The Vietnamese electric vehicle (EV) giant of Vingroup last week formally inked a cooperation agreement with Bahwan Automobiles Trading (BAT) to distribute EVs in Oman.

VinFast broadens pursuit to rule EVs

This event not only marks VinFast’s inaugural foray into the Middle East but also represents a pivotal step in the Vietnamese EV manufacturer’s global expansion journey.

“Under the agreement, BAT will become VinFast’s official distributor in Oman. Between now and 2027, BAT plans to establish and operate 13 stores and service workshops for VinFast. The first store is scheduled to open in mid-2024, offering VinFast’s electric models upon their market debut,” the company stated.

Ta Xuan Hien, VinFast’s CEO for the Middle East, shared, “Oman is a promising EV market as its citizens increasingly show interest in sustainable and green transportation. We believe that partnering with BAT will help VinFast quickly penetrate the market, offering customers in this country the most diverse and high-quality range of EVs.”

Abdullah Ahmed Salim Bahwan, CEO of Bahwan Automobiles Trading said, “We are delighted to become VinFast’s first dealership partner in the Middle East. We are confident the cooperation will contribute to the development of the market in Oman and enhance the electrified commuting experience for customers.”

Meanwhile, in the commencement of construction for VinFast’s manufacturing facility in India last week, Pham Sanh Chau, CEO of VinFast India, shared that the company is poised to introduce an extensive line-up featuring six variants across diverse automotive segments.

“Ensuring competitive pricing and broad accessibility for a diverse consumer base is our steadfast commitment,” said Chau. “We are gearing up to offer a diverse range of options, featuring electric models with an impressive 400km range per charge. This aligns seamlessly with the advancing public charging infrastructure and facilitates convenient at-home charging.”

Establishing a robust supply chain from Indian suppliers is paramount to achieving a breakthrough in pricing for VinFast products, Chau explained.

Located in Tamil Nadu, the VinFast India plant is set to debut its inaugural vehicles by mid-2025. The initiative encompasses an initial investment of $500 million over five years, with a projected annual production capacity of 150,000 vehicles.

The company is also making strategic inroads into Southeast Asia’s largest automotive market, Indonesia, by establishing partnerships with its first five dealerships in mid-February.

VinFast Asia sales director Zachary Mark Hollis said, “The EV market in Indonesia is expected to surge from 50,000 units to potentially double that figure in the near future. Our goal is to capture a significant share of Indonesia’s EV market.”

However, the Vietnamese manufacturer’s strategy of importing vehicles is a temporary measure, with plans underway to construct a local assembly plant capable of producing 50,000 EVs per year. This move is aimed at catering to the young, urban demographic in Indonesia, who are increasingly dependent on reliable intercity transportation.

Yet, the landscape is expected to be challenging. VinFast’s entry into Indonesia pits it against established giants like BYD and Hyundai, which not only have a strong exhibition presence, but are also actively adapting their strategies to align with the local market’s sensitivities to price.

According to Nikkei Asia, Hyundai’s response to BYD’s affordable offerings is the introduction of the Kona Electric this month, a model priced much lower than its premium variant, the Ioniq 5. This strategy could potentially undercut VinFast’s market position unless it responds with equally competitive pricing and localised marketing strategies.

VinFast’s latest offerings in the Indonesian market are priced below half the global average for EVs. However, they remain relatively costly within the Indonesian context, as reported by the Central Statistics Agency last year.

Regarding its financial health, VinFast CFO Nguyen Thi Lan Anh stated that Q4/2023 saw revenue and margins grow significantly. “Our focus on cost optimisation and investment efficiency is key as we venture into new markets like Indonesia and India,” Lan Anh said.

The Vietnamese carmaker, which runs 13 outlets in California and boasts a presence across five US states with 75 dealers, also targets expanding its North American footprint to 130 and its global presence to 400 by the end of this year.

The company’s strategy centres on a dual thrust of driving revenue growth while trimming costs, grounded in efficient manufacturing and materials sourcing. In its quest for cost efficiency, VinFast is also set on slashing material costs by 40 per cent within two years of a vehicle’s launch, leveraging design innovation and supply chain improvements.

For 2024, VinFast’s ambitious target is to put 100,000 vehicles on the road, supported by an aggressive distribution drive.

In 2023, VinFast reported revenues of around $1.2 billion, a robust 91 per cent growth from the previous year. Despite this, the company faced a gross loss of around $551.6 million. Vehicle sales saw a significant uptick, with 34,855 EVs sold, marking a 48 per cent increase, alongside 72,468 electric motorcycles.