Vietnam electric car whizz takes ambitious road

3 minute read

Le Thi Thu Thuy, vice chairwoman of the Vingroup and VinFast Global CEO, poses by a VF9 electric SUV during the unveiling of a line of electric SUVs at CES 2022 at the Las Vegas Convention Center in Las Vegas, Nevada, U.S. January 5, 2022. REUTERS/Steve Marcus - RC2CTR9VIEX5

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HONG KONG, Feb 9 (Reuters Breakingviews) - Vietnam’s Tesla (TSLA.O) wannabe is speeding up. Carmaker Vinfast will stop making internal combustion engine models by the end of 2022 and aims to sell overseas as it goes all-electric. Its ambition to motor towards a 2022 U.S. listing read more , which Refinitiv publication IFR says could raise up to $3 billion, combines the clout of a powerful parent with potential for a shift to new energy vehicles in its fast-growing neighbourhood.

Vinfast sold its first electric car last month and hopes to build on its earlier success: drivers bought more than 35,000 of its gasoline models in 2021, some 18% of the annual sales of passenger vehicles reported over the period by the Vietnam Automobile Manufacturers' Association. With around a fifth of Vietnamese consumers considering hybrid or electric for their next purchase, per Deloitte, the brand’s battery-powered cars are positioned to do well too.

Overseas expansion plans support some of the industry’s valuation hype. While Tesla and western rivals eye the far east and Chinese peers Xpeng (9868.HK) and Nio (NIO.N) have their sights on Europe, Vinfast trumpets its plans for the United States, Canada and Europe. Southeast Asia could be a destination too: its Vietnamese factory boasts an annual capacity of more than the country’s 2022 sales as reported by manufacturers. That means Vinfast can easily cater to growing demand in the region. The ambitious marque, part of Vingroup’s loss-making industrials unit, seeks a $60 billion market value, Reuters reported in April, roughly quadruple that of its 51.5% owner Vingroup (VIC.HM), the country’s largest listed company.

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Having a retail-to-property conglomerate parent may prove an advantage. Vinfast can offer its shopping customers deals on vehicles, and install chargers at strategic spots, for instance. In India, the consumer products-to-hotels Tata (TAMO.NS) conglomerate is taking a similar electric lead. A strong owner can help crowd in funding too: in 2020, Vingroup sold a $650 million stake in Vinhomes (VHM.HM) to a consortium including KKR (KKR.N) and Singapore’s Temasek to help fund Vinfast.

It isn’t all easy driving. In December former Volkswagen (VOWG_p.DE) veteran Michael Lohscheller left his role as chief executive of the Vietnamese carmaker after just five months in the position. Despite the bump in the road, Vinfast is set for a fast ride.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

- Vietnam’s Vinfast said on Dec 4. that it plans a U.S. listing in the second half of 2022. The company will raise up to $3 billion, Refinitiv publication IFR reported on Dec. 10.

- The carmaker is eyeing a $60 billion valuation, Reuters reported in April, citing sources.

- Vinfast is 51.5% owned by Vingroup, the country’s biggest listed company by market capitalisation.

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Editing by Una Galani and Thomas Shum

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Katrina Hamlin is global production editor, based in Hong Kong. She is also a columnist, writing on topics including environmental policy, cleantech and green finance, as well as the gambling industry in Macau and Asia. Before joining Reuters in 2012, Katrina was deputy managing editor of Shanghai Business Review magazine. She graduated from the University of Oxford with an MA in Classics, and earned a Masters of Journalism with distinction from the University of Hong Kong.