Vietnam’s richest man and billionaire, Pham Nhat Vuong, who heads a brand new automotive manufacturer, is so keen to export electric vehicles to the US in 2021 that he’ll use his own funds to achieve this.
According to Bloomberg, his money would cover half of the capital investment of VinFast, which began supplying cars with BMW-licensed engines to Vietnamese consumers earlier this 12 months and intends to expand into electric vehicles.
Vuong founded the corporate and holds the title of president.
“It will be a very difficult road and we will have to put in a lot of effort. But there is only one road ahead of us.”
In Vietnam, VinFast Trading and Production LLC faces huge competition from established foreign players reminiscent of Toyota, Ford Motor Co and Hyundai.
VinFast follows a protracted list of Chinese automakers which have had ambitions to sell vehicles within the US for greater than a decade. Although the plans haven’t yet been implemented, Guangzhou Automobile Group Co., Zotye Automobile Co. and other corporations have arrange local sales units and conduct research and development activities to indicate how serious they’re.
In recent years, some Chinese brands have also exhibited at American automotive shows.
But the tycoon, whose net value is $9.1 billion in accordance with the Bloomberg Billionaires Index, just isn’t fooled.
Vingroup sold some shares last 12 months, and Vuong plans to sell as much as 10%. own shares to lift funds for an ambitious project.
It owns 49 percent of VinFast, while parent company Vingroup owns 51 percent.
Vuong said the carmaker wouldn’t be profitable for even five years since the local market was “too small” and overseas sales were the important thing to achieving profitability.
VinFast may even face the much more daunting task of winning over discerning consumers within the U.S. and other developed markets where emissions and crash standards are stringent.
Adding to those challenges is the successful production and sale of electrical vehicles. Many Chinese startups, backed by billions of dollars, are betting on the prospects of electrical vehicles on the planet’s largest auto market, but few of them are getting cash.
The first VinFast electric vehicle won’t roll off the assembly line until late next 12 months, but Vuong said he plans to export the vehicles to the United States, Europe and Russia in 2021.
VinFast must clear some high hurdles to compete outside Vietnam, said Michael Dunne, CEO of automotive consulting firm ZoZo Go LLC, which makes a speciality of the Asian market.
“It will take some time before the company is ready to compete in the US – still the most difficult market in the world. You need a solid brand,” he said.
He said many consumers prefer a used Honda or Toyota vehicle to a brand new automotive of an unknown brand.
Dunne said VinFast would wish to supply at the very least 100,000 vehicles a 12 months to stay cost competitive, develop a world brand and establish a parts and repair network.
VinFast, which operates a 335-hectare factory within the northern port city of Haiphong, sells its first line of vehicles – hatchbacks, sedans and SUVs – at below-cost prices.
The hatchback costs the equivalent of $17,000, the four-cylinder sedan – $47,400, and the SUV – $60,400.
By 2025, the corporate plans to supply as many as 500,000 vehicles per 12 months. It also produces electric scooters.
Vuong said Vingroup would must spend “many trillion dong a 12 months” over the following few years to cover VinFast’s losses, estimated at as much as 18 trillion dong a 12 months.
These losses include financing and depreciation and as much as VND7 trillion annually to soak up the effect of selling cars below cost.
“We want to build a Vietnamese brand that enjoys a world-class reputation. Our biggest challenge is that Vietnamese products do not have an international brand. For many international friends, Vietnam is still a poor, backward country.
“We will have to find a way to market and prove that our products represent a dynamic and growing Vietnam that has achieved the highest standards in the world.”
