In the fast-evolving world of electric vehicles, a new contender has emerged to challenge the dominance of Tesla. VinFast, a company that set its wheels in motion in Vietnam back in 2017, is now steering its ambitions towards the highly competitive American market. However, as the Vietnamese automaker begins its foray into the US, it finds itself grappling with unforeseen obstacles on its path to success.
The company’s plan is to establish a firm foothold there before venturing into other states. In pursuit of success, VinFast has taken drastic measures, slashing prices and offering attractive lease deals to stimulate demand for the first shipments of VF 8s.
Yet, despite these efforts, the newcomer finds itself confronting a myriad of obstacles that challenge its journey to automotive prominence in the US. As it navigates through these bumps in the road, VinFast must demonstrate resilience and ingenuity to establish itself as a worthy rival to Tesla and other established players in the electric vehicle space.
Introducing an electric vehicle brand from scratch in the United States at this time is an arduous task. Apart from the lingering reservations some Americans have about electric vehicles, the market is becoming increasingly crowded and facing challenges like rising raw material costs, software issues, and fluctuating vehicle prices. These factors have left some consumers uncertain and hesitant.
VinFast, a startup electric vehicle manufacturer from Vietnam, is taking on this challenge and has launched its first electric crossover in the U.S. The initial model, known as the VF 8 City Edition, is currently available for lease starting at $431 per month for 36 months. The brand’s recognition in the U.S. is limited, and analysts point out that the VF 8 is priced higher than comparable vehicles from Ford, Volkswagen, and Hyundai. Moreover, recent price cuts on the Tesla Model Y have made their crossover a more appealing option in a competitive market.
The starting price for the VF 8 City Edition is $48,100, including shipping, and does not qualify for the federal tax incentive of up to $7,500, unlike the Tesla Model Y, which starts at $40,240 after tax credit since it’s manufactured in North America. Every VF 8 model comes equipped with dual motors and all-wheel drive. The Eco versions deliver 348 horsepower and 369 pound-feet of torque, while the Plus versions provide 402 horsepower and 457 pound-feet of torque. VinFast claims the VF 8 can accelerate from 0 to 60 mph in 5.5 to 6.5 seconds.
The VF 8 City Edition boasts a relatively large 82-kilowatt-hour battery, while a newer trim, the VF 8 Standard Edition, equipped with an even bigger 87-kWh battery, is scheduled for delivery in June. However, compared to similar EVs, the launch edition of the VF 8 offers a limited driving range. The Eco trim provides 207 miles of range, and the Plus edition offers 191 miles. In contrast, many competitors offer around 250 miles of range, and some, like the Tesla Model Y, provide more than 300 miles.
Charging the 87-kWh battery in the VF 8 from 10% to 70% capacity takes approximately 24 minutes, according to VinFast. The company also offers lessees the option of a free home charger, along with a $1,000 credit for installation or three years of unlimited free charging at eligible public networks. Early reviews of the VF 8 have been collected and analyzed to gauge its performance and reception in the market. Automotive journalists have given the VF 8 mixed reviews, with some expressing that it seems like a rushed product.
Sport mode, for instance, raises some concerns and might not be the best option. In Sport mode, the accelerator pedal becomes overly sensitive, making the VF 8 CE feel challenging to handle unless you apply extremely gentle inputs. Even small dips in the road can cause the car to lurch forward, making it difficult to achieve smooth driving or finesse. It’s advisable to stick to Normal mode, where there is already ample power and the car maintains a stable and composed demeanor without any jittery or overly enthusiastic behavior.
As you spend more time behind the wheel, certain issues become more apparent. The brakes, for instance, exhibit uneven performance. Initially, pressing the pedal seems to have little effect, but about halfway down, the brakes suddenly grab, causing the nose to dip as the weight shifts forward. This uneven braking experience can be disconcerting for the driver. Although the VF 8 City Edition offers regenerative braking and the potential for one-pedal driving, the regen is so weak that drivers find themselves relying on traditional brakes frequently.
Steering and overall handling leave much to be desired as well. While the steering is responsive and requires only minor inputs for lane changes or maneuvering winding roads, it lacks any sense of feedback or connection to the car. As a result, the driving experience feels disconnected and devoid of enjoyment, despite the ease of parking.
The suspension tuning of the VF 8 CE is also problematic, exhibiting conflicting characteristics. On straight roads, it feels overly stiff, yet in corners, it becomes too soft, leading to noticeable body roll as the car struggles to manage its substantial 5,700-pound curb weight. On tighter roads, this can even induce a sense of car sickness. Despite the VF 8’s perceived quickness, the overall driving experience leaves much to be desired, with many preferring alternatives in this vehicle class.
VinFast’s plans to list its shares in the U.S. through a special-purpose acquisition company are encountering difficulties, as reported by Reuters.
According to Experian data, the VF 8 had minimal new registrations in February, followed by a slight increase in subsequent months, ranking 22nd among 25 brands on Experian’s list of new EV registrations.
VinFast has intentions to introduce a range of EVs, including the three-row VF 9 SUV expected this year with a starting price of $83,000. Additionally, they have designed two smaller crossovers, the VF 6 and VF 7, to be more budget-friendly.
To support its expansion from Vietnam to larger markets in North America, Europe, and parts of Asia, VinFast is exploring various financing options, including investments from its parent company, Vingroup, and a public listing of shares in the future.
Based on information from Reuters, shareholders of Black Spade Acquisition, a special-purpose acquisition company that intends to merge with VinFast for its U.S. stock market listing, have redeemed more than 80% of their shares. This development could present a challenge for VinFast, which initially planned to pursue a U.S. listing independently and has faced difficulties in commencing production and expanding sales beyond Vietnam.
VinFast, in response to the situation, stated that the shareholder redemptions do not affect the listing process or the agreed valuation of the company, as reported by Reuters.
In the first quarter, VinFast reported a significant loss of $598 million, attributed to a 49% decline in revenue. The company disclosed this financial information in a filing to U.S. securities regulators as part of the special-purpose acquisition company merger, which aims to value the automaker at $23 billion.
As VinFast ventures into the competitive U.S. market, it faces formidable rivals like Tesla, which has been reducing prices, intensifying competition with established automakers like Ford and General Motors. Despite the challenges, VinFast remains optimistic, aiming for sales of 45,000 to 50,000 vehicles this year. The company is even considering expanding its portfolio to include electric pickups, mini cars, and other models based on market demand.
Supporting VinFast’s endeavors has come at a significant cost for its founder, Pham Nhat Vuong, and the parent company, Vingroup. Between 2017 and the end of March, approximately $9.3 billion has been invested by Vingroup, its affiliates, and external lenders to fund the EV maker. Despite substantial investments, VinFast managed to reduce its net loss in the first quarter compared to the same period last year.
Vuong’s vision for profitability indicates a long-term approach, with expectations that the company might achieve profitability after 2025 if operations run smoothly. He also expressed hopes of breaking even by the end of next year.
Regarding its proposed $4 billion plant in North Carolina, VinFast has altered its production timeline. The previous indication of starting production in 2025 has been removed from the latest filing. While pre-construction work began in the third quarter of the previous year, the company has not specified when production will commence at the facility. Initially, the plant is expected to have a capacity of 150,000 vehicles per year, with plans to ramp up production to approximately 250,000 vehicles annually. However, the timeline for reaching these capacity levels remains undisclosed.
The pressure from established players like Tesla, coupled with the high costs of expansion, demands a resilient and strategic approach from the Vietnamese automaker. With ambitious sales targets and dreams of profitability in the future, VinFast’s success will hinge on its ability to navigate the ever-changing landscape of the electric vehicle industry.