VinFast aims to be profitable within 3 years

HAI PHONG, Vietnam -- Vietnamese automaker VinFast, which plans to start delivering electric vehicles to customers in Europe and the U.S before year-end, aims to be profitable within the next three years, Chief Financial Officer David Mansfield said.

When asked whether getting there was tied to the EV maker’s goal of boosting sales to 1 million within the next five to six years, Mansfield said the volume would be "substantially less than that number."

He said he could not share more about VinFast’s sales targets ahead of its planned initial public offering.

"Because of where we are in the potential listing process and the regulations we are under, I can’t share more details," Mansfield said during a media roundtable Wednesday at the automaker’s sprawling vehicle assembly complex here.

VinFast said in April that it had filed confidentially for a U.S. IPO. The share sale could raise about $2 billion, Bloomberg News reported, which would make it the biggest ever by a Vietnamese company.

The automaker previously said it was looking for a fourth-quarter share sale. That timetable has changed due to volatile market conditions, Mansfield said.

VinFast has secured about $1.2 billion in incentives for its planned EV factory in North Carolina, where it intends to start production in 2024.

The company said in July that it had signed agreements with banks to raise at least $4 billion to help its U.S. expansion.

1 million milestone

VinFast is a unit of conglomerate Vingroup JSC, which was founded by billionaire Pham Nhat Vuong in 2017. Vuong set the ambitious target to deliver as many as 1 million cars globally in five to six years.

To put that into perspective, VinFast wants to do in 10 to 11 years of existence something that Volvo Cars has not been able to achieve 95 years.

The company builds 200 cars a day on one, eight-hour shift in Vietnam. The goal is to boost that to two shifts starting next month and eventually to three shifts to maximize its home plant’s 250,000 units of annual capacity.

The North Carolina plant will have 150,000 units of annual capacity, the company said, adding that it’s looking for a location in Europe for a third factory but declined to give a planned capacity for that plant.

VinFast Deputy CEO Michael Johnson, who is also head of manufacturing, did provide four criteria for the automaker to establish a plant in Europe:

1. It needs to be close to the markets VinFast will sell in, which currently includes Germany, France and the Netherlands.
2. It needs to provide the opportunity to use clean energy resources to power the facility
3. It needs to be in a location that make it logistically easy to transport vehicles to its target markets in Europe
4. It needs to be in location with a qualified workforce.

'If he wants to do it, it's done'

Johnson is also bullish about the company’s 1 million a year goal.

"If he [Vingroup boss Vuong] wants to do it, it’s done," Johnson said, adding that he also has an ambitious target for the Vietnam plant.

"Our planned capacity here will be more than any other single site," Johnson told Automotive News Europe while touring the factory.

He said that is possible because at 836,000 square meters (9 million square feet), the Hai Phong complex is three times the size of most car assembly plants in the U.S.

Hyundai says its factory in Ulsan, South Korea, is the world’s largest, with a volume of more than 1.3 million vehicles in 2020.

Johnson also said that while it would take at least six months of recruiting to get enough people to add another eight-hour production shift in the U.S and Europe, he can fill the slots in half that time in Vietnam.

Also, the country’s workweek is 44 hours, which means VinFast can add a production shift every other Saturday of the year.

"We have a flexible and willing workforce," he said, adding that VinFast plans to double its staff to 12,000 to accommodate the second shift.

VinFast started making gasoline-powered cars in 2019 but said it would transform into an EV-only brand this year. The company’s final 100 gasoline-powered models will be completed by October, Johnson said.

The automaker is transforming its former engine shop at its plant here to build castings for its electric motors, which it also builds itself.

The automaker will also start making its own battery cells and chips in Vietnam, a move VinFast CEO Le Thi Thu Thuy said was taken in response to unreliable access to both because of the ongoing supply chain crunch.

The company says it has about 65,000 reservations for its EVs globally. The models due to arrive in the U.S. and Europe before year-end are the VF 8 and VF 9 SUVs.

In Germany, the VF 8 midsize SUV will start at 45,700 euros and the VF 9 large SUV at 62,250 euros, excluding the cost to lease the battery, which is 120 euros a month for the VF 8 and 150 euros a month for the VF 9. To purchase the VF 8 outright, forgoing the battery-lease option, in Germany the starting price is 61,700 euros for the VF 8 and 82,250 euros for the VF 9.

The VF 8 and VF 9 SUVs will start at $42,200 and $57,500, respectively, for U.S. customers, excluding the cost to lease the battery.

VinFast has signed an agreement with FCA Bank, which is part of Stellantis, to help with financial services in Europe. The automaker also has a memorandum of understanding to make LeasePlan the brand’s preferred partner for vehicle leasing in Europe. LeasePlan will also provide fleet management, remarketing and online leasing solutions.

Johnson, who during more than 30 years at Ford Motor worked for the automaker in Germany, the UK, South Africa and North America, said VinFast aims to offer the content of a premium car at an "acceptable cost."

He said that will be possible because of the Vietnam plant’s high amount of vertical integration -- making everything from plastic injection moldings, to subassemblies, to seat frames -- is the most impressive he has seen in his career.

"And this is not just compared with Ford plants. This includes Volvo, Jaguar, Land Rover, Daimler and BMW factories," Johnson said.

When asked what VinFast will do to stand out from rivals, which it said were Tesla and established automakers in the U.S. and Europe, Thuy said the key will be offering good quality, reasonable prices and reliable customer service.

Bloomberg contributed to this report