How VinFast Can Avoid Fisker’s Fate in the U.S.

VinFast, the Vietnamese automaker with aspirations of grandeur as a global BEV maker, is planning to launch an inexpensive battery-electric mini-car in the U.S. market in 2025 that could sticker for between $20,000 and $25,000. That car would follow the introduction of the larger VF8 last year, which has sold in small numbers while garnering big complaints from buyers.

On paper, the proposition to sell a cheap BEV sounds promising as a possible lure to cash-strapped consumers facing average transaction prices of $49,000. But as the bankruptcies of Fisker and Lordstown Motors, and the struggles of Lucid and Rivian, show, successes are not created on paper in the business of selling new vehicles to the U.S. public. Success is built on being well capitalized and having a savvy, experienced management team, patience, attention to product quality and customer service, plus a sound, modern, well-funded, methodical marketing plan.

The company was buoyed this month by receiving around 30,000 non-refundable pre-orders for its VF3 mini-SUV within less than 70 hours of opening an order bank in Vietnam. At just 125.6 ins. (3,190 mm) long the VF3 is almost two feet (0.6 m) shorter than the Fiat 500. That car is being offered in VinFast’s home market for the equivalent of $12,390 for a car with a range of 125 miles (201 km). The car will sell as cheaply as $9,248 in Vietnam with a battery subscription as opposed to owning the battery. A single motor produces 43 hp and 81 lb-ft of torque, drawing power from an 18.6-kWh battery.

VinFast is going with a hybrid dealer/direct sales strategy with VF3. Vehicles were sold on e-commerce platforms such as Shopee, VinID, and orders could be placed through nine livestream sessions conducted by 15 “influencers.”  The cars come with a 7-year/160,000-km (100,000-mile) warranty for the vehicle and an 8-year, unlimited-mileage warranty for the battery.

But selling vehicles in Vietnam where VinFast is a household name has absolutely nothing to do with selling in the U.S., where the company is pursuing a hybrid distribution approach with dealers and direct sales.

As the company is finding out. The VF8 launched last year has been pilloried by the automotive media for excessive body roll and shake and subpar fit and finish, with no shortage of complaints on social media platform Reddit about product quality and lack of customer service solving problems.

VinFast has been offering the VF8 starting at about $45,000, but for a lease rate of $249 a month, with zero down. And still, sales/leases are soft.

Plant Problems

VinFast has agreed to build a $4 billion manufacturing plant in North Carolina to produce 150,000 vehicles per year and received a $1.2 billion incentive from the state. Local PR around the factory has been mixed, with the state exercising eminent domain to buy and demolish 27 homes and a church to make way for the plant. State officials wrote the first check on behalf of taxpayers to VinFast in May 2023, sending the company $16.2 million from a $125 million pot that will be dished out in tranches based on meeting deadlines and performance targets. Additionally, the state Legislature allocated a $375 million investment to improve infrastructure and reimburse VinFast for construction costs.

VinFast posted a net loss of $623 million in the third quarter of 2023, bringing its total yearly loss to $1.7 billion. That comes after losses of $2.1 billion in 2022 and $1.3 billion in 2021. The company has said it hopes to deliver 100,000 vehicles worldwide in 2024. But it delivered just 9,689 vehicles in the first quarter.

Things aren’t adding up. This is a company in a hurry to succeed, which is not conducive to success in the auto industry. VinFast’s schedule and forecast of employment for producing vehicles by the end of 2025 seems like a dream. Compare VinFast’s schedule, for example, with that that of Volkswagen Group-backed Scout Motors, which is well ahead of VinFast in construction at its plant near Columbia, SC. That plant is planned to produce 200,000 vehicles a year and employ up to 4,000 people. After breaking ground last February, Scout hopes to have site preparation completed by the end of this year, with equipment going in in 2025. Manufacturing won’t begin until late 2026, with production ramping up in earnest in 2027. Yet VinFast, which says has gone only as far as building supporting walls for its plant, plans to be in production by the end of next year? Seems like more than a reach.

Fat-Wallet Owner

Pham Nhat Vuong is the owner of VinFast Auto Ltd., through his private conglomerate Vingroup. Vuong is Vietnam's richest man and the chairman of Vingroup. As of April 2024, Vuong had invested $2 billion of his own money into VinFast, including $1 billion in 2023 and another $1 billion pledged at a shareholders meeting. Also, Vuong has also transferred a 99.8% stake in battery maker VinES to VinFast.

He intends to will this enterprise into a viable company. But VinFast, rather than modeling after companies like Toyota and Honda did when they entered the U.S. in the 1960s, feels more like it’s following Fisker, Bricklin, DeLorean and Lordstown.

Here is a 10-point Plan for How VinFast Could Defy the Odds.