will continue in 2023 when a number of affordable electric SUVs and pickups hit the market. These are the most popular car models in the US, and the ones that VinFast is introducing to US consumers. Demand is high, but automakers are having trouble boosting production due to prolonged supply chain disruptions and a shortage of semiconductor chips. In addition, batteries are also one of the difficult problems that all electric vehicle manufacturers have to solve. VinFast fully understands this problem. “It is true that everything is lacking now, even our VF e34 car is only missing one stamp because the supplier cannot provide it, so it cannot be manufactured. When the supply is guaranteed, we will develop very quickly because in the world now there is only a shortage, not a surplus of cars. If we have cars, we can sell them very quickly in many markets,” Mr. Pham Nhat Vuong - Chairman of Vingroup Corporation shared at the Annual General Meeting of Shareholders in May 2022.

To be self-sufficient in battery supply - considered the "key" to accelerating electric car production, Vingroup and VinFast have spent thousands of billions to continuously open 2 new battery factories in just the past 12 months. The company calls this a “three-legged stool” strategy, including “buying batteries from the world’s best manufacturers; cooperating with partners to produce batteries; and researching, developing and producing batteries themselves.” The supply chain’s unknowns can be considered the biggest challenge for VinFast’s business plans in the global arena. Speaking to Nikkei Asia, VinFast global CEO Le Thi Thu Thuy said the company’s goal is to sell 1 million electric vehicles globally in the next 5-6 years. This is an extremely ambitious number considering that it took Tesla 12 years to sell its first 100,000 electric vehicles, while two Chinese startups, Nio and Xpeng, both took about 6 years to achieve similar sales. “Predicting VinFast is not easy because of the unprecedented speed and ability to break the limits of the Vietnamese car company, but VinFast will certainly soon become a formidable competitor to leading automakers,” said Dan. Vardie – President of Europe’s leading car rating organization Autobest said when asked about VinFast. This is the organization that awarded VinFast the “New Star” award in 2018 when the company first launched the brand at the Paris Motor Show that year and the “Rising Star” award at the same exhibition in 2022. “VinFast can sell 500,000-700,000 cars per year but who knows, our prediction for 4-5 years, the company can achieve it in just 2 years,” Mr. Dan Vardie concluded.

According to Market Pulse