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What Does VinFast’s Success as Vietnam’s Best-Selling Car Brand Tell Us?

1 December, 2024

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In September 2024, for the first time, a pure electric car brand topped the sales charts in Vietnam, with VinFast announcing a total of over 9,300 vehicles sold. This feat was repeated in the following month.

As of the first ten months of the year, VinFast has delivered over 51,000 electric vehicles, leading the entire automotive industry. Toyota and Hyundai followed with over 48,000 units each.

A Shift in Consumer Behavior

Dr. Nguyen Son, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, opined that the rise of the ‘Made in Vietnam’ electric car brand to the top spot reflects a significant change in Vietnamese consumers’ perception of electric vehicles in general.

According to him, several factors have contributed to this shift in mindset. Nowadays, consumers, especially the younger generation with middle to high incomes, consider environmental protection as a crucial motivator when considering a car purchase. This aligns with the global trend towards sustainable transportation and is a testament to the success of environmental protection education and advocacy.

Policies such as registration fee waivers and import tax reductions for electric vehicles have also made this option more appealing to consumers. Dr. Son praised VinFast’s attractive after-sales services, including free charging at V-GREEN stations until July 1, 2025.

The operating costs of electric vehicles are generally competitive compared to traditional cars, especially with the rising fuel prices. The introduction of diverse electric car models across different segments by manufacturers has expanded the choices available to consumers.

” The transition to electric vehicles will continue, and even accelerate, but it will take time to optimize and convince more discerning consumers in other areas. Key factors include durability, safety, pricing, and the availability of energy charging points ,” Dr. Son remarked.

(From left to right) Dr. Nguyen Son, Dr. Truong Quang Dung, and Dr. Irfan Ulhaq – lecturers at RMIT University.

Investment Appeal in Vietnam’s Electric Vehicle Industry

Dr. Son also believes that VinFast’s success could significantly impact domestic and foreign investors, boosting the developing electric vehicle industry in Vietnam.

” Major automotive and international technology companies may seek collaboration opportunities or establish their own operations in Vietnam to capture this growing market ,” said the RMIT expert.

He predicts that the electric vehicle market in Vietnam could reach a scale of $5-7 billion in the next five years. The demand for electric vehicle batteries will surge, creating investment opportunities in battery production and recycling facilities. There will also be a growing demand for specialized components, benefiting domestic and foreign suppliers.

Dr. Son believes that the success of electric vehicles in Vietnam could spur increased investment in research and development, potentially attracting venture capital funds focused on related technological fields, such as autonomous driving, intelligent vehicle systems, and advanced battery technology. Furthermore, there are investment prospects in ecosystem-related services like support, maintenance, battery swapping, and electric fleet management.

Charging Stations Remain the Biggest Challenge

Despite the promising potential of electric vehicles, Dr. Truong Quang Dung, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, pointed out that challenges related to charging infrastructure and grid capacity persist.

With a plan to deploy 150,000 charging ports, VinFast aims to achieve a ratio of 15 charging ports per 10,000 people, surpassing the US and China. However, there are concerns about the distribution of this infrastructure, as many consumers feel that charging stations are not yet widespread enough.

A survey conducted in Ho Chi Minh City in December 2023 revealed that 86.83% of respondents were hesitant to switch to electric vehicles mainly due to concerns about the lack of charging stations. While VinFast’s stations cover highways and inter-provincial routes, there are gaps in urban and rural residential areas. The company’s decision not to share charging stations with other car brands for the next ten years may hinder infrastructure expansion.

” Another significant challenge is that Vietnam’s power grid may struggle to meet the increased energy demand as the number of electric vehicles grows. The current grid infrastructure, particularly in urban areas, lacks the capacity and reliability to support a rapid increase in electric vehicles without significant upgrades. To meet future demands, substantial investments in renewable energy sources, such as solar power, will be essential ,” analyzed Dr. Dung.

In addition to grid upgrades, Dr. Irfan Ulhaq, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam, suggested that a comprehensive support framework from the government could be pivotal in accelerating the transition.

” The primary focus should be on developing robust supporting industries. Government incentives should prioritize establishing an advanced supply chain for electric and hybrid vehicles. Simultaneously, investments in steel production and material industries will enhance self-sufficiency in manufacturing, reducing reliance on imports ,” opined Dr. Ulhaq.

The RMIT expert added that creating strategic automotive clusters is another crucial step, serving as development and application hubs that bring together manufacturers, suppliers, and research organizations.