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Vietnam’s response to Tesla has America in its electric sights By Reuters

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© Reuters. A worker works at the VinFast factory in Hai Phong city

By James Pearson and Phuong Nguyen

HAIPHONG, Vietnam (Reuters) – Get over Tesla (NASDAQ :), how about a VinFast?

That’s the proposal offered by the auto arm of Vietnam’s largest conglomerate, Vingroup. It is betting big on the US market with its VinFast line of cars and hopes that electric SUVs and a battery-leasing model will be enough to alienate consumers from local market leaders like Tesla and General Motors Co (NYSE: ).

A recent arrival on the auto scene and No. 5 in Vietnam, VinFast is not lacking in ambition, with its sights set on listing in the United States and a valuation of up to $ 60 billion, according to two sources familiar with its plans.

It will launch in North America and Europe in 2022, CEO Nguyen Thi Van Anh told Reuters, joining a crowded field of gamers looking to compete with Elon Musk’s Tesla, including a string of losing upstarts fueled by a madness of fundraising on Wall Street.

“We are going to North America, the United States, Canada and Europe at the same time. In Europe, we are going to Germany, France and the Netherlands,” Van Anh said in an interview at the company’s sprawling factory complex near the North. Haiphong port.

Behind VinFast is Vingroup, Vietnam’s answer to a South Korean chaebol or general conglomerate. Founded as an instant noodle business in post-Soviet Ukraine, the company’s track record has mirrored that of Vietnam, one of Asia’s fastest-growing economies, with interests spanning real estate, resorts, schools, hospitals, and smartphones. .

Even with such formidable local backing, VinFast has a lot of work to do as industry giants like General Motors, Toyota, and Volkswagen (DE 🙂 spend tens of billions of dollars to develop electric and driverless vehicles.

Founded in 2017 with a team led by former General Motors Co executives, the company aims to compete on vehicle size and price, launching an electric SUV that Van Anh described as “more luxurious” than those currently on offer.

VinFast cars will also come with a battery lease scheme which means that the cost of the battery, one of the most expensive components in an electric car, will not be included in the final price.

“I’m going to give you a better product. I’m giving you an SUV. I’m giving you a more spacious car,” said Van Anh, who will move from Hanoi to Los Angeles next month to lead VinFast’s US operations. .

According to a presentation prepared by the company for potential investors, Vin Fast cars will be cheaper compared to other electric vehicle (EV) models.

A Tesla SUV sells for around $ 50,000, but Van Anh, who declined to discuss potential competitors, was not attracted to the asking price of a VinFast SUV. Two of the company’s three electric models are destined for the United States, where the company is targeting annual sales of 45,000 cars, he said.


There is a precedent for Asian automakers making their way into the US market. Toyota in the 1970s and Hyundai in the 1980s overcame initial skepticism with products that ultimately stole market share from American manufacturers.

VinFast, which achieved annual sales of around 30,000 units last year in Vietnam and has yet to turn a profit, faces an uphill battle.

“Their biggest challenge is convincing consumers that they have a strong product and a compelling value proposition,” said Bill Russo, director of Shanghai-based consultancy Automobility Ltd and a former Chrysler executive.

“The product itself appears to have the right look and feel, but this will only get you in the game. Winning requires a technology or business model that outperforms the competition.”

The company is betting that its battery leasing scheme, where customers would pay a monthly amount roughly equivalent to what the average consumer could spend on gasoline, will win over American customers.

When the battery, which uses South Korean Samsung (KS 🙂 SDI cells, reaches 70% of its full life, VinFast will replace it, Van Anh said.

A similar scheme has already been implemented in China by electric vehicle maker Nio (NYSE :), backed by Tencent, whose ES6 SUV has a starting price of around 358,000 yuan ($ 55,272).

No electric vehicle maker can compete with Tesla in the near future, according to Michael Dunne, chief executive of automotive consultancy ZoZo Go, pointing to the overall strengths of the American company.

“But the good news is that companies like VinFast don’t have to beat Tesla to win. All they really need to do is convert a portion of the 65 million consumers who bought gasoline cars in 2020 to switch to electrics.” He said. Dunne.

VinFast, whose Vietnam manufacturing plant has the capacity to produce 250,000 cars a year, plans to do most of its US sales online, eliminating the need for a costly dealer network. So far it has received 15,000 pre-orders for its VF (NYSE 🙂 e34 electric car in Vietnam.

The company has hired Jeremy Snyder, a 10-year Tesla veteran, as its US Director of Growth.

Snyder told Reuters he was VinFast’s first employee on the ground in the United States, but among full-time employees and consultants, the company now has about 100 people working there.

“It is very exciting to bring Vietnam and the United States closer together through VinFast,” he said.


Vingroup founder Pham Nhat Vuong, Vietnam’s richest man, has pledged to invest $ 2 billion of his own money in the auto division and Vingroup has invested hundreds of millions of dollars in VinFast by issuing bonds. international markets and the sale of shares in other units.

But expansion over the years has raised Vingroup’s debt and losses at some of its companies have reduced its cash flow. To fuel its growth, VinFast will need more cash. The company is looking to take advantage of a funding frenzy in the United States, where investors, including some of the world’s largest money managers, have invested billions in auto startups through blank checking companies known as companies. Special Purpose Acquisition or SPAC.

Three sources with direct knowledge of the plans said VinFast was leaning toward a SPAC, although Van Anh declined to comment on when or how the company would generate funds in the United States.

Officials from the US Securities and Exchange Commission will visit Vietnam soon to meet with Vingroup executives about their efforts to list, two independent sources said. If VinFast is listed in the United States, it will be the first Vietnamese company to do so. “When it happens, how it happens, whether by SPAC or another method, we will make the right decision at the same time,” Van Anh said.

There are hundreds of SPACs looking for companies to go public, and investors are desperate to identify the next Tesla, whose stratospheric market rally has made Musk one of the richest men in the world.

Nio, which had a net loss last year of $ 860 million, has a market capitalization of about $ 67 billion, according to its New York Stock Exchange listing and sold just under 44,000 cars last year, close to what that VinFast targets in the United States. .

A stream of EV-related startups posted multi-billion dollar valuations last year despite having no products ready to sell, but their shares have taken a hit recently.

VinFast likes to distinguish itself from other EV startups.

“If you look at some of the SPAC deals that have already happened, they really don’t have what we currently have,” Van Anh said.

“Even if we don’t have a product on the world market, we have it here.”

($ 1 = 6.4771 renminbi)

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