Low capacity raises VinFast questions

WHILE a focus has been placed on mainstream EV manufacturers from China, Japan, Europe, the US and South Korea, smaller countries are increasingly coming into the picture, like Vietnam. However, a recent media visit to VinFast’s Hanoi facility has raised questions about the manufacturer’s prospects.

 

The Vietnam-based, Singapore headquartered VinGroup conglomerate’s electric car division, called VinFast, last week hosted a media introduction to their EV manufacturing facilities. The visit provided plenty of ‘news’ but left quite a few questions up in the air.

 

VinFast is a real ‘newbie’ to EV manufacturing having only embarked on the car-making enterprise in 2017 before which it had not made a car, let alone an EV. The company recently purchased the former Holden proving ground in Lang Lang, Victoria, before pulling out of the deal at the height of the COVID-19 pandemic.

 

Now, the company says it is moving rapidly to address that issue starting with a large new factory in Haiphong, north of Hanoi that covers 84 hectares. Additionally, another new factory investment valued at $A6.1 billion is planned for phased development in North Carolina in the US.

 

The goal is to manufacture (and sell) some one million electric cars within the next five to six years.

 

Achieving such a target is ambitious considering VinFast is at 35,000 units in total for 2021. VinFast says it is looking further afield than the Vietnam home market planning to target EV customers in the US, Canada and Europe as well as taking on so called legacy car-makers such as Toyota, Volkswagen and General Motors. Not forgetting of course: Tesla and a swag of other EV start-ups including the Chinese brands.

 

As reported in Bloomberg Business outlet, VinFast admits it’s a tall order for a company barely known outside Vietnam. According to their report, VinGroup Founder and Chairman, Pham Nhat Vuong, has “very deep pockets”.

 

Bloomberg and other media were hosted at VinFast facilities last week to see the body shop, press shop, battery pack facility and general assembly line. The report said: “The cavernous complex was stocked with state-of-the-art German machines and gleaming robots. VinFast also makes its own micro-chips and is starting to make its own EV batteries “just next door,” attendees were informed.

 

But the media’s visit left quite a few question marks over the veracity of the company… According to Bloomberg: “very little equipment was operating during the visit and most places were devoid of workers, creating some scepticism.”

 

But a spokesman said after the tour that VinFast had stopped making petrol vehicles and only has one model EV in production for the time being, with a second on the way. “Annual output is currently only running in a range of tens of thousands, so lines are operating in low capacity at the moment,” he said.

 

VinFast says the factory is designed to eventually reach 250,000 units annually and will operate at high capacity when the VinFast VF8 and VF9 vehicles are ready to be sold in Vietnam and globally.

 

Bloomberg’s report called attention to what it considered to be some anomalies at VinFast saying: “There was always a ready reason for where everyone else was.”

 

“Press shop workers were at lunch, despite it being 10 in the morning – that was also the case in July, when another batch of reporters were taken on a similar tour. General assembly line employees hadn’t started their shift yet. The machines were running slow or not at all so influencers could take video more easily.

 

“The oddities only compounded as the day progressed. Guests were driven around in a convoy of buses to tour some of VinGroup’s sprawling real estate empire on the outskirts of Hanoi. VinHomes Ocean Park 1 was all rice paddies three years ago. Now, there are man-made lakes, running tracks, high-rise condos, a shopping centre and row upon row of French-influenced villas.

 

“Outside the residential towers, though, the area is largely deserted. Weeds have taken over the gated front yards of the villas, windows are boarded up and the buildings have started to crumble.

 

“A spokesman said the company sold out all the houses that are part of the project, and that some customers are completing interiors of their properties. Others haven’t been able to complete construction because of the pandemic and have postponed their move-in,” said the Bloomberg report.

 

The Bloomberg Business report continued: “Inhumes Ocean Park 2, which will be even bigger, is already under construction a few kilometres down the road. There, a huge waterpark and wave pool has been built first, surrounded by cranes and dust.”

 

“Lifeguards stood on duty even though not a single visitor was present. The park was very popular with Hanoi residents, attendees were told, just not on a weekday.

 

“At VinUniversity, the library was devoid of books (most are electronic, visitors were told) and the campus was nearly devoid of students. Some were on autumn break, and others had compulsory military obligations, according to the company.

 

“Two young people introduced as students — one from Ukraine and another from New Zealand — were vague about what they were studying and didn’t have a convincing answer for why they’d come to a university that didn’t exist a few years ago.

 

“Both said separately their mothers had made the decision for them. A VinGroup ambulance also cruised by at convenient moments, offering tour guides a neat segue to talk about the company’s hospital business and VinUniversity’s medical degree,” the Bloomberg report concluded.

 

Test drives of the company’s EVs were offered to the media.

 

The VF8 SUV available with battery or for extra with a battery subscription. The vehicle is said to provide good handling and ride characteristics, a quite drive and an impressive array of features including a touchscreen console, voice-activated features and stylish leather interior.

 

VinFast will us a direct marketing sales channel for its products that has had mixed results (Proton) but the company allegedly holds some 65,000 pre-orders globally.

 

Can the start-up move quickly to 750,000 EVs annually by 2026? It’s highly unlikely given the experience of companies like Tesla that took nearly 20 years to get to that level of production.

 

For the time being, we’ll have to wait and see.