Pham Nhat Vuong’s move to bet over $8 billion to fund its electric automaker VinFast is a well-known tale of a corporate tycoon who staked a significant portion of his fortune on EVs only to experience financial difficulties, Bloomberg reports.
For instance, the same path was taken by household appliance billionaire James Dyson, Netflix China founder Jia Yueting, and China Evergrande Group’s troubled real estate tycoon. Pham Nhat Vuong is one of the latest to follow Elon Musk, the PayPal co-founder who survived what he commonly called Tesla’s “production hell.”
Unfortunately, it becomes increasingly improbable for any of these EV players to endure the challenges that Tesla did. In 2019, Dyson ended its EV business. A potential delisting from the Nasdaq is looming over Jia’s Faraday Future Intelligent Electric Inc. China Evergrande New Energy Vehicle Group Ltd., owned by Hui, is fighting to remain in business.
Vuong has so far invested $8.2 billion in VinFast’s expansion
VinFast filed for an initial public offering (IPO) in December 2022. However, it apparently postponed plans to list in the United States.
In the past six years, the automaker’s running costs and capital expenditures have been paid for with an astounding $8.2 billion from Vingroup JSC, Vuong’s conglomerate that owns residences, hotels, hospitals, and shopping malls, as well as from its affiliates and lenders.
However, VinFast sales only hit 93,000 e-cars and 162,000 e-scooters, providing a pitiful return on all the money spent.
Instead of backing down, Vuong has only increased his bet. It announced another $2.5 billion investment for VinFast, including $1 billion from his personal wealth.
Can VinFast succeed in the US highly competitive electric SUV market?
The Vietnamese EV maker initially intends to begin shipping longer-range models of its VF 8 SUVs to US clients in April. However, Bloomberg’s report indicated that the plan had been moved this month.
However, it is uncertain whether or not those SUVs will gain popularity in the increasingly competitive EV market in the US.
It is worth noting that America’s leading brand Tesla has been lowering pricing and exerting pressure on established players who have been in business for over a century.
That said, VinFast will have to invest a lot of money to get Americans to know its brand. It will also need to establish distribution networks and provide delivery trucks.
See Also:
- VinFast secures $2.5 billion fund for its global expansion
- VinFast started customer deliveries for first VF 5 Plus models in Vietnam
- VinFast plans to deliver longer-range electric SUVs to the US in April
- VinGroup launches taxi and rental service company to boost VinFast EV’s deployment
- VinFast announces successful customer delivery of its first 45 VF 8 models in the US
Furthermore, the Vietnamese automaker will also need to get beyond the learning curve Musk encountered while attempting to manufacture cars in large quantities.
“Can VinFast run a marathon and sacrifice the short term for the long term?”
Asia-Pacific Center for Security Studies’ professor Alexander Vuving
Vuving further noted that the company might need substantial finances to endure deficits for many years.
Indeed, VinFast would take a while to recoup Pham Nhat Vuong’s enormous investment. Hopefully, it can strive in the electric vehicle industry as Tesla did despite the difficulties.
