Chapter 1: Introduction to VinFast

For those who may not have heard of VinFast, it’s a Vietnamese electric vehicle (EV) startup poised to launch its products in the U.S. and Canada by the end of 2022. At first glance, the company may seem like yet another overly ambitious EV startup destined for failure. However, a closer examination reveals significant potential. VinFast operates under Vingroup, Vietnam's largest conglomerate, valued at a substantial $35 billion. Additionally, the company has invested $2 billion in a factory in North Carolina to facilitate its U.S. market entry.

VinFast has only recently garnered international media attention, yet it has been manufacturing vehicles in Vietnam since 2019. This early start gives it a competitive edge over rivals like Lucid and Rivian, who are still grappling with production challenges. Despite this head start, VinFast still faces the daunting task of establishing itself as a credible automaker and overcoming skepticism from American consumers regarding its Vietnamese roots. Thus, the question arises: Can VinFast successfully address these doubts and emerge as a strong player in the EV sector?

Chapter 2: VinFast's Strategy for the American Market

VinFast is keen to attract North American consumers, who represent the largest automotive market globally. Beyond Tesla, many traditional and new car manufacturers in the U.S. are still working to increase their EV production, placing VinFast in a relatively favorable position. The company has also seen encouraging sales at home, with 35,000 vehicles sold in Vietnam in 2021, amounting to 11% of the national market despite having only three years of production experience.

To bolster its U.S. production capabilities, VinFast claims its North Carolina facility will reach a capacity of 150,000 vehicles annually by 2024. Though the plant isn't operational yet, the company has already delivered its first 100 vehicles in Vietnam and plans to ship 5,000 units to the U.S., Canada, and Europe as early as December.

VinFast is developing two key models: the VF8, a midsized crossover, and the VF9, a three-row SUV. The VF8 boasts a range of up to 292 miles, while the VF9 can reportedly reach 370 miles. They have already received 65,000 global reservations, though this is still lower than Rivian's nearly 100,000. This disparity may be due in part to VinFast's limited North American media presence and its unique battery subscription model, which could leave potential customers confused.

Chapter 3: Understanding the Battery Subscription Model

A significant challenge for VinFast is effectively communicating its battery subscription model, which allows customers to buy the vehicle without purchasing the battery outright. Instead, they can lease the battery separately. The first option, a “Flexible Plan,” starts at $35 per month, covering 310 miles of driving, with an additional charge for extra mileage. Given that the average American drives over 1,000 miles a month, this could make the plan less appealing.

The second option is a “Fixed Plan” costing $110 per month for the VF8 and $160 for the VF9. This could result in substantial long-term costs, reaching $13,200 for the VF8 and $19,200 for the VF9 over ten years. While this pricing may seem excessive, it allows for lower vehicle prices initially, with the VF8 priced at $40,700 and the VF9 at $55,500.

However, potential buyers may be deterred by the subscription model's complexity, overlooking the long-term savings from not having to replace the battery. VinFast intends to offer consumers the choice between leasing the battery or including it in the vehicle price by 2024, a move that could make the subscription model more attractive.

As VinFast continues to scale its production and refine its business approach, it remains a promising contender in the EV landscape. With ambitious goals, including profitability within three years and a target of producing one million EVs annually within six years, the company's evolution will be closely watched.

In conclusion, the future looks intriguing for VinFast, and its journey may redefine its place in the global automotive market.