At CES earlier this year, VinFast announced its all-electric strategy, adding that it would stop producing vehicles with internal combustion engines (ICE) by the end of 2022 — making it one of the world's first automakers to make the transition to pure electric.
“VinFast aims to become one of the leading EV brands globally in the next ten years,” said Madam Le Thi Thu Thuy, VinFast Global CEO. ”As electrification is inevitable, we want to make EV ownership easier by offering reasonably priced premium products and excellent service, while pursuing our mission to create a greener future for everyone.”
The company has also made a commitment to achieve net-zero carbon emissions by 2040 — a decade earlier than the Paris Agreement — after announcing its participation in The Climate Pledge,3 a movement co-founded by Amazon and Global Optimism, a nonprofit dedicated to cutting greenhouse gas emissions.
Part of Vingroup, Vietnam's largest conglomerate, VinFast is emblematic of a massive shift towards industry and services in the Southeast Asian country. As the region's fastest growing economy, Vietnam posted double digit growth this year, propelled by a post-Covid rebound in manufacturing.4
The Vietnamese government is also prioritizing innovation and technological development as a major growth engine, with its digital economy forecast to grow to $52 billion by 2025 from 2020, expanding by almost 30% a year.5 It has committed to fostering digital talent development, creating an entrepreneur-friendly business environment, and expanding the country's digital infrastructure.
From conflict to a pandemic, global shocks have exposed shortcomings in our supply chains in recent years, leading to crippling shortages in vital components such as semiconductor chips. According to a survey by Interos, supply-chain disruption during Covid-19 cost leading US and European companies an average of $184 million a year in revenue.6
This has made it essential for VinFast to control its own supply chain. Earlier this year, it announced that it would invest “tens of millions of dollars” in Taiwan-based Prologium, which will supply it with solid-state batteries for its new range of EVs until 2024.7 Through this partnership, VinFast aims to secure the quantity and quality of its battery supply required to meet the market's demand for high-performance, safe, and environmentally friendly batteries.
However, VinFast is also building its own battery manufacturing plant in central Ha Tinh province, which it hopes will eventually produce up to one million units a year. This policy of self-reliance extends to its vertically integrated Haiphong plant, where components such as electrics and the vehicle body frames are assembled in-house, with key suppliers also located on site.
“VinFast always wants to keep our commitment to high-quality products and speed of production to our customers, so supply chain security is hugely important for us,” said Madam Thuy.
“From the time it was born, VinFast has chosen to establish strategic partnerships with prestigious suppliers to build sustainable supply chains, share access to critical data, and ensure the supply of components with a clear commitment to product output.”
The most important component of an EV is the battery. And VinFast has a unique — and ultimately sustainable — proposition.
It plans to sell two of its sports utility models — the five-person VF8 and the seven-seat VF9 — in the US without a battery. Owners will instead be given the option of leasing batteries from VinFast for a small monthly fee. But once the battery charging capacity falls below 70%, it will be replaced for free.
This subscription program will enable the automaker to monitor and recover old, expired batteries and recycle or dispose of them sustainably.
Maintaining a foothold in developed consumer markets like the US will be a major challenge.
However, VinFast's cause was undoubtedly helped when US President Joe Biden tweeted about the automaker's plans for an EV manufacturing hub in North Carolina, where models such as the VF8 and VF9, which are currently being exported from Vietnam, will eventually be built.
Like its Haiphong plant, the North Carolina operation will be largely self-contained. Spanning 800 hectares, it will feature three main zones: electric car and bus production and assembly, battery production, and ancillary suppliers. VinFast plans to invest up to $2 billion in the project, with the aim of turning out 150,000 vehicles a year and creating more than 7,000 jobs.
Earlier this year, the company opened its first six overseas showrooms in California, with plans to go nationwide. Located in high-visibility retail areas, they will showcase the company's premium vehicles while conveying a “future of mobility theme,” a recognition that much of the work is still to be done to convince drivers to shift to electric vehicles.
The US, alongside China and Europe, only recently moved beyond the 5% EV tipping point.8 This means 5% of new cars are powered only by electricity. Experts consider this to be the start of mass EV adoption.
“The biggest challenge is changing consumer habits with ICE vehicles and convincing them about EVs,” said Madam Thuy. “Vinfast will address this by introducing a fleet that offers reliability, flexibility through our battery subscription program, and peace of mind with our 10- year vehicle warranty.”
On an island on the outskirts of Haiphong, Vietnam's third-largest city, a state-of-the-art factory the size of a town dominates the landscape.
The facility makes cars, buses and motorbikes for VinFast—a relatively new automaker with plans to produce over one million vehicles within five years. And to cap this, the company says it is the first to have transitioned into an electric vehicle-only brand.1
It was a smart move at the right time. A typical passenger vehicle emits about 4.6 metric tons of carbon dioxide a year,2 so the race is on to get carbon-emitting vehicles off the road. VinFast currently provides an ecosystem of EV products in Vietnam, including e-scooters, buses, cars, and charging stations. Now it’s going head-to-head with more established competition in North America and Europe, with a strategy underpinned by sustainability and self-reliance.
This is their story.
