Vietnamese EV maker’s future global growth strategy involves setting up CKD manufacturing plants in India and Indonesia, each with total capacity of up to 50,000 cars per annum. Production is expected to commence by 2026.
07 Oct 2023 | 6724 Views | By Ajit Dalvi
Vinfast, the sole Vietnamese carmaker, yesterday announced its operating highlights for the third quarter of CY2023 and also its future global growth strategy which includes the key markets of India and Indonesia. The two countries are among the seven new market clusters Vinfast has identified for potential establishment of manufacturing ...
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Vinfast, the sole Vietnamese carmaker, yesterday announced its operating highlights for the third quarter of CY2023 and also its future global growth strategy which includes the key markets of India and Indonesia. The two countries are among the seven new market clusters Vinfast has identified for potential establishment of manufacturing facilities for its EVs and batteries. These will be CKD (completely knocked down) manufacturing facilities.
While the proposed plan for CKD manufacturing in Indonesia was revealed at the end of June 2023, Vinfast has expanded that CKD manufacturing strategy to now include India, where demand for electric vehicles across the two-, three- and four-wheeler segments is growing rapidly. In September 2023, India EV Inc surpassed the 100,000-unit monthly sales mark for the 12 month in a row and is headed for a record 1.4 million EV sales in CY2023.
Founded in 2017 by Vietnam’s richest entrepreneur, Pham Nat, as part of his Vingroup enterprise, Vinfast is planning an ambitious global expansion programme on the back of increasing sales in Vietnam, where it is the sole local carmaker and in the US market, where it has begun sales recently. Its overall sales numbers are still small – Vinfast’s sales grew from 15,300 units to 29,485 units in 2020. Cumulative global sales of electric cars and SUVs in the January-September 2023 period are 21,342 units.
Earlier this year, Vinfast has entered into a vehicle sale pact with GSM, a Vietnamese EV-only taxi operator and an affiliate of VinFast, officially launched in Hanoi and Ho Chi Minh City, for up to 200,000 e-scooters and 30,000 EVs.
Listed on the NASDAQ on August 15, 2023, Vinfast yesterday released its Q3 CY2023 numbers which indicate increased sales and in turn revenue. A total of 10,027 electric cars were sold in the third quarter of 2023, representing an increase of 5.2% over Q2 2023. The company stated that it has “started to see a sales increase in September in North America, particularly in Canada.”
E-scooters deliveries were 28,220 in Q3 2023, up 177.2% Q2 2023 and up 112.9% on Q3 2022. On the network front, as of September 30, 2023, Vinfast had 126 showrooms globally for EVs and 247 showrooms and service workshops for e-scooters, including VinFast showrooms and dealer showrooms.
As per the company, the YoY increase in vehicle sales over Q3 2022 was mainly due to a significant increase in EV and e-scooter sales volume in Vietnam, including the VF e34, VF 8, VF 5, VF 9 electric cars and the Feliz and Evo electric scooters. This increase was partially offset by phasing out production of ICE vehicles in furtherance of Vinfast’s plan to fully transform into a pure EV player, which resulted in minimal revenue from sales of ICE vehicles in the third quarter of 2023.
TARGETING A PRESENCE IN 50 GLOBAL MARKETS
Vinfast’s new business model, unveiled last quarter, calls for the company to establish “broad distribution channels, leveraging local networks and the expertise of third-party dealerships and distribution to increase coverage in our expanding list of target markets. We aim for our vehicles to be present in up to 50 global markets and countries by the end of 2024.”
VinFast states that it has “optimised its capital expenditure plan for global manufacturing in 2024 and 2025, which is expected to save approximately US$400 million (Rs 3,299 crore), compared to earlier guidance. These savings are expected to be used towards building CKD factories in Indonesia, the most populous country in Southeast Asia, and India, the third largest auto market in the world, according to Nikkei Asia.”
The company added, “VinFast aims to access the tremendous potential for increased EV adoption in India and Indonesia where EV penetration is currently only 1%. The establishment of VinFast facilities in these local markets can provide access to government incentives for local manufacturing, relief from certain tariffs and taxes and access to raw materials at attractive rates.
Each CKD facility in Indonesia and India has a planned total capacity of up to 50,000 cars per year and an estimated total capital expenditure of US$150 million to US$200 million in Phase 1. Production is expected to commence by 2026.”
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