HANOI, Vietnam (AP) — Vietnamese automaker VinFast, briefly the world’s third-most valuable automaker, has a big problem: It can’t sell enough cars.
Idle factories are bleeding money and the company’s financial health is at stake. Finding the U.S. market difficult to penetrate, Vinfast hopes its smallest and cheapest car to date — a roughly 10-foot-long, $9,200 pure-battery electric minivan called the VF3 — can become the “national car” of Vietnam and win over consumers in Asian markets. .
The VF3 is designed specifically for Vietnamese and other Asian markets, according to VinFast. Vingroup president Le Thi Thuy said on an earnings call in April that it expects larger sales than previous models that were mainly intended for export to Western countries.
VinFast was dreaming of entering the major global automakers when it launched sales in the United States last year and listed its shares on the Nasdaq, where its market value briefly surpassed that of General Motors and Ford Motor Co. in late August.
Investor enthusiasm has slowed since then, and its shares are trading at less than $4 from a peak of $82.35. VinFast faces Construction delays The $4 billion factory is in North Carolina, where the company said in an email that it is reviewing and evaluating “all aspects of the construction process.” She is facing legal problems due to an accident that killed four people in California. She also deals with allegations of patent infringement.
VinFast’s future is important for Vietnam, both because its ambitions align with the Communist Party’s own goals, and because of the outsized role its parent company Vingroup plays in the Vietnamese economy. The group started as an instant noodles company in Ukraine in the 1990s and now operates all types of businesses.
VinFast reported a net loss of $2.39 billion last year, despite a 90% increase in revenue. To patch up its tattered finances, Vingroup recently sold its profitable commercial real estate arm, Vincom Retail. Vingroup’s founder, Pham Nhat Vuong, has committed $1 billion of his personal fortune, on top of the $11.4 billion in funding the parent company pumped into VinFast in 2017-2023. According to a report filed with the US Securities and Exchange Commission.
“We will never leave VinFast,” he told Vingroup shareholders at their annual general meeting in April. According to government media.
Tu Li, founder of consultancy Sino Auto Insights, said the VF3 will initially be sold in emerging markets in Asia, where car buyers ranging from motorcycles to SUVs may not be as picky as Americans.
At just 3.1 meters long, 1.6 meters wide and high (10 feet long, 5.2 feet wide and 5.2 feet high), it can squeeze into tight lanes in Asian cities, but still seats five people.
VinFast aims to sell 20,000 of these cars in Vietnam this year and deliveries will begin in August. It is being sold on Southeast Asian e-commerce site Shopee, with an initial deposit of about $2,000. The company says that more than 27,000 people applied to purchase the car in the first three days after applications opened on May 13.
Many, like Deo Linh, 32, are buying cars for the first time. A businesswoman and her husband wanted to switch from using motorcycles to using a car, which is safer and more comfortable during extreme temperatures or rain.
“The price of the VF3 is attractive,” she said. “But I will wait and see how it performs on the road before I make my deposit.”
VinFast plans to start selling VF3s in the Philippines this year and in Indonesia, Thailand, the United States and Europe by next year.
It opened its first showroom in Jakarta, the Indonesian capital, in April, and says it has sold about 600 SUVs to Indonesian companies. Construction of a factory has begun in India.
Even in Asian markets, VinFast faces a lot of competition, especially from the Chinese electric car maker BYD, Which has already achieved a large enough scale for cost-effective manufacturing. Chinese electric vehicle manufacturers such as BYD and Haima are expanding rapidly in Southeast Asia. But in Vietnam, VinFast’s near-monopoly on charging infrastructure — charging stations are widespread in the country, not only in major cities but also in remote mountainous provinces — consumer distrust of Chinese products and nationalist sentiment may give it an initial advantage, Le Hong Hiep said. , a visiting fellow at the ISEAS-Yusof Ishak Institute in Singapore.
BYD plans to launch three models – Atto 3, Dolphin and Seal – in Vietnam next month.
VinFast has to boost sales to lower unit costs at its sprawling plant in northern Vietnam’s Haiphong province, which has the capacity to produce about 250,000 electric vehicles a year, but makes a fraction of that.
“An idle factory consumes money,” said Tu Li, an automotive consultant.
India, the world’s third-largest auto market by sales, offers the promise of scale, but only if VinFast builds its own factory there to enable it to take advantage of policies that protect local automakers. High import taxes mean that even at $9,200, the VF3 will be too expensive for Indians, said Ishan Raghav, managing editor of Indian car magazine autoX.
The VF3 may appeal to Indian families looking for a compact car with adequate range for cruising around India’s crowded cities. But he said new entrants would have to establish large-scale car sales and electric vehicle charging networks, and that would take a few years. “All of these things — manufacturing, sales, service, shipping networks — are capital-intensive and take time,” he said.
Vingroup has launched a company called V-Green to build its charging infrastructure in Vietnam and other key markets. In Thailand, it plans to build its own charging infrastructure, said Fu Dang Yen Hang, CEO of VinFast Thailand. He told The Associated Press in an interview in March.
VinFast is racing against time.
despite of prioritization In the U.S., it sold less than 1,000 cars in North America last year and only about 35,000 globally, short of its goal of at least 40,000 cars. About two-thirds of VinFast’s revenue in 2023 came from sales to its Vingroup-owned taxi service, According to a report filed with the US Securities and Exchange Commission.
Hepp said VinFast’s main challenge is improving its financial performance.
“If they can’t survive long enough, they may go bankrupt,” he added.
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