Brace yourself, America; VinFast is on the way.
The Vietnam-based electric vehicle maker is taking the slow boat to California as it sends its first batch of 999 VF 8s, the company's 5-seater electric SUV, to America aboard the Silver Queen, a Panamanian charter ship.
The Silver Queen is expected to arrive in the Golden State about 20 days after departing from MPC Port in Haiphong, Vietnam.
The company, which held a ceremony to mark the occasion on Nov. 25., said the first VinFast customers in the US can expect their cars by the end of December.
“The export of the first 999 VF 8s is a significant event for VinFast and Vingroup and a proud historical milestone for the Vietnamese automotive industry," Nguyen Viet Quang, vice chairman and CEO of Vingroup, said in a statement. "It affirms that Vietnam has successfully produced high-quality standards electric vehicles that are ready to compete in the international market."
The news of the shipment follows the company's Nov. 17 announcement at the Los Angeles Auto Show, where VinFast said it had received an order from Autonomy, the nation’s largest electric vehicle subscription company, for more than 2,500 VF 8 and VF 9 vehicles.
Established in 2017, VinFast is part of the VinGroup conglomerate, which was founded by Pham Nhat Vuong, Vietnam's first billionaire.
"The VinGroup has a lot of resources and they are investing those resources to enter the American and European markets," said Tung Bui, information technology management professor with the University of Hawaii at Manoa's Shidler College of Business.
Filling the Void
Bui said it was too early to tell how VinFast will fare in the U.S., "but they have followed the marketing strategy of Hyundai when it entered the U.S. market in 1986:"
"There is currently a void for affordable luxury EVs and VinFast is trying to fill this void with an entry point of $45,000," he said. "They also have an aggressive second-to-none warranty service: 10 years or 200,000 whatever comes first. This is a strong signal of quality."
Bui said that the company's timing is good, since battery technologies are getting better and cheaper.
"In the domestic market, VinFast is rolling out a line of electric motorcycles," he said. "Vietnam is still recovering from Covid, the economy has nicely return to full production, and they are benefiting from the US-China trade war, with many factory relocating from China or developing in Vietnam."
Vietnam’s economic recovery accelerated over the last six months on the back of resilient manufacturing and a robust rebound in services, according to a World Bank study.
The report said the recovery is facing such risks as growth slowdown or stagflation in main export markets, further commodity price shocks, continued disruption of global supply chains, or the emergence of new COVID-19 variants.
VinFast said in July that it had received a $1.2 billion incentive package from the State of North Carolina for its electric vehicle manufacturing facility at the Triangle Innovation Point in Chatham County.
The facility will cover 2,000 acres, with sections for electric cars and buses production and assembly, and ancillary industries for suppliers. The factory is designed to reach the capacity of 150,000 vehicles per year.
Closer to Customers
"While VinFast has a production facility in Haiphong they believe the investment in the NC plant positions them to compete more effectively in the U.S. against Tesla and other EV manufacturers,” said Michael Goldberg, a professor with the Weatherhead School of Management at Case Western Reserve University. "It reminds me a bit of Honda's decision to open a production facility in Ohio in 1982 to get closer to customers here."
Goldberg said "it will be a challenge for VinFast to control costs in the US as opposed to manufacturing in Vietnam but they think it is a risk worth taking."
"Like many conglomerates in Asia, VinGroup is involved in quite a few businesses and have deep pockets," he said. "So VinFast is not a thinly capitalized startup in the EV space. They can count on support through VinGroup as they go through their capital intensive market launch in the U.S."
In September, VinFast Chief Financial Officer David Mansfield said the company is looking to conduct its U.S. initial public offering sometime in 2023, according to Bloomberg, which would make VinFast one of the first Vietnamese companies to be traded on an American market.
Ivan Small, associate professor of anthropology and international studies at Central Connecticut State University, wrote last year that many auto companies "ranging from Peugeot to Isuzu have entered and subsequently exited the US auto market," and startups have an even harder time.
Growing a Global Presence
VinFast's "investment in the American market demonstrates the company’s commitment to succeed by growing a global presence," Small said in an article posted by the ISEAS–Yusof Ishak Institute, a research institution under the scope of the Ministry of Education in Singapore.
"By focusing on electrical vehicle sales in America, VinFast sees an opportunity to leap frog into a transition market where industry leaders are no longer necessarily established original equipment manufacturers," he added.
Small said Vinfast sees competition with companies like Tesla (TSLA) as well as many others, such as Amazon (AMZN) backed Rivian (RIVN),, "that are banking that they can attract new customers based on experimental innovation and competitive price points."
"New technologies often attract younger buyers willing to try brands that are not yet established," he added.
Small said that "rather than focusing on access to next door China, the world’s largest auto market, Vingroup has turned to the second largest, yet 'original, global auto market – the United States, to establish international brand recognition."
He cited several likely reasons for this strategy, including ongoing Vietnam-China political tensions, "the historical complications for foreign automotive companies depending on Chinese joint venture partners, and the Chinese government’s sensitivity to green vehicle competition, a key industrial development sector that has received strategic support from Beijing."
