Biggest News From 2021 LA Auto Show Might Be Vinfast Selling Cars in the US
While EV startups have dominated the 2021 LA Auto Show headlines, the biggest news might just be that Vinfast debuted its EV SUVs for US distribution. Why is this the bigger news? Because while the countless startups have one thing in common; nothing to sell, Vinfast actually makes electric vehicles. And it is backed by the largest conglomerate in Vietnam.
Could Vinfast be a repeat of the Japanese and Korean vehicle US invasions?
And also because if the Japanese auto invasion of the 1960s and Korean invasion 20 years later is any guide, cars made in Vietnam might become as common as Toyotas and Hyundais are today. Plus, the bar was pretty low back then. Both Toyota and Hyundai had a long learning curve before their cars caught on.
The bar is much higher now. So the expectation is that Vinfast vehicles should be at a level that will compete from day one. And they’ll be priced lower, which is right from Toyota’s and Hyundai’s initial playbook. The price will make them too good to pass up.
Vinfast makes products now and has basically unlimited capital
If the quality and features are comparable, they’ll be off and running. The SPAC startups are mostly targeting a much higher-priced segment. That means they will appeal to fewer buyers because they’ll be expensive. So they’ll never proliferate like a reasonably-priced SUV.
And some of these high-end startups have already peddled back on early promises, as has been the case with Fisker. It talked a big game three or five years ago. Now? To be honest, it holds no more compelling reason to purchase one than being the first on your block. And if it gets to the point it actually produces vehicles, that will be short-lived. If, if, if.
According to the Financial Times, Vinfast is spending $200 million to kick off a US headquarters to begin selling EVs here and in Europe. In the second half of 2024, it will begin producing cars in the US. Not just selling, but manufacturing them.
Vingroup has already put up $5 billion to make EVs
So far, Vingroup, the huge Vietnamese private conglomerate, has already invested $5 billion to develop and manufacture vehicles. The money comes not from SPAC investor stock, but from the richest man in Vietnam, Pham Nhat Vuong. Believe it or not, his fortune began with a noodle business in Ukraine.
Vinfast will release its first full-size SUV EV in Vietnam before the end of this year. It already sells electric scooters. Those may not be the same as an SUV, but it is already generating revenue. That’s something the SPAC EV companies still aren’t doing.
It’s offering something no other EV manufacturer offers
And it will offer something no other company does; it will rent its batteries. The single most expensive component in an electric car, The buyer will own the car, but rent the batteries. “You only rent the battery and then over time get the next generation battery,” said Michael Lohscheller, the Vinfast chief executive to the Financial Times. “It brings the monthly cost down. We will be the first to do that.”
He also said that it is finalizing its first 60 stores in California, and won’t use the third-party dealer network as has traditionally been used for decades. That’s how Tesla sells its EVs, and it seems to be working fairly well for it.
That’s exciting news and more compelling than another shaky EV startup. So keep your eye out and see if Vinfast can follow in the large footsteps of the Japanese and Korean automakers in the US.