Vinfast spots ‘golden’ opportunity to sell electric cars

While there is a major shortage of cars, VinFast has received 4,000 electric car pre-orders for this year out of its plan to produce 17,000 units, said Vuong at conglomerate Vingroup’s annual general meeting.

The company is building a factory in the U.S. with a plan to sell 750,000 units there from now until 2026.

But 600,000 of them will be produced in Vietnam, and the rest in the U.S., as the company strives to make VinFast cars a made-in-Vietnam product.

“The localization rate of VinFast cars is 60 percent, and we aim for it to reach 80 percent,” said Vuong, referring to the ratio of parts manufactured locally versus imported parts.

Some shareholders have expressed concerns about VinFast’s production plans, especially the shortage of materials to produce batteries, like lithium.

Vuong said that other materials are also in short supply, including cobalt and nickel, but Vingroup has been making plans to secure these materials for long-term development, including working with mines to place large quantity orders.

VinFast has not faced issues in materials as production scale so far remains small, but this will be a major problem when operations increase.

Another concern for Vuong is the disruption in China’s supply chains due to its Covid-19 policy, as there are parts that VinFast imports from this market.

A car has 3,000-4,000 parts, and the shortage of one screw could become a major problem, Vuong said.

In the long run, Vingroup is working to attract more manufacturers of car parts and chips to increase the localization rate by giving them free industrial land for 10-15 years.

Shareholders have also expressed concerns about VinFast’s ability to compete with global electric car manufacturers.

Vuong said that he has confidence in the quality of VinFast cars, as they will have the same functions as those of Tesla.

The fact the VinFast leases its batteries instead of selling them to customers will lower the initial price tag, while the company’s after-sales service will also convince consumers to purchase its products.

“We will convince each and every customer of our product quality. I believe this will be a challenge, but we will make it happen,” Vuong said.

Vingroup last year posted its first post-tax loss ever at VND7.56 trillion ($327.63 million) due to rising costs of Covid-19 and its change of strategy from making gasoline cars to electric cars.

The company targets a post-tax profit of VND6 trillion this year, while revenue is set to rise by 11 percent to VND140 trillion.