The Powerhouse Behind VinFast's Electric Vehicle Ambitions
- Written by Daily Sun
Vietnam's richest man is pouring resources into VinFast, the electric vehicle arm of Vingroup, Vietnam's largest private company. This move signals a strong belief in the future of electric mobility.
At Vingroup's annual general meeting of shareholders, Pham Nhat Vuong, Vingroup's Chairman reaffirmed the corporation's commitment to its electric vehicle subsidiary, VinFast. "The electric vehicle market will continue to grow," Vuong declared. "VinFast is Vingroup's mission, honor, and future, and I will not give up on VinFast."
Vuong's statement underscored his confidence in the electric vehicle industry's unwavering trajectory. It also signaled Vingroup's role as a financial backing for VinFast's international aspirations.
Multi-industry Corporation from Vietnam, a New Manufacturing Powerhouse
A recent survey by the European Chamber of Commerce in Vietnam (EuroCham) indicates growing optimism in the country's economy among European businesses. The EuroCham Business Confidence Index, conducted by Decision Lab, reached a six-quarter high of 52.8 in the first quarter of 2024.
Vietnam's economic rise is also reflected in the success of domestic corporations like Vingroup. This diversified conglomerate is a major player in the economy, contributing an estimated 1.6 percent of Vietnam's 2023 GDP. Vingroup operates across three core sectors: technology-industry, trade & services, and social enterprise.
While all of Vingroup's businesses contribute to its success, the real estate and electric vehicle segments have emerged as the primary revenue drivers in 2023, exceeding 6.5 billion USD combined. In the first quarter of 2024 alone, the company achieved total consolidated net revenue of 853.7 million USD and consolidated after-tax profit of 52.5 million USD.
Manufacturing emerged as the key driver of this growth, with revenue reaching 238.2 million USD, a significant 3.4-fold increase compared to the same period in 2023. This highlights the growing strength of Vingroup's manufacturing sector.
In fact, Vietnam has emerged as a manufacturing powerhouse, attracting global companies seeking to diversify supply chains. Low labor costs, a skilled workforce, and open investment policies fuel this growth. However, Vietnam has long aspired to develop its own independent automotive industry, complete with a domestic supply chain.
Prior to VinFast's appearance, the Vietnamese auto sector relied heavily on imports, with limited local assembly and underdeveloped supporting industries. Despite these challenges, Vietnam's automotive market boasts immense potential, with a car ownership rate of just 23 per 1,000 people – one of the lowest globally.
VinFast has become a key player in fostering an independent and proactive Vietnamese auto supply chain. This, in turn, elevates the national brand on the world stage. Just seven years after unveiling its first models at the Paris Motor Show, Vingroup's chairman, the founder of VinFast, has been included in a prestigious list of the most influential figures in the global auto industry.
VinFast's global expansion plan was recently underscored by the inclusion of Vingroup's chairman and VinFast's CEO, Pham Nhat Vuong, on the 2024 MotorTrend Power List. Notably, Vuong is the only honoree from Southeast Asia, highlighting his visionary leadership and the groundbreaking work underway at VinFast. This recognition underscores VinFast's rapid rise and its potential to disrupt the established automotive landscape.
Highlighting his belief in VinFast's future, Vuong confirmed a personal investment of an additional $1 billion into the electric vehicle manufacturer.
VinFast's distinct advantage in the competitive European market
2023 was a good year for the car industry in Europe, with sales in the European Union jumping nearly 14% to over 10.5 million units, according to the European Automobile Manufacturers Association (ACEA). This marks the highest level of new car registrations since before the pandemic.
A significant shift occurred in consumer preferences, with battery-electric vehicles (BEV) becoming the third-most popular choice, surpassing diesel cars for the first time. BEV sales surged by 37%, capturing a 14.6% market share (up from 12.1% in 2022) with over 1.5 million units sold. This momentum is expected to continue, with projections suggesting BEVs could outsell traditional internal combustion engine (ICE) vehicles in Europe by 2025.
The rise in European demand for electric vehicles is attracting automakers worldwide. Meanwhile, the long-standing cooperation between Vietnam and the EU, further solidified by frameworks like the EVFTA (EU-Vietnam Free Trade Agreement) and EVIPA (EU-Vietnam Investment Protection Agreement), could prove advantageous for Vietnamese EV manufacturers seeking to establish themselves in the European market.
Vietnamese electric vehicle maker is accelerating its push into the European market with a key partnership announced this week. The company signed a cooperation agreement with Bosch, a global leader in automotive technology and services. This deal grants VinFast customers in Europe access to Bosch's expansive network of charging stations, a significant boost for EV adoption and travel convenience.
Vingroup's Tech Ecosystem Propels VinFast's Electric Vehicle Push
Forging strategic partnerships and prioritizing consumer-centric technology features, VinFast aims to carve a niche in the competitive European electric vehicle market. The company's product portfolio emphasizes innovative features that enhance the driving experience. This focus, coupled with the backing of its parent company, Vingroup, positions VinFast for potential success in Europe.
VinFast's parent company brings more than just financial muscle to the table. It also provides a comprehensive technological ecosystem that empowers VinFast to develop cutting-edge, smarter electric vehicles that surpass gasoline-powered rivals. Vingroup's technology ecosystem several specialized entities:
- VinBigData: Established on the bedrock of Vingroup Big Data Institute's data science and AI expertise, VinBigData delivers cutting-edge products like ViVi (smart voice assistant) and AI Camera.
- VinAI: A leader in smart mobility solutions, VinAI empowers automakers to elevate vehicle performance through advanced AI technologies. Their innovations are already integrated into VinFast models and those of European automakers. Notably, VinFast's collaboration with VinAI on VinFast MirrorSense, the world's first AI-driven automatic mirror adjustment technology, recently earned an Innovation Award at CES 2024.
- VinES: With a focus on research, development, and production of batteries, VinES plays a crucial role in solidifying VinFast's self-sufficiency in battery technology. Last year's merger between VinES and VinFast further strengthens VinFast's position in the competitive EV market.
- VinCSS: Cybersecurity takes center stage with VinCSS, which provides passwordless authentication solutions and IT security services.
- VinHMS: Optimizing business operations is VinHMS's forte. This software company delivers high-quality tech products specifically designed to streamline enterprise activities.
- VinBrain: Revolutionizing healthcare with AI, VinBrain leverages cutting-edge technology to create tailored solutions for the medical sector.
Recently, Vingroup has earned the prestigious AIBP 2023 ASEAN Tech for ESG Award, solidifying its position as a leader in sustainable development across Southeast Asia. As a regional multi-industry conglomerate, Vingroup is driving a greener future through digital initiatives focused on ESG principles.
Leveraging cutting-edge technologies like AI, IoT, robotics, immersive tech, and blockchain, Vingroup addresses sustainability challenges across its diverse portfolio covering the technology industry, trade & services, and social enterprise.
VinFast serves as the final piece of Vingroup's ambitious puzzle, driven by a vision to elevate the lives of everyone with smarter technologies.
Vingroup's chairman emphasizes social responsibility as a key motivator for investing in VinFast. He aspires to establish VinFast as a prestigious Vietnamese brand on the global stage. Mr. Vuong acknowledges the long-term commitment required and pledges to dedicate significant resources from both Vingroup and himself to ensure VinFast's success.
Hashtag: #VinFast
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