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Skilled labour, cheap production costs and strategic location for shipping in the Southeast Asian region have made Vietnam an attractive destination for manufacturing, the sector which is driving the country’s growth. Automaker VinFast is one such company which has established itself in Vietnam and is now making strides in global markets to compete with the likes of Tesla and others.
A unit of the conglomerate VinGroup, VinFast is the sole domestic automotive manufacturer headquartered in Vietnam. Launched in 2017 by Vietnam’s only billionaire Pham Nhat Vuong, the company forayed into the electric vehicles business within the next year to launch electric motorcycles. VinFast launched its first electric cars in 2021, sourcing battery cells from South Korea’s LG Chem.
The small Vietnamese company has now set up shop in the United States and has filed for an IPO with the US securities regulator. Let us look at what makes the company an attractive investment opportunity.
VinFast’s dizzying pace of growth
Before VinFast, there was no domestic passenger car brand available in Vietnam. The company started mass producing its vehicles less than two years after the construction of its greenfield automotive factory in Hai Phong in Vietnam. The 335-hectare plant is a fully digital factory (claims 90% automation) that employs solutions from Siemens to create digital twins of the products, production, and the performance of the product and production.
Shortly after launching its electric car in 2021, VinFast introduced the first electric buses in Vietnam. The company started operations in five markets in North America and Europe during the same year and most recently announced it is going fully electric and introduced several new models at the Consumer Electronics Show CES 2022.
“In terms of production, VinFast is applying automation, using robots and technology to assist and replace human labour. In business, we are developing digital sales platform (e-commerce), virtual reality (VR) applications, livestream sales and more,” Tran Thi Hong Bich, CEO of VinFast EU, said during an interview.
Let us first look at the company’s electric bus business, which first started in Vietnam. Vingroup subsidiary VinBus manages and operates the electric buses in the country, and electric buses are manufactured and assembled by VinFast at its Hai Phong factory. Having a range of 220km to 260 km, VinBus can be fully charged within two hours using a 150kW fast charging station.
Earlier this year, VinFast announced it is exploring setting up a factory in Germany and is working with the Germany Trade & Invest (GTAI) for foreign trade and location marketing. It is being speculated that VinFast will take over Opel’s Eisenach plant to build electric cars and buses. The company has also announced it will open 50 stores across Europe (25 in Germany, 20 in France and five in the Netherlands). VinFast has confirmed the cities it will open stores in as well.
VinFast IPO and US operations
Vietnamese conglomerate Vingroup established a subsidiary in Singapore and transferred its 51.2% stake in VinFast to this unit. The EV-maker had plans to launch its public issue in the US in the second half of 2022, but recent reports indicate that the IPO may be delayed until next year due to market uncertainty.
VinFast’s Singapore-based holding company has filed for an IPO with the US SEC, but Chairman Pham Nhat Vuong recently said that the company is facing issues with sourcing chips and other parts from China due to factory closures in industrial hub Shanghai that had caused a disruption in chip supplies and other parts. The US IPO of VinFast is expected to be momentous as other EV makers that got listed in the country have attracted hefty investments. The IPO of US-american EV-maker Rivian Automobile was 2021’s largest public issue in the US, raising $13.7 bn. Earlier reports indicate that VinFast could raise about $3 bn from its IPO, and expects to have a post-IPO valuation of $25 bn to $60 bn.
VinFast is planning to build a factory in the US by the end of 2024 and is in talks with Credit Suisse and Citigroup to raise $4 bn for setting up manufacturing in North Carolina and fund its US expansion. The EV maker’s North Carolina factory will cover 800 hectares, produce 150,000 EVs per year and potentially create 7,500 jobs for US residents. The company was also pursuing additional incentives from the government and has managed to secure $1.2 bn from North Carolina, the state’s largest incentive package to date.
Separately, VinFast in July 2022 opened its first six stores in California — the previous headquarters of Tesla before it moved to Texas. The Vietnamese automaker plans to open at least 30 stores in California.
Several EV manufacturers are exploring solid-state battery technology, and Toyota is expected to be the first automaker to offer passenger vehicles with the new technology. VinFast has invested an undisclosed amount in Taiwanese ProLogium, a solid-state battery manufacturer, to source the new technology starting from 2024. The two companies revealed that they may establish a joint venture solid-state battery factory in Vietnam.
Earlier this year, VinFast was the lead investor in Israeli EV-battery maker StoreDot’s $80 m funding round. At present, VinFast is manufacturing battery cells in its factory back in Vietnam.
Meanwhile, parent company Vingroup is working with Intel to develop 5G technology and IoT devices for electric vehicles and batteries, along with other business verticals.
VinFast has been hailed as the rising star of Vietnam and has the potential to transform the country’s car industry. It has inked key deals to bridge the technological and skill gaps in Vietnam.
After announcing its plans to go fully electric, VinFast has revealed its two crossover SUVs — the VF 9 and its smaller sibling VF 8 — with the first cars expected to be delivered by the end of the year.
