The nation’s newest automaker will open its first showroom next week, Vietnam’s VinFast planning to have 30 company-operated locations operating in California before the end of this year.
The startup is developing a fleet of all-electric vehicles, two of which are initially set to go on sale in the largest U.S. market for battery cars. Eventually, VinFast officials have said, they plan to expand that line-up as they also stretch out into other parts of the U.S. market.
VinFast hopes to gain ground in the expanding EV segment by undercutting key competitors on price while also using a novel approach that will have customers lease their battery packs. The automaker promises to repair or replace packs that either fall or experience a significant drop in range.
California, here they come
Initially, VinFast will open six stores July 14, focusing on the Los Angeles, San Diego and San Francisco regions that are the largest U.S. markets for battery-electric vehicles. The initial showrooms will be based in Berkeley, Commerce, Corte Madera, San Diego, San Mateo and Santa Monica.
Demand for all-electric vehicles has been running at about 15% of total new car sales in the Golden State this year, according to the California New Car Dealers Association. That’s roughly triple the U.S. figure — though overall demand has grown from a national average of barely 1% as recently as 2019. Industry analysts have forecast BEV sales could account for as much as 20% of the U.S. total by 2025.
VinFast was formed in 2017 as a subsidiary of the Vingroup, one of the largest conglomerates in Vietnam. It was founded by entrepreneur Pham Nhat Vuong, who also owns a network of malls, spas, resorts, hospitals, schools and other businesses.
The automotive operation debuted its first product, a modified version of the BMW X5, in 2019. But it announced a major shift in direction during a L.A. Auto Show news conference last November. It is abandoning internal combustion engine technology and will migrate to pure electric propulsion. Two models geared for the U.S. were introduced during the show, with VinFast unveiling three more during the Consumer Electronics Show in January 2022.
The first two targeted for American buyers are the VF-9, a Hyundai Palisade-sized SUV, and the slightly smaller VF-8. The original plan called for deliveries to begin late this year, though VinFast officials have signaled they may push back into 2023. A third model, the smaller and sportier VF-7, is also expected to reach the States in 2023.
“We are a young company but we have big ambitions,” Pham said during an April meeting with reporters and investors at VinFast headquarters in Haiphong, a two-hour drive from the Vietnamese capital of Hanoi.
To back those ambitions, VinFast has announced plans to set up an assembly complex in North Carolina. It will start with a $2 billion assembly plant expected to create as many as 7,500 local jobs. It’s set to begin operations in 2024. Longer term, the budget is set to climb to $6.5 billion and will cover not only production of the VF 8 and VF 9 SUVs, but electric buses, as well as battery cells and packs
Still more BEVs to follow
Two more downsized BEVs are also planned for the U.S. market, though VinFast does not intend to bring its smallest BEV to the States. It began deliveries of that model, the VF e34, late last year.
The VF 9 is being pitched as a near-luxury vehicle and will start at $55,500, while the VF 8 will carry a base price of $40,700. Those figures exclude both delivery fees and the battery lease.
The first-of-its-kind move is meant to reassure customers who might worry about the reliability and durability of lithium-ion battery technology, said Le Thi Thu Thuy, vice chairman of the Vingroup and CEO of VinFast. Customers will have their packs replaced if they develop problems that could include a more than marginal decline in range.
Battery lease options
There will be two leasing options, a basic plan at $35 a month for the VF 8, $44 for the VF 9. Motorists will get up to 310 miles of free use each month. Beyond that they’ll pay an additional 11 cents per mile for the VF 8, 15 cents with the VF 9. The alternate, all-you-can-eat plan will run $110 a month for the VF 8 and $160 for the VF 9.
The leases initially run for three years. After that, motorists will have a choice of either buying the packs or continuing to lease them. Eventually, VinFast plans to offer buyers the choice of leasing or buying the battery pack.
A “dogfight” ahead
VinFast is one of numerous startups hoping to cash in on the shift to battery-electric vehicles. But while a handful have gotten into production, a number of others are struggling — or have already called it quits. With mainstream manufacturers now committing billions to the EV segment, “It’s going to be a dogfight,” warned Joe Phillippi, senior analyst with AutoTrends Consulting.
For his part, Pham acknowledged the challenges during his April news conference.
“I believe we can do it,” he said, although acknowledging there “is no easy or fast way” to success in the U.S. market.
VinFast also plans to enter the European market, where EV demand is growing at a more rapid rate than in the U.S.