The automotive industry is entering a period of transition that threatens the existence of existing manufacturers and promises the emergence of bolder newcomers. And if we expected them from China or the United States, it is finally from Vietnam that the electric vehicles that best embody this small revolution will land in Canada.
Tesla outrageously dominates the North American electric car market for one simple reason: North American automakers keep delaying their own electrification plans. The Chinese brands NIO and BYD are focusing on their own domestic market.
Meanwhile, the immense popularity of electric vehicles and the desire of States to put an end to combustion engines create the ideal context for newcomers eager to upset the established order. This is where a completely unexpected brand from Vietnam appears: VinFast.
VinFast is owned by the Vingroup conglomerate, itself headed by Pham Nhat Vuong, Vietnam’s richest man. His fortune is valued at US$6.4 billion. It was in Ukraine that he experienced his first success: he sold instant noodles “which cooked faster than the others”. Nestlé bought its product for US$150 million in 2009.
This myth of self-made man serves Pham Nhat Vuong well today. It gives it this aura of vision that allows it to shoot in all directions: Vingroup manages dozens of commercial, industrial and residential buildings, hotels and amusement parks all over Vietnam. His most recent creation is a brand new neighborhood on the outskirts of the capital, Hanoi, where he hopes to see some 35,000 households settle and form a middle class that is currently very modest, but which, according to Vietnamese government plans, will 36 million people before the end of the decade.
In Ocean Park — the name of this new neighborhood — this middle class will have a very Western lifestyle: numerous cafes offering overpriced espressos and free Wi-Fi will rub shoulders with clothing and surf accessories shops that would be more out of place in Malibu or Half Moon Bay.
A world-class university has also been erected from scratch on a former swamp. Only 50,000 students are missing — the capacity of this huge campus — willing to specialize in artificial intelligence or some other up-to-date scientific field so that this dream of a life, perhaps better, but certainly Western, becomes reality.
A dream that Pham Nhat Vuong intends to realize. “I can’t wait to talk about it again in ten years,” he says in all seriousness.
Electric vehicles
It will not take ten years for Canadians to become familiar with Vingroup. VinFast, its automotive division born in 2017 and which will be ready by the end of 2022 to market exclusively electric vehicles in North America and Europe, is hiring massively these days a mari usque ad mare. VinFast Canada currently employs a few dozen people, but we could soon number in the hundreds. VinFast wants to emulate Tesla and sell directly to consumers, without independent dealerships.
The immense popularity of electric vehicles and the desire of States to put an end to combustion engines create the ideal context for newcomers wishing to upset the established order.
A first store will open this summer near Carrefour Laval. The curious will be able to see the VF8 and the VF9, two large electric station wagons costing $51,250 and $69,750 respectively. Both were designed by the prestigious Italian firm Pininfarina and will be assembled by state-of-the-art German robots in a 90% automated factory that has been hastily erected over the past 21 months in northern Vietnam.
The construction of a new plant in North Carolina was announced jointly with the US government. Within three years, VinFast promises a catalog of five electric vehicles that will be produced at a rate of at least 950,000 copies per year.
Washington is very keen to attract such investments to the United States. The US$4 billion project will be funded in part by federal aid and in part by VinFast’s listing on the New York Stock Exchange. The automaker hopes to raise at least US$2 billion in fresh capital. “It’s going fast,” concedes Pham Nhat Vuong, laconic.
Same, not the same
VinFast distinguishes itself from other electric vehicle manufacturers by selling its vehicles and then leasing the battery. Buyers will pay a monthly installment for at least three years, after which they can purchase the battery. If its capacity drops below 70%, it will be replaced.
At home, the Royal Bank will help fund this new kind of business model. RBC sent representatives to Vietnam in early April to see how VinFast product development is progressing. A few prototypes of the VF8 were presented there to some sixty specialized journalists from Canada, the United States and Europe.
Partners like RBC are vital for Vingroup. The Vietnamese conglomerate wants to recreate the industrial success that the South Korean group Hyundai took 25 years to achieve, but in half the time. He must also prove that Vietnam is an emerging economy ready to reap the benefits of the energy shift that all transport will take in the coming years – Vingroup also produces electric buses, which it plans to sell to North American public transport services.
It’s quite a challenge. It is a very ambitious dream. And if it’s not quite the American dream, it’s undoubtedly the Vietnamese variant of this adage that everything is possible, provided you believe in it.
This report was produced thanks to the invitation of VinFast Canada.