The Car of the Future: How VinFast Left Tesla, Ford, and GM in the Dust and Rose to the Top of Vietnam’s Auto Industry.

Electric Car Sales Stall

Over the last decade, electric cars have emerged as a novel topic of conversation. Offering a fresh experience with high acceleration, low center of gravity, and cutting-edge technology, electric vehicles are carving out a unique space in the automotive market.

However, with most electric cars priced higher than their gasoline counterparts, many customers are unable to afford them, leading to a stagnation in sales.

Initially, electric cars appealed to a niche market—those with financial means and an open-minded attitude. However, as this group makes up a small portion of the population and has already been largely tapped, sales have begun to decline.

To boost sales and attract new customers, automakers around the world are planning to introduce more affordable models.

Dan Ives, a financial analyst at Wedbush Securities, commented, “Similar to what we’ve seen in China, once you get to a certain price point, that’s when you can really start to stimulate demand and tap into that segment of the population that hasn’t bought electric yet.”

Tesla, the world’s largest electric car manufacturer in terms of sales in the first half of 2024, has hinted at plans to release a model with a starting price of around $25,000 (626.5 million VND). Elon Musk stated, “We’ve been working on future products to accelerate the pace of new model releases. While previously expected to start production from the second half of 2025, we are now aiming to push it forward to sometime in 2025, or possibly even earlier.”

However, despite first mentioning this vehicle in Q3 2022, Tesla, and Musk in particular, have yet to release even a concept image.

Ford and General Motors are also hard at work developing affordable electric options. Ford plans to release a small SUV with a similar price tag to Tesla’s offering, expected to hit the market in late 2026.

General Motors is preparing to launch the Chevrolet Equinox EV, with the LT version expected to start below $30,000 (around 752 million VND) after US government incentives. It’s worth noting that GM already offers an affordable electric car, the Chevrolet Bolt, starting at $26,500 (664 million VND). However, the company has considered discontinuing its production and the model has faced issues with battery fires.

The Solution: Affordable Electric Cars?

What may come as a surprise to these established automakers is that VinFast, a newcomer to the industry with its first factory inaugurated in 2019, already offers a comprehensive range of electric vehicles from the A to E segments. These cars are designed for both the domestic and export markets, meeting the standards and quality expectations of their target destinations.

In Vietnam, VinFast has successfully sold almost all of its electric car models, with the latest being the VF 3 mini electric car. As other automakers scramble to develop affordable options, VinFast’s VF 5, an A-segment electric car, has become the top-selling model in Vietnam for July, with nearly 2,600 units sold.

VinFast has also introduced the VF 5 to other Southeast Asian markets, including Indonesia, where the car with a battery is priced at approximately 495 million VND. Additionally, the company delivered the first batch of VF e34 vehicles to Indonesian customers, with a price of around 651.7 million VND including the battery.

While offering affordable options is crucial to attracting customers, VinFast and its competitors must also pay attention to profitability.

Garrett Nelson, an analyst at CFRA Research, believes that the $25,000 price point targeted by Tesla and Ford is “not realistic,” citing the significant increase in costs in the post-COVID-19 era.

Dan Ives agrees that a low price alone is not enough to attract customers. He emphasizes the importance of striking a balance between price, model diversity, and technology that meets customer needs. “It’s got to be the price, the models, and the technology that fits the consumer. Just being cheap doesn’t get you over the hump,” he said.

References: InsideEVs, Investor’s Business Daily