Few electric vehicle (EV) start-ups are as intriguing as VinFast Auto (VFS -0.99%), which is trying to disrupt the EV market all the way from Vietnam. It's tough enough to break into the EV industry from the U.S., and to do it from the outside seems even more daunting. But VinFast has a few things going for it, and investors just got some good news. Let's dive in.
Introduction
Most investors likely haven't heard of VinFast Auto before -- and for good reason. Before making a small name by trying to break into the U.S. EV market, it was busy dominating its home Vietnamese market with electric scooters, cars, and buses.
Its Hai Phong facility is state of the art and can produce up to 300,000 units, many of which it hopes to ship to the U.S. market, especially SUVs. It has a global production list of seven EV models and one pickup concept, and it has the financial backing of its parent company Vingroup, which has invested billions in the young EV maker.
So that's a brief description of VinFast Auto. But what's the good news?
Distribution
One of the most difficult things for young EV makers to accomplish is connecting the dots between product and consumers. Just ask Fisker what happens if you make a product but can't distribute it -- the answer isn't good.
So it's great news for VinFast investors that the company just added 12 franchised dealerships to sell its crossover EVs in the U.S. market. Five of those 12 dealerships will be located in Florida, another four in Texas, and the others in Kentucky and Connecticut.
"Leveraging the network of stores, market experience, and capabilities of leading U.S. dealers, VinFast will quickly deliver high-quality, competitively priced electric vehicles," said David Duncan, vice president of sales, in a press release.
Having 12 dealerships might not sound like a lot, but it's a big chunk of the company's total 18 dealerships across only seven states, not including California where its company-owned locations began selling roughly a year ago. For the record, its California sales model is still based on direct-to-consumer, but the rest of the distribution plan has pivoted to a dealership model.
What does it all mean?
This is good news as it shows real growth on the first phase of VinFast's plan to have more than 100 U.S. dealerships by the end of 2024. Currently, the company only has one vehicle on sale in the U.S., the VF 8 crossover, but dealers are soon expected to receive the VF 9 -- which launches this quarter -- and the smaller VF 7.
The VF 8 starts at $47,200 with shipping, and leased vehicles qualify for the $7,500 federal EV incentive, making it competitively priced. But the trick will be to convince U.S. customers to trust and buy from a brand-new foreign company with an already forward-thinking EV product -- no easy task.
VinFast's story is in the early, early innings, but this is just a little bit of good news that it's making legitimate progress on its path to creating a real distribution network to connect people to its products. Investors should be delighted.
