Vietnam’s VinFast to Target Europe Even as it Struggles to Gain Ground in the U.S.

VinFast will begin shipping its first EVs to the European Union before the end of the year, now that it has received EU regulatory approval, putting it into direct competition with Chinese brands like Great Wall and BYD that have flooded into the continental market.

A first shipment of VinFast’s midsize VF 8 crossovers will be delivered to dealers in France, Germany and the Netherlands, Reuters reported Thursday, more than four times the original target set by the company, which is based in Haiphong.

That would be a fraction of the roughly 70,000 EVs Chinese automakers shipped to Europe during the first three quarter of 2023, according to research firm Inovev. But a new EU probe over allegedly non-competitive practices could result in new tariffs on the Chinese brands, reducing any competitive advantages they currently have.

Going all-electric

VinFast was founded in 2017 and began producing its first product, a licensed and modified version of the BMW X5, two years later. In 2021, it announced plans to transform itself into an all-electric brand, subsequently unveiling a range of EVs including the VF 8 that went on sale in the U.S. this year.

The automaker’s initial plans also called for it to enter the European market, with 700 of those EVs to reach the continent by July. That was delayed until EU regulators gave their approval. Now that VinFast has gotten the go-ahead, it has boosted its sales goals.

“We expect to deliver the first VF 8 models to French, German and Dutch customers in the fourth quarter of this year,” Le Thi Thu Thuy, VinFast’s chief executive, told Reuters.

More products, more markets

As it plans to do in the U.S., VinFast will subsequently add more product lines to the European mix. That is set to include the bigger, more luxurious VF 9, as well as smaller models like the VF 6 and VF 7. They will go on sale in 2024, Thuy said.

The Vietnamese automaker is also expected to expand into more of the EU’s 27 member countries, though it has not announced timing.

 

The company’s entry into Europe comes at a time when that market is rapidly beginning to embrace EVs. All-electric models account for as much as three-quarters of the new automobiles sold in Norway, though demand is significantly less in some countries, such as Italy. But the EU has set strict targets for phasing out the internal combustion engine over the next 12 years.

Chinese EVs come under scrutiny

That has led to a flood of EVs from China. Brands such as BYD and Great Wall have seen their share of the European market more than triple since 2019. But there’s a growing backlash that has triggered a closer look by regulators.

Earlier this month, the European Commission, the EU’s executive arm, began looking into potentially illegal subsidies for Chinese EV manufacturers provided by the Beijing government. They’re blamed for the lower prices on products like the BYD Song Plus that have proven difficult for domestic brands to match.

“Europe is open to competition but not for a race to the bottom,” Commission President Ursula von der Leyen said in a speech to Europe’s Parliament.

New tariffs could benefit European automakers — and Vinfast

If the probe results in new tariffs on Chinese auto imports, that could help not only domestic European brands such as Volkswagen and Peugeot, but also VinFast, industry analysts believe.

VinFast could use the additional outlet. It has gotten off to a slow start after shipping its first load of 999 VF 8 EVs to the U.S. at the end of last year. A series of snags delayed the first consumer delivery until March. Meanwhile, initial reviews of the midsize battery-electric SUV were harshly critical, leading the automaker to delay its American rollout to address various concerns such as its electronic control systems.

Stock rides the roller coaster

Complicating matters, VinFast racked up increasing losses ahead of the sales launch — though that wasn’t entirely unexpected as it began its U.S. rollout. Through the first half of 2023, VinFast has lost $4.5 billion since it announced its shift to becoming an all-electric brand.

It has since shown some more positive signs. Second-quarter revenues hit $327 million, a 131% increase. And its net loss fell 8.2% from the same period a year ago, to $526.7 million.

And, after some initial concerns, VinFast’s SPAC merger with Hong Kong-based Black Spade Acquisition Co today was completed in August, followed by a listing on the Nasdaq exchange. But the company’s stock has been riding a roller-coaster since then, hitting a $93.00 high before settling back to just over $16 a share on Thursday morning.