VinFast bets its U.S. future on $20,000 EV that's 'an interesting twist'

Vietnamese electric vehicle maker VinFast (VFS) made a big splash with its public debut in the US last year. Its stock soared 255% on its initial day on the Nasdaq, after completing a SPAC merger with Black Space Acquisition, surpassing the market cap for Ford (F) and General Motors (GM).

But it’s been a steep decline since. The stock is down roughly 90%, and the VF8, its first global vehicle, has been riddled with abysmal reviews.

VinFast is hoping for a reset with a $20,000 vehicle, unveiled at CES in Las Vegas. With an estimated driving range of 125 miles on a full charge and measuring just 125 inches long, the VF3 would be one of the smallest vehicles in the US market.

It’s one that Le Thi Thu Thuy, chairwoman of VinFast’s Board of Directors, said the company never intended to bring to North America.

“It’s an interesting twist,” Thuy said, explaining why VinFast chose its larger VF8 as the entry vehicle in 2023. “All the market research said US consumers like really big cars.”

But when Thuy visited the US to meet with dealers in September and showed off the smaller VF3, she said they urged her to compete on the lower end of the market.

“Everybody said, ‘definitely, it’s going to be the biggest volume for us,’” Thuy said. “So we went back and we decided to just develop the VF3 for the US market as well.”

The shift in strategy highlights the challenges the Southeast Asian upstart faces in penetrating an increasingly crowded EV market. The company began delivering cars in California last March and sold roughly 21,200 units as of the third quarter of 2023. Tesla (TSLA), by comparison, delivered more than 435,000 vehicles in the third quarter alone.

VinFast’s price tag, ranging from $47,000 to $53,000, has also proven to be a tough sell at a time when American consumers are turning more cautious on the electric transition.

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EV sales topped a record 1.2 million vehicles in 2023, according to Kelley Blue Book, but the rate of sales growth slowed compared to the same period the previous year. In a Yahoo Finance-Ipsos poll last fall, drivers listed range, cost, and infrastructure as primary reasons to delay their EV purchases.

“Now you really have to sell to the mass market,” Thuy said. “You just have to make sure that the vehicles are affordable and can also meet the daily needs of the consumer.”

To meet that demand, VinFast is building a $4 billion EV factory in Chatham County, North Carolina, where the company is aiming to produce as many as 150,000 vehicles annually once it’s completed next year. It’s also turned to dealerships to accelerate the rollout of its cars, abandoning a previous plan to rely solely on a direct-to-consumer model.

The firm also underwent its fourth executive shakeup this week. Pham Nhat Vuong, the founder of parent company Vingroup, stepped in to replace Thuy as CEO while she was named chairwoman of the board of directors. Thuy called the move a “reinforcement” that would position the company for global expansion.

In addition to the US facility, VinFast is building a $2 billion factory in India, with an aim to deliver 750,000 vehicles per year globally by 2026.

Thuy said the VF3, which is already sold in Vietnam, is scheduled to launch in the US “early next year.” But the company isn’t giving up on its larger car ambitions for the market.