VinFast, Vietnam’s first homegrown automaker, is trying to sell its electric vehicles in the US and Europe. It faces stiff competition from Tesla (TSLA), but so far its biggest struggle has been finding buyers for its cars within Vietnam itself.
Despite being backed by one of the country’s largest conglomerates- Vingroup, it has found it tough to convince drivers of its reliability and quality.
Hanoi Businessman Prefers a Petrol-Powered Honda Instead of a VinFast EV
VinFast’s
EV sales are plummeting in its home country Vietnam! That is despite the
government offering generous subsidies to encourage people to make the switch
from petrol-driven cars.
But for Ngo
Trong Tu, a 31-year-old businessman from Hanoi, the decision was simple. He
considered buying a $35,000 VinFast EV but instead spent nearly $5,000 more on
an imported petrol-powered Honda.
"I believe it safer than buying a VinFast EV," he told AFP. “I have seen many reports on social media about faults in VinFast EVs and I don't want to spend my money on an imperfect product" Ngo said!
Faulty Construction and Software Problems are Major Reasons for Declining Sales
VinFast
sold only 7,400 electric passenger vehicles when some 280,000 new such cars
were purchased in Vietnam in 2022. In the first half of 2023, there were about
11,000 purchases (for VinFast EVs) — but more than half went to a taxi company
owned by parent Vingroup.
Moreover, there
have been various complaints online from some customers about faulty
construction and car software problems. Selling EVs is challenging anywhere; on
top of that it’s particularly difficult in underdeveloped countries such as
Vietnam with little charging infrastructure.
So, its becoming pretty challenging for VinFast to continue selling EVs in its home country- Vietnam!
Xe Dien EV Exposes Major Issues in VinFast EVs
Real-world VinFast
EV consumers have reported a litany of concerns since the startup began
deliveries early 2022.
In January,
presenter of "Xe Dien EV" YouTube channel dedicated an entire video
(with English subtitles) complaining about problems with the car including a
faulty battery and an inability to open it using its smart key.
Months
later, they highlighted further issues with its virtual assistant, accelerator
and even its air conditioner.
In April, an
owner’s VinFast EV caught fire in Nghe An province; it wasn’t immediately clear
what caused the blaze but Vinfast later released a statement denying fault in
the incident.
These incidents clearly indicate that quality levels are not quite up to the mark with VinFast EVs!
VinFast's Chief Executive Le Thi Thu Thuy Believes its Unrealistic to Expect a New Product to be Perfect
VinFast’s
CEO Le Thi Thu Thuy acknowledged the complaints and doubts about its products.
“It’s
unrealistic to expect a new product- especially in an emerging category like
electric vehicles, with ambitious new technology and very little mature
infrastructure- to be perfect,” she said.
“We have
high hopes for our products, but we also know that they will improve through
real-world usage by our customers.”
She added that most of the complaints reported to its service centre had been resolved, while several software updates have markedly improved its EVs’ performance.
However, VinFast has Deep Pockets- So there’s Room for Improvement!
However,
VinFast has deep pockets- its parent company is owned by Vietnam's richest
person, Pham Nhat Vuong, who has built a $5 billion empire in industries such
as real estate, tourism and education.
VinFast has
aggressively expanded into the global electric vehicle market with showrooms in
the US and outlets in Europe.
Despite
reporting losses of over $600 million it continues to expand towards markets
such as India, Indonesia and the Middle East. Southeast Asia trade expert James
Guild believes that Vingroup's deep pockets can sustain current losses for now
but not forever.
VinFast plans to sell 50,000 cars globally this year but so far has sold just 21,000. Let’s see how many more it can sell!
The Bottom Line
Local
company Vingroup has pioneered EV infrastructure in Vietnam, but a nascent
automobile expert in this Southeast Asian country does not trust its VinFast
brand.
Consumers
have shown much more faith in foreign brands bringing their premium vehicles
into the nation and with a government keen to encourage people to buy products
made in Vietnam it will be a long and difficult play for Vingroup to gain
either customers' trust or market presence!