VinFast electric vehicles are parked before delivery to their first customers at a store in Los Angeles, March 1, 2023.
Lisa Baertlein | Reuters
Vietnamese electric vehicle maker VinFast’s ambitious plan to deliver as many as 50,000 vehicles this 12 months is “unrealistic,” according to one analyst.
VinFast said it expects to deliver 40,000 to 50,000 vehicles in 2023 despite a weak global economy. That is almost seven times the 7,400 EVs it sold last 12 months, all in Vietnam.
The corporate delivered only 11,315 vehicles in the primary half of this 12 months, of which 7,100 were sold to Green and Smart Mobility, a Vietnamese taxi company controlled by parent Vingroup, the firm said during its second-quarter earnings call on Sept. 21. In April, Green SM launched a pure EV taxi service in Vietnam with VinFast models.
Shares of Vingroup, one in every of the biggest conglomerates in Vietnam, closed at 45,200 Vietnamese dong ($1.85) on Wednesday, its lowest level since November 2017, according to Refinitiv data.
“Greater than 50% of EV volume during 1H2023 were to a related company while U.S. volume was lower than 200 units raising serious concerns over demand for VinFast’s EVs,” Shifara Samsudeen, equity analyst at LightStream Research, said in a report published on SmartKarma.
Through June, only 137 VinFast EVs — all VF8 SUVs— were registered in the U.S., according to automotive data provider S&P Global Mobility which CNBC confirmed.
U.S. sales aren’t expected to improve any time soon. The reputational issues brought on by the launch of the VF8 is not going to be solved by the VF9.
David Byrne
Analyst, Third Bridge
Meanwhile, U.S. rival Tesla and China’s XPeng delivered 889,015 and 300,145 electric cars, respectively, in the course of the first half of the 12 months.
“VinFast’s ambitious EV plan seems unrealistic. It seems unlikely for VinFast to meet its 50,000 EV target for 2023 and our revised forecast suggests there may be further downside despite shares dropping greater than 50% vs IPO,” said Samsudeen.
In response to CNBC’s request for comment, VinFast said it’s “ramping up production to ensure delivery targets in international markets.”
“Besides, VinFast will soon expand to Southeast Asian and Middle Eastern markets soon, which will even boost our production,” the corporate told CNBC.
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VinFast, which has yet to make a profit, began trading on the Nasdaq on Aug. 15. Its share price soared greater than 250% on the primary day of trading, but has since dropped greater than 60%.
Ambitious plans
VinFast has been ramping up its expansion outside of Vietnam this 12 months, in a bid to compete with automakers globally.
“We have now established our operational facilities, including sales network in Vietnam, North America and Europe, and moving forward, we plan to expand our coverage to Asia-Pacific, Middle East and other potential markets globally,” VinFast CEO Lê Thị Thu Thủy said in the course of the firm’s second quarter earnings call.
“We have now ambitious plans to deliver seven models in Vietnam, North America, Europe and Asia over 2023 and 2024, equivalent to delivering the VF9 in North America by the top of the 12 months, in addition to targeting first delivery of the – the VX6 later this 12 months and the – the VX7 and VF3 in 2024,” said Lê.
Our U.S. sales are improving at our stores. And with the upcoming addition of dealers, we’ll likely exceed our plan for the 12 months.
Higher prices
Analysts also noted that VinFast’s models will not be competitively priced. For instance, VinFast’s VF9 model is priced from $83,000 whereas the Tesla Model X is priced from $68,590 after federal tax credit and gas savings.
Moreover, Tesla passenger vehicles qualify for a $7,500 federal tax credit in the U.S., while VinFast vehicles are currently not eligible as they will not be built in the U.S.
“[This suggests] that it could not as easy as said to increase the sales volume in the U.S. and other foreign markets given more established EV models are selling for a lower cost,” said Samsudeen.
“Our experts questioned the pricing decision of VF9 in the US market. It’s dearer than key, more established competitors equivalent to the Kia EV9 and the Tesla Model X, despite the platform being internal combustion engine-derived, compromising its performance and range,” said Bryne.
VinFast told CNBC that “experts have rigorously researched and priced our vehicles properly.” It also said it doesn’t consider a few of these mentioned vehicles as their competitors, without specifying models.
Through the second quarter, VinFast posted a net loss of $526.7 million, improving 8.2% from the identical period a 12 months ago.
VinFast expects to break even by the top of 2024, its founder Pham Nhat Vuong reportedly told investors at the corporate’s annual general meeting in May.