HANOI: VinFast, a prominent Vietnamese electric vehicle (EV) manufacturer with aspirations to compete globally, particularly with Tesla, is encountering challenges in capturing a substantial local market share.
Backed by Vingroup, Vietnam’s largest conglomerate, VinFast boasts strong brand recognition within the country. However, it has struggled to convince domestic consumers that its EVs are reliable and of high quality.
Ngo Trong Tu, a 31-year-old entrepreneur from Hanoi, contemplated purchasing a $35,000 VinFast EV but ultimately opted to spend nearly $5,000 more on an imported gasoline-powered Honda. Tu expressed concerns over the perceived safety and quality of VinFast’s EVs, citing negative feedback on social media.
Despite approximately 280,000 new passenger vehicles being sold in Vietnam in 2022, according to the International Organization of Motor Vehicle Manufacturers, VinFast managed to sell only 7,400 units. In the first half of 2023, the company saw 11,000 purchases, but over half of these went to a taxi firm owned by its parent company, Vingroup.
In addition to consumer skepticism, VinFast has faced criticisms related to construction quality and car software issues, compounding the challenges of promoting EVs in a country with limited charging infrastructure. Reports have surfaced of problems with VinFast’s EVs, including battery malfunctions, smart key issues, virtual assistant glitches, accelerator problems, and even a vehicle fire.
VinFast asserted that the fire incident was not caused by a fault in their vehicle, as determined by authorities. VinFast’s CEO, Le Thi Thu Thuy, acknowledged the doubts and said that it was unrealistic to expect a new product to be flawless. She emphasized the company’s commitment to continuous improvement.
VinFast’s Ambitious Target
VinFast maintained that they promptly address complaints reported to their service center, and after several software updates and enhancements, their EVs are performing well.
The parent company of VinFast is owned by Vietnam’s wealthiest individual, Pham Nhat Vuong, who began his journey in the Soviet Union selling dried noodles before building a $5 billion conglomerate spanning real estate, tourism, education, and more. His recent focus is on the growing global EV market, with VinFast expanding its presence in the United States, France, Germany, the Netherlands, and other markets.
Despite VinFast’s shares experiencing significant fluctuations since its Nasdaq debut in August, with a market value surpassing auto giants like Ford and General Motors before declining, the company continues to grow. It reported a net loss of over $600 million in the third quarter but aims to deliver up to 50,000 cars globally this year, having sold approximately 21,000 units thus far.
While Vingroup has the financial capacity to endure such losses for now, experts like Southeast Asia trade analyst James Guild from the S. Rajaratnam School of International Studies in Singapore suggest that a viable long-term plan is needed.
Despite Vingroup pioneering EV infrastructure in Vietnam, not all experts trust VinFast’s offerings, and there’s a perception that Vietnamese consumers place more faith in foreign brands over national pride when it comes to buying expensive cars.
