Inside VinGroup's Bold Plan to Sell Americans Electric Cars

Mike Letterman

Jul 22, 2022, 11:57 PM
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The Red River Delta is home to the world's most ambitious electric-vehicle upstart. Outside VinFast's plant by the port city of Haiphong, fishermen in conical hats still plumb mudflats for grass carp and tilapia, while inside, each car negotiates an overhead ergonomics conveyor assembly line. The gauntlet of 1,250 robot arms twirled like pneumatic ballerinas, adding some 3,000 components and rivet wielding after rivet in a flurry of sparks.

The machinery here is top of the line. 98% of welding is done using machines. The capacity is a lot. The facility is able to assemble multiple models on the same line. Half of the site is under the South China Sea because it was reclaimed from the waves in just 21 months.

The Biden administration is trying to kick start the electric vehicle race.

Not even the Mountain View, Calif., giant can keep up with the EV maker's fast pace. Building cars in two years was thought to be impossible at the beginning. She says that some people called them crazy. We launched three car models.

The global EV market was valued at $185 billion in 2021, and is expected to reach $980 billion by the year's end. VinFast is not the only one who craves that pie and is targeting the U.S. and European markets. It needs to either get gasoline-car drivers to switch over or it will fail. Even though China accounts for half of the global market for electric vehicles, it hasn't tried the U.S. despite spending tens of millions of dollars on feasibility studies.

When it comes to the EV industry, skeptics are right. One startup is able to steal a march on rivals when its funding round is over. The U.S. industry is now worth $750 billion, and legacy autos are starting to look at a market whose importance is soaring alongside global oil prices. How does a parvenu from the backwaters of Vietnam think they'll be able to compete?

It's a big challenge. The parent firm of VinFast is Vin Group. Vin Group is the largest conglomerate in Vietnam and has a market value of over $23 billion. Its revenue accounted for 2% of the nation's GDP in 2020. Huong Le Thu is the principal fellow at the Perth U.S. Asia Centre. This is the largest building in Vietnam. Now you can do everything with VinGroup, it's overwhelming.

It is close to a state for the upscale. A well-to-do Vietnamese can be born in a VinMec hospital, study at a VinSchool, live in a VinHome, shop at a VinCom mall, graduate from Vin Uni, and maybe even become one of the leviathan.

They can commute in a VinFast electric car, which has emerged as the vehicle for the firm's ambitions to jump from domestic to international. VinFast bought a GM factory in Vietnam in June of last year and began producing its first gasoline VinFast vehicles less than a year later. The initial offerings were ciphers of Western brands, specifically the Chevrolet Spark compact and the BMW 5 Series sedan. They were hugely popular because of clever marketing and low costs. The learning steps were important.

VinFast will be exclusively manufacturing EV's. A $4 billion factory will be built in North Carolina, and the company is looking for a European plant. The site in Chatham County will be able to produce 150,000 electric vehicles a year in the summer of 2024. It is the largest foreign direct investment in the state's history and shows VinFast's ambition to become one of the top global EV makers in five to 10 years. We believe that we can be as good as anyone else. VinFast opened its first six overseas showrooms in California on July 14. The VF7 and VF8 are sleek looking SUVs. Michael Dunne, founder of the ZoZoGo EV market intelligence firm, said after a test drive that it was a good car. The US market is not for the faint hearted.

The electric vehicle transition depends on the amount of lithium in the car. This is also in short supply.

VinFast wants to lure American EV shoppers with a 10-year warranty and a sticker price that doesn't include the cost of the battery. Buyers will be able to lease batteries from the company for a fee. Vin-Fast swaps in a new one if the battery life goes down to 70%. Yale Zhang, an auto-industry analyst based in Shanghai, says investors like this kind of business model. You need to find more batteries to make it work.

There is an extremely competitive field. VinFast has more pockets than many new entrants into the EV market. VinFast has been funded by Vin Group and has assembled a leadership team from firms like Ford, GM, and BMW. The styling is by Pininfarina, the dashboard displays are byLG and the batteries are by SAMSUNG. "We leased intellectual property from BMW, and so that immediately became the standard we worked to," says the VinFast deputy CEO in charge of manufacturing.

Some of the firm's champion are quite influential. The latest example of Biden's economic strategy was VinFast's U.S investment plans. VinFast says it had almost 10,000 pre-orders from customers in the U.S. within a matter of days. We joke that President Biden is the best salesman we have ever had. There is more to come, it doesn't stop there. When she attended the SelectUSA investment conference in June, she was happy to hear that most of the speech was dedicated to VinFast. The level of support from the U.S. government has astounded me.

The economic and strategic priorities of Hanoi aim to turn Vietnam into an upper-middle-income economy by 2030. and a high-income economy by 2045 by enhancing advanced manufacturing-capabilities. The majority of the phones sold in the US are assembled here. The priority of the politicians in Hanoi is to build strong local players. Le Hong Hiep is a senior fellow at the ISEAS- Yusof Ishak Institute in Singapore.

The oldest of three children who grew up poor in Hanoi, with his mother running a tea stand and his father serving in the Vietnam army, is at the center of this ambition. He received a scholarship to study engineering at Moscow Geology University. He set up a restaurant after the fall of the Soviet Union. He diversified into instant noodles that were flavoured with spices from his homeland and exported to 29 countries. Soon after, fortune followed. In 2010, he sold his company for $150 million and returned to Vietnam ready for a new challenge.

The VinPearl beach resort was his first venture in the country. A flurry of plush real estate developments followed, including Ocean Park, a complex of 45,000 villas and apartments around an artificial sand and seawater beach in centralVietnam. Vin Group has urban complexes and shopping malls in Vietnam. Business decisions that were bold and quick were developed by Vuong. The Pandemic took hold in January 2020 and Vin Groupnixed a venture into airlines.

The overseas expansion of VinFast provides protection for Vuong, who is a member of the Communist Party. The purge of wealthy tycoons has gathered pace since the younger brother of Vuong was sentenced to three years in prison for taking bribes. If he succeeds in the U.S., it will strengthen his bargaining power in Vietnam and enhance his political status.

A champion of women in a region where sexism is rife, Vuong is known for shunning the spotlight and demanding high standards. Vin Group has six vice chairpersons, four of which are women, including Thuy, who joined Vin Group from Lehman Brothers, where she was vice president. "We only do things that have a big social impact." Huong is one of those visionaries. You could compare him to another person.

It is obvious that it is a comparison given the focus on electric vehicles. Vin Group sold off its convenience store chain. VinSmart, the Vin Group's consumer-electronic arm, was shut down in May of last year despite having secured over a third of the domestic market for smartphones.

The group's VinPearl resort on Hon Tre Island became an engineering hub during the Pandemic. The VinFast engineers and their families lived on the island from May to October of 2021. The VinFast chief deputy of power train and a Ford veteran said that they had the golf course to occasionally play on. The differences of Vin Group's style became apparent here. I have direct communication with our CEO instead of waiting for layers of local, regional, and international management to greenlight decisions. The approval layer is not very thick.

It is symbolic that the hub for his new venture was his first venture since returning from Ukraine. Given his ties with both Russia and Ukraine, his perspective on the February 24 full-scale invasion has been subject to a lot of speculation. A close friend of the man says he is devastated by the war in Ukraine. Vin- Group helps arrange visas for Russians who have faced restrictions in Europe.

Vietnam's government has a long history of security in maintaining relations with all great powers and is wary of offending the north. According to Alexander Vuving, a professor at the Asia Pacific Center for Security Studies in Hawaii, Putin's invasion of Ukraine was seen as validation of Vietnam's approach to China. The lesson of Kyiv flirting with the West was that it jeopardized the nation's security. Their position is very similar to China's.

The cost of China's embrace of Putin is rising quickly.

It has been buffeted by the invasion. Vietnam abstained from the U.N. motion to condemn Russia for its invasion. Investments like VinFast's North Carolina factory that build goodwill in the U.S. Congress offer a welcome counterbalance to Vietnam's leaders.

VinFast's investment in the U.S. is in line with Vietnam's objectives of boosting ties and balance trade with the U.S. VinFast's US IPO is possible only with the explicit approval of the Communist Party of Vietnam. TheVietnamese government has been very supportive.

The U.S position is underpinned bygeopolitics. Even though China and Vietnam are both ruled by communists with little respect for rule of law or human rights, the White House wants to cement ties in the Asia-Pacific. According to the 88 Project, a rights watchdog, Vietnam currently holds at least 208 political prisoners.

The main difference is that China wants to challenge the U.S. on the global stage. The American interests from Europe to the Pacific, Latin America to Africa were undermined by the President's support of Putin. The America Competes Act was passed by the House of Representatives in February. One top State Department official tells Time that if you are the leader of China, you have to make the world safe.

Vietnam harbors a lot of ambitions, but they are mostly for its own neighborhood. Vietnam is cooperating with the United States in order to compete with the United States. Vietnam and Beijing often clash over islands in the resource-rich South China Sea, and memories of China's invasion of 1979 burn brighter than those of the US. The approval of the U.S. in Vietnam is at an all time high.

Knowing it's place in the world is what makes it comfortable. Over the past century, Vietnam has defeated French, American, and Chinese invaders. Vietnam is known as the toughest little guy in a rough neighborhood. Can it compete with the might ofTesla? It may not have to because of the size of the EV market. According to S&P Global Mobility's principal analyst, the real competition of EV's like VinFast aren't withTesla. Internal combustion engine owners are the real competition.

VinFast and Vietnam think they can. On a cruise for VinFast investors tracing the jagged limestone karsts of northern Vietnam's Ha Long Bay, a musician in silk ao dai strums a whining version of the Eagles' "Hotel California" on the single- stringed zither. There is a scene that shows where this Southeast Asian nation wants to be. If you will, the next South Korea will be an ambition that feels explicit. Many people in Vietnam are proud of VinFast, and they want us to succeed. Vietnam has a red star.