One might think that being the undisputed leader in a country with a long tradition of state support is a lucrative business. But for VinFast and its billionaire founder Pham Nhat Vuong, that wasn’t the case at all. Despite dominating its domestic market, the Vietnamese electric vehicle maker has lost around $11 billion since launching its first electric car in late 2021.. Although it receives some government subsidies, its funding comes primarily from Vingroup, Vuong’s conglomerate – with companies of varying sizes Shopping malls to solar farms – and from Vuong himself. By June, Vietnam’s richest man had committed $2 billion of his personal wealth to VinFast’s losses and pledged billions more.
VinFast is no closer to profitability. The company boasts that it “continues to break records” for vehicle deliveries. However, You lose money with every unit sold. So far this year, more than 120,000 electric cars and 230,000 electric motorcycles have been delivered, generating nearly $2 billion in sales. Production costs were almost $3 billion, which resulted in heavy losses even without taking into account research and development costs and overhead costs.
The company sells around 90% of its vehicles on the local market and is increasing production domestically. A new factory with a production capacity of 200,000 units was inaugurated in central Vietnam in June. But since profitability still cannot be achieved, VinFast is relying on international expansion to find salvation. It has already failed once: only a few thousand cars were sold in the United States after trying to land there in 2022. (The plan is still officially underway, but has been pushed back to 2028). The company is now targeting closer markets such as India, Indonesia and the Philippines and hopes to soon have a sixth of its production capacity outside Vietnam.
Where it is most advanced is India, where a sales network with around two dozen dealers has been set up. These are supported by a factory in Tamil Nadu that has a production capacity of 50,000 cars per year. This month the company announced it would expand the manufacturing complex Scooter Electric and buses. He’ll bet that price-conscious Indian consumers will be more receptive than American ones. Although the electric car market in India is small – just over 70,000 units sold in the first half of the year – this number has grown by 65% compared to the same period in 2024, according to HSBC.
However, India is not a safe choice. Three local manufacturers – Tata Motors, Mahindra and MG Motor (a partnership between Indian conglomerate JSW and Chinese automaker SAIC) – along with South Korea’s Hyundai account for more than 90% of electric car sales in the country. The rest is covered by major foreign brands such as Tesla, BMW and BYD. In November, VinFast sold 291 electric cars in India: more than Tesla, but less than half than BYD. Electric two-wheelers, a more fragmented market, could offer greater opportunities, although their sales are growing more slowly than those of electric cars. In both segments, VinFast will face strong price competition, which will not have a positive impact on profitability.
VinFast’s only clear advantage is Vuong’s deep pockets. Vingroup shares are up 600% this year, increasing its assets to over $25 billion from $4 billion in 2024. One reason for the growth is Vietnamese retail investors’ enthusiasm for Vingroup’s new businesses, says Dominic Scriven of Dragon Capital, an investment firm based in Ho Chi Minh City. The group’s transportation arm, launched this year, will begin construction this month on a $4 billion subway line connecting Ho Chi Minh City with a nearby coastal area. Vingroup also recently expanded into film (V-Film) and steel (VinMetal). And VinFast revealed plans to start building robotaxis. Vuong has a busy year ahead of him.
About The Author
