VinFast has two years of mass production capacity, three years of squeezing into Vietnam's top five car companies, five years of global development speed is almost "Great Leap Forward", but the biggest hidden danger behind overextending is still losses.
Text | Qian Boyan
Relying only on two or three pure electric models in the domestic market to beat Toyota and Ford to a retreat, the richest man in a country has invested heavily to get rid of the international manufacturers and is known as the light of the national automobile brand, and actively enters the Major Western automobile powers such as the United States, Canada, and France, and the valuation is close to the "Tesla killer" Rivian.
It is not Weilai Automobile, which has been laid out in Norway and Germany, but VinFast, a new car-making force in Vietnam.
VinFast of the global strike
On March 30, local time in the United States, VinFast, a new vietnamese car-making force, announced that it will invest $2 billion to build a new automobile plant in North Carolina, USA, for the production of electric vehicles and power batteries of the brand. The plant is planned to have an annual production capacity of 150,000 units, the main models are VinFast's two SUVs VF 8 and VF 9, and will create at least 7,000 jobs in the local area, and is expected to start production by July 2024.
Currently, VinFast has signed a Memorandum of Understanding with the Government of the State of North Carolina. In the memorandum, VinFast also plans to invest an additional $6.5 billion in the future, and has the opportunity to further expand the annual production capacity of the North Carolina plant to 250,000 units, and the number of jobs will rise to 13,000. The North Carolina Economic and Investment Commission has approved nearly $850 million in incentives for this purpose.
Le Thi Thuy, CEO of VinFast, who attended the ceremony on the same day, said: "With its production facilities in the US market, VinFast can better stabilize prices and shorten product delivery times, making our electric models more acceptable to customers. ”
VinFast's boldness even alarmed Biden, who was far away in the White House. Biden posted on social media on the same day praising Vietnam's investment and saying that the investment was the latest achievement of his economic strategy during his tenure.
In fact, VinFast, just five years old, set up its U.S. headquarters in Los Angeles last November. Like China's new car-making powers, although the so-called U.S. headquarters is essentially only responsible for sales and import and export trade, the announcement of a factory in the United States is indeed an important step. Still, VinFast's "ambitions" are clearly not limited to the United States.
On January 6 this year, Li's Qiushui made it clear: "The era of relying on shipping to deliver cars has ended, especially in the context of the global epidemic." In order to win customers, it is necessary to keep the production site close to the sales market. We are convinced that we can have a place in the European market, especially when the electrification transition in Europe is already very clear. ”
Just as Tesla has set up its European factory in Germany, the continent's largest power, VinFast has also decided to build a new electric car factory in Germany. At present, the Vietnamese side is negotiating with the German Foreign Trade and Investment Agency, and it is expected that Lower Saxony, where Volkswagen's headquarters is located, has a greater advantage.
As early as July 2018, VinFast opened a German branch in Frankfurt and a European branch in Paris shortly thereafter. According to VinFast's plan, it will set up flagship stores in many European and American countries, including the United States, Canada, France, Germany, the Netherlands, the United Kingdom, and Spain.
VinFast's ambition and confidence in expanding overseas can also be seen in the models it mainly promotes.
The two SUVs, the VF 8 and VF 9, are the highest-end models in the VF series. The VF 8 sells for VND1.05 billion to VND1.237 billion in Vietnam depending on the Eco version or the Plus edition, while the VF 9 Plus version fetches VND1.57 billion. In overseas markets, in Germany, for example, the price of the VF 8 and VF 9 is expected to be as high as 43,900 euros and 58,600 euros.
In contrast, the Volkswagen ID.3 of the ID.family costs 36,900 euros and the ID.4 costs 38,900 euros; in the Tesla product line that has just been officially put into production in Berlin, the Model 3 basic model costs 46,500 euros and the Model Y base model costs 59,900 euros. The NIO ES 8, which has just entered Norway, sells for as low as NOK 609,000 (62,500 euros).
Considering the VF 8 Plus version's 5.5-second 100-kilometer acceleration, 90 kWh battery capacity, 504 km cruising range and a maximum power output of 300 kW, the pricing strategy of the VinFast model can at least not be described as "civilian".
Perhaps the biggest key to supporting the premium of VinFast models is its technology company and the positioning of "Asia's Little Tesla". It was at CES, the consumer electronics show in Las Vegas earlier this year, that VinFast brought three models in one go: the VF 6, the VF 8 and the VF 9. At the Los Angeles Auto Show last November, VinFast released the VF 8 and VF 9 globally, and played the slogan of "The Future of Mobility", which is enough to show that VinFast attaches great importance to the US market.
VinFast started with real estate
While VinFast is happily touting its debut at cess, the consumer electronics show, and its official website and corporate image are benchmarked against Tesla's, VinFast's history has nothing to do with cars.
If you want to find a few labels on VinFast, it may not be appropriate to call it the Southeast Asian version of "Wei Xiaoli". On the contrary, VinFast is more like a collection of Evergrande Automobile, Zotye Automobile and Qoros Automobile - the parent company behind VinFast is VinGroup, vietnam's largest private enterprise, which started with real estate, VinFast only started by OEM and parts business at the beginning, and VinFast is also full of a bunch of "foreign monks with high salaries and good chanting".
One of the most critical roles is undoubtedly Pham Nhat Vuong, Vietnam's richest man. Pan Riwang lived in Moscow and Kharkov, Ukraine, for many years as a public Soviet student, and founded VinGroup (Wenner Group) while studying in Kharkiv.
After VinGroup officially returned to his hometown of Hanoi, Vietnam in 2000, Pan Ri Wang began to quickly enter all walks of life such as real estate, supermarket retail, tourism and entertainment, life and health, and smart phones, and was successfully listed on the Ho Chi Minh City Stock Exchange in 2007, and Pan Ri Wang himself successfully became the richest man in Vietnam.
Like all the richest people looking to become big, Pan Riwang quickly set his sights on the auto industry. But unlike some companies that build cars only to cheat or hoard land, before Pan Riwang entered the automobile industry in 2017, there was not even a real national automobile company in Vietnam, and Pan Riwang's newly established VinFast also set up a factory in Gehai County, a rural area of HaiPhong City, where birds don't.
At that time, VinFast, who had nothing but a good boss, quickly received the full support of European and American car manufacturers.
Just as Qoros' design team wouldn't say Chinese, VinFast's first models (LUX A2.0 and LUX SA2.0) were designed entirely by Pininfarina in Italy, BMW in Germany and Magna Steyr in Austria, and successfully participated in the 2018 Paris Motor Show.
In addition to the "tone" of the European design team, VinFast also needed the commercial ability of Americans. In the same year, VinFast successfully established a partnership with Chevrolet and acquired ownership of GM's Hanoi plant, and VinFast could choose to license production, OEM sales, or sell under the VinFast brand.
At this point, VinFast's model was still a far cry from an electric car. For example, the core of the power system of its first model, lux A2.0, is actually the BMW BMW N20 turbocharged engine that was discontinued in 2017. It was not until 2018, with the help of Germany's Siemens, that VinFast obtained the qualification for the production of electric bus parts in Southeast Asia, and only then did it touch the threshold in the field of electric vehicles.
Relying on these internal combustion engine OEM vehicles, VinFast announced an annual production capacity of 250,000 units at the end of 2018, becoming the first national automobile brand in Vietnam's history to have mass production capabilities.
VinFast, who has found the "patriotic card", quickly took advantage of this to be invincible in the field of public opinion, and its most classic marketing case is to promote the 2020 F1 Vietnam Grand Prix as a title sponsor and a national enterprise – although the Vietnam Grand Prix was later blown away due to the epidemic and suspected corruption. That same year, VinFast, just two years old, squeezed into the top five of Vietnam's auto sales charts, behind Hyundai, Toyota, Kia and Honda.
Entering 2021, VinFast still recorded a 54.4% sales growth in the overall shrinking vietnamese car market (35,700 units per year, and a total annual sales volume of 383,000 units in Vietnam), and its VinFast Fadil became the best-selling model in Vietnam, while the sales of Japanese and Korean brands declined across the board. VinFast has also managed to continue to narrow its distance from international automakers, with annual sales of Hyundai's 70,500 units, Toyota's 69,000 units and Kia's 45,000 units also mean that VinFast will almost certainly enter the top three of vietnam's auto market this year.
Is the global VinFast a success, or a helpless one?
Considering that VinFast actually has only 4 models (all fuel vehicles) on sale, VinFast's fourth place in Vietnam is enough to be called a success.
But VinFast and Phan Ri-Wan's ambitions are clearly not limited to Vietnam, a population of just 97 million.
Perhaps it is the realization that Vietnam's domestic market is too small to form economies of scale, or perhaps Pan Riwang's life experience is full of legends of bigger and stronger, or it may be that VinFast, which has suffered heavy losses, needs a more moving capital story. After all, the manufacturing unit of VinFast's parent company, VinGroup, lost VND23.9 trillion (about US$1 billion) in 2021, of which VinFast lost $284 million in half a year, which VinGroup blamed on poor sales of fuel vehicles in Vietnam.
According to the strategic planning of VinFast and VinGroup, 2017 to 2019 is the founding stage, 2020 and 2021 are the acceleration phase, and 2022 is the globalization phase. The acceleration phase refers to the cessation of the development of fuel models and the development of VF series electric models.
In 2021, VinFast launched its first electric model, the VF e34, and extended the VF 5, VF 6, VF 7, and VF 8 and VF 9 models that have already appeared in Las Vegas, covering a variety of models from A class to D class. In addition, VinFast plans to build more than 2,000 charging piles in 63 provinces and cities in Vietnam, and invest $170 million to build a new power battery plant in Ha Tinh Province, central Vietnam.
VinFast has two years of mass production capacity, three years of squeezing into Vietnam's top five car companies, five years of global development speed is almost "Great Leap Forward", but the biggest hidden danger behind overextending is still losses. The huge loss of VinGroup mentioned earlier is actually not all, Pan Riwang, who has an obsession with the automobile business, has actually sold the group's smartphone business and the retail business in order to build a car, while the rest of the gap relies on the income subsidy of the real estate industry in Vietnam's booming housing market.
Although Pan Riwang's strategy of relying on housing to raise a car is more conducive to the real economy than the model of gambling real estate on automotive industrial land, the Ho Chi Minh City Stock Exchange, which has an extremely limited volume, is obviously unable to support VinFast's capital pie. Expanding overseas and attracting the attention of European and American capitals in order to obtain overseas listings are among the few options for VinFast's further development.
Telling stories to European and American capital is also the most important reason why VinFast is eager to switch to the electric vehicle track, and it is also the root cause of VinFast's must announce its electrification strategy at CES in Las Vegas.
This can be seen in the company's CEO Li Shiqiushui's previous statement on the IPO. Lai estimates that VinFast will be valued at between $25 billion and $60 billion after its U.S. listing, and is also in talks with potential investors about raising billions of dollars in bonds or equity. The valuation given by Li Qiushui is somewhat excessive, which is enough to show how great the impact of being able to tell a good capital story will have on VinFast's future.
In addition, as early as early December last year, VinGroup announced the transfer of its 51.52% stake in VinFast to its Singapore subsidiary. Upon completion of the transfer, VinFast Singapore will own 99.9% of VinFast Vietnam and VinGroup will hold 100% of VinFast Singapore, through which it will indirectly control VinFast Vietnam. This move can undoubtedly be understood as preparation for VinFast's listing in the United States.
Although Lai's Qiushui has not yet made a statement on whether VinFast is listed in the United States through traditional declarations or through SPAC (special purpose acquisition company), considering that the American electric vehicle manufacturers Rivian and Lucid, which do not have a production car at present, once had a market value of 80 billion US dollars by PPT, there are still enough Vietnamese with dry goods
time.
Even though VinFast has been half ahead of the "Wei Xiaoli" in terms of overseas layout, VinFast, which lacks the huge domestic market and capital support, is essentially helpless. However, in the context of the long-term Sino-US competitive relationship and the extremely rapid transformation of the European market, the slow half-beat of the new Chinese car-making forces that are still satisfied with the small trouble in Norway may also mean the rapid closure of the time window.