Doing Business

American Dream of made-in-Vietnam Electric Vehicles (EVs) firm

Trường Lăng

May 13, 2022

Doing Business

American Dream of made-in-Vietnam Electric Vehicles (EVs) firm

Trường Lăng

May 13, 2022

The born of the future cars – Electric Vehicles (EVs)

President Joe Biden of the USA has just congratulated Vinfast on its first investment in the Electrical Vehicles manufacturing plant in North Carolina on Twitter. For the first time, Vietnam has a made-in-Vietnam Electrical Vehicles (EVs) firm in the USA. This big success has its footing on the strategic planning and restructuring of Vingroup – the parent corporation of Vinfast. Vingroup is one of the largest multi-sector private corporations in Vietnam in particular and in Asia in general with a market capitalization of nearly 16 billion USD. Through three major restructurings in its development directions, Vingroup has been well-prepared for the global advancement of Vinfast. 

President Joe Biden’s tweet on made-in-Vietnam Electric Vehicles

Vingroup first restructured by replacing retails, agriculture and aviation with new-focus sectors – automobile, smartphones and television. In the second restructuring, the giant corp ceased the manufacturing of smartphones and televisions. Instead, Vingroup distributed most of its resources to the automobile sector. With this progressive approach of the group, several experts feared that it could be risky for Vin to put all its eggs in one basket. Yet, at that time, the focus on automobiles revealed a breaking-through step of Vin – electric vehicles.  

Though Vinfast had initially generated strong impressions as the first Vietnamese-made car maker, the company has officially halted the production of its successful gasoline car lines to fully dedicate the organizational focus on the EV business launched in late 2021. 

The decisive move of Vinfast has emphasized its long-term visionary plan of becoming the leading EV manufacturer in the region and in the world. At the moment, the trade-off between gasoline cars and EVs has caused significant loss to Vinfast. Nonetheless, according to the Chairman of Vingroup – Pham Nhat Vuong, this loss is only temporary. As the traditional automobile market in Vietnam has been saturated with the biggest pies belonging to well-established brand names, the opportunities for the follow-suit are marginal. 

Meanwhile, the EV market is a potential land domestically and globally. The global demand for EVs in recent years has significantly increased. In particular, the Evs’ global sales experienced a strong upswing of 4.2 million cars sold out in 2021, doubling the quantity in previous years. China contributes the largest share of electric vehicle sales in the world today, accounting for about 10% of annual car sales for the past three years, compared to 2% in the US. The consumption of EVs will reach 60% of the total car sales by 2040. Despite the rising demand for EVs, the supply of electric cars is in shortage. Therefore, the market space for EVs is tremendous, opening potential opportunities for first-movers.  According to the Vietnam Registry, the number of electrified vehicles (hybrid, plug-in hybrid and pure electric vehicles) in Vietnam is marginal compared to the increasing demand. There were 140 electric vehicles in 2019 and 900 vehicles in 2020 most of which are imported and hybrid cars. Thus, Vietnam EVs are potentially blooming in the near future, creating a large market space for investors 

RankingCar LineSales July 2021 (Quantity: car)Comparision to June 2021 (Quantity: car)Accumulated Sales(Quantity: car)
1Vinfast Fadil2,928 Increase by 37613,005
2Hyundai Grand i10805Decrease by 1817,152
3KIA Morning194Decrease by 672,467
4Toyota Wigo98Decrease by 831,383
5Honda Brio81Decrease by 1061,612
Sales of Type A Car in Vietnam as of July 2021

Further, in the third restructuring, the electric vehicle ecosystem is the most promising business that Vingroup has ever launched, along with their well-established business line which is real estate. “It is worth trying,” Mr Vuong said, “all the new production and business areas of Vin in the past 5 years have been accumulating to converge on electric car manufacturing – VinFast”.  Thanks to determined and aggressive actions from the Chairman of Vingroup, the electric cars of Vinfast have gradually put its name on the map with flattering compliments from international counterparts. 

Heading to the American market…

Vinfast is heading its way to one of the most fastidious markets in the world – the USA. The reasons behind this expansion affirm Vinfast’s outstanding and visionary strategic vision. 

When it comes to EVs, the USA is one of the early pioneers. According to the International Energy Agency (IEA), President Joe Biden’s administration strongly commits to reducing a considerable amount of traffic emissions into the environment. In this way, by 2030, President Joe Biden expects that 50% of sold cars in the USA are zero-emission vehicles. Under strong directives, the USA manufacturers in EVs are in bloom, notably Tesla, and Porsche, among others. In short, the USA is showing its biggest favour to EVs compared to other global counterparts. Thus, this is such a one-of-a-kind for foreign investors like Vietnam to take a bold chance. Vinfast is catching with no misses. 

Additionally, the EV infrastructure in the USA has been well-established and continuously upgrading. The New York Times reported that the Government has devised a comprehensive plan for EV infrastructure development with a total value of up to 2.000 billion USD, part of which contributes to constructing EV charging systems. Further, according to CNBC, recently, President Biden promised to invest 400 billion USD in clean energy, including battery technology and electric vehicles. The Government, therefore, is determined to tackle climate change by motivating its people to use EVs instead. This creates a favourable environment for foreign investors to base their manufacturing plants in the country. Hence, Vinfast has taken a swift but firm move-in EV manufacturing in the US. 

What sets the EVs in the USA apart lies in the developed skill level of electric vehicle manufacturing workers. The automobile industry is playing an important role in job creation for the US workforce. Therefore, for many years now, the US has been actively improving the skills of workers in automobile manufacturing (The Center for American Development – CAP). Seeing this as an advantage, Vinfast is on its way to establishing an EV production plant in the USA. The Vice President of Vingroup and General Director of VinFast Global – Mrs Le Thi Thu Thuy informed that VinFast has signed a preliminary agreement on an initial investment of 2 billion USD to build an electric vehicle and battery factory in North Carolina. In addition, to encourage the development of EVs, the US Government has also approved and issued diverse tax-incentivized policies for EV manufacturers. In the case of Vinfast, the company will receive a tax incentive of 20.5 million USD from the North Carolina State Government. Mrs Le Thi Thu Thuy also shared: “Locating the manufacturing plant in the US will help VinFast proactively supply, stabilize prices and shorten the supply time. As a result, VinFast’s electric vehicles will become more accessible to customers, contributing to the realization of local environmental improvement goals.”

Overall … 

The current success of Vinfast has been attributed to various elements, products, strategies, marketing, and policy-insight, among others. This Vietnamese car brand name has become the nation’s pride and is spreading its impact and offering inspiration to the ambitious younger generation. However, this is just the beginning: Vinfast has a long way to go to achieve its goals. What we can tell now is that Vinfast has had a resounding debut, laying a solid foundation for its great long jump. 

Opportunities are still wide open and equal for any investors. The question is Why not now? With assistance from a seasoned leading firm in the industry, you will be guided through the process of starting up a business in a foreign environment. Let us be your companion and help you along the way!

Related posts

Doing Business

New Decree 02/2022/ND-CP guides the Real-Estate Business Law

Since the Real-Estate Business Law was in effect in July 2015, the Vietnam Government has issued several legal documents to support the implementation of this ...

Read more
Doing Business

Real estate M&A of Vietnam in 2022

Real estate M&A deals are getting increasingly popular in Vietnam, yet there is still more work to be done from the Government and Vietnamese businesses ...

Read more
Doing Business

Top translation agency in Vietnam

Viettonkin Translation – a subsidiary of Viettonkin Joint Stock Company – is well-positioned as a professional translation agency in Vietnam with a wealth of experience ...

Read more
Doing Business

Translation service in Singapore

Singapore is the convergent point of diverse cultures and ethnicities. Hence, Lion Island is a multilingual nation with about four official languages, including English, Tamil, ...

Read more