What can be learned from VinFast's success after becoming the best-selling car brand in Vietnam?

DNHN - VinFast's market-leading sales in Vietnam in September marked a major turning point, as a domestic electric vehicle brand outpaced international competitors.

VinFast's leadership position proves that electric cars can thrive in Vietnam

Recently, the Vietnamese automobile market in September witnessed a memorable milestone when, for the first time, the Vietnamese electric car brand VinFast surpassed all international gasoline and electric car brands, becoming the best-selling car brand, just over two years after transitioning to a fully electric manufacturer. The number of cars sold in a month by Vietnamese automaker VinFast was 1.5 times that of Toyota, which ranked second, and even 2-3 times more than brands like KIA, Honda, and Ford.

The significant growth of VinFast over the past period, overtaking international brands to become the top car manufacturer in Vietnam, reflects a substantial change in Vietnamese consumer perception toward electric vehicles (EVs). Speaking to Business and Integration Magazine, Dr. Nguyễn Sơn, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, said this shift partly reflects a transformation in consumer behavior in Vietnam. He pointed out several key factors driving this change:

First, consumers today see environmental protection as one of the key motivations for exploring electric vehicles. Additionally, younger consumers with medium to high incomes are more focused on green technology. This trend aligns with the global shift towards sustainable transport and is also a result of effective communication and education about environmental protection.

Second, policies like free registration and reduced import taxes for electric vehicles make this line of cars more attractive to consumers. The operational costs of electric cars are also highly competitive when compared to traditional vehicles, which, though still needing verification and detailed long-term studies, has proven particularly attractive amid rising fuel prices.

Third, the swift, timely expansion of the charging station network, with VinFast alone having installed over 150,000 charging ports, has helped reduce concerns about EV range and convenience.

Lastly, the introduction of various electric vehicle models across different segments from different manufacturers has expanded the options for consumers.

VinFast's success in the electric vehicle market not only encourages consumers but also opens up significant investment opportunities, both domestically and internationally. According to Dr. Nguyễn Sơn, the rapid growth and leadership position of VinFast prove that electric vehicles can thrive in Vietnam. This could encourage more local companies to join the EV supply chain, while also attracting the attention of foreign investors looking to collaborate or establish operations in Vietnam to capture market potential.

"In the EV value chain, with the Vietnamese market expected to reach $5-7 billion in the next five years, the demand for EV batteries will rise, creating investment opportunities in battery manufacturing and recycling facilities. The need for a widespread charging network presents opportunities for investors in infrastructure development and related technologies. As the EV industry develops, the demand for specialized components will also increase, offering opportunities for domestic as well as foreign suppliers. Supportive policies from the Vietnamese government, such as free registration and reduced import taxes for electric vehicles, create a favorable environment for investors. These incentives could encourage larger investment funds to view the Vietnamese EV market as a promising long-term opportunity," said Dr. Sơn.

He also emphasized that the success of electric vehicles in Vietnam could drive significant investments in research and development of technology, attracting venture capital into areas like autonomous driving technology, smart vehicle systems, and advanced battery technology. In the future, support services such as maintenance, battery exchange, electric vehicle management, and autonomous vehicles will also become appealing areas for investment.

Challenges facing the electric vehicle industry and solutions to overcome them

With VinFast surpassing all international gasoline and electric car brands to win over Vietnamese users, it is clear that the electric vehicle industry in Vietnam is at a critical transitional stage, promising significant growth. However, despite its considerable potential, many experts assess that the EV market in Vietnam still faces several challenges.

Speaking to Business and Integration magazine, Dr. Trương Quang Dũng, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, pointed out numerous challenges in Vietnam's development of the electric vehicle industry, including charging infrastructure, power grid capacity, and technology. Currently, VinFast is the only provider of charging stations, achieving a ratio of 15 charging ports per 10,000 people, higher than in the US and China. However, concerns remain about the distribution of infrastructure, as many consumers believe that charging stations are not yet sufficiently widespread. A survey conducted in Ho Chi Minh City in December 2023 showed that 86.83% of participants were not yet willing to switch to electric cars, mainly due to concerns about the lack of charging stations. Although VinFast's stations already cover highways and interprovincial routes, gaps remain in urban residential areas and rural areas. VinFast's decision not to share its charging stations with other car brands for the next 10 years could limit infrastructure expansion.

Additionally, according to Dr. Trương Quang Dũng, VinFast has made significant advances in battery technology and EV performance, making its products competitive in terms of range and charging time. However, as the company focuses on international markets, particularly building factories in the US and developing autonomous and commercial vehicles, domestic infrastructure development may lag.

"A major challenge is Vietnam's power grid, which may struggle to meet the rising energy demand as the number of electric vehicles grows. Experts are concerned that the current power grid infrastructure, especially in urban areas, lacks the capacity and reliability to support the rapid increase in EVs without major upgrades. To meet future demand, significant investments in renewable energy such as solar power will be essential," said Dr. Trương Quang Dũng.

To address existing challenges and enhance competitiveness in the industry, Dr. Irfan Ul Haq, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, stated: "The government must establish clear regulatory frameworks, provide targeted financial support, and invest in workforce development. Promoting strategic international partnerships, while also protecting domestic interests through carefully structured trade agreements and export promotion programs, will be essential for Vietnam to become a competitive force in the regional market. This coordinated approach will boost domestic production capacity, create significant job opportunities, and contribute substantially to the country's economic growth. The successful transformation of Vietnam's automotive industry depends on cohesive policies balancing international integration with protecting domestic industries."

Furthermore, to promote the Vietnamese EV market, Dr. Irfan Ul Haq also suggested that the government should prioritize establishing advanced supply chains for electric and hybrid vehicles, while investing in steel production and material industries that will enhance production independence and reduce reliance on imports.

He also emphasized that supporting technology through grants and tax incentives, especially for core technologies, will help Vietnam meet international environmental standards.

Bao Bao