Hanjayeon "Vietnam VinFast, Abandoning Internal Combustion Engines and Going All-In on Electric Vehicles... Worth Watching"

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[Asia Economy Reporter Kiho Sung] Vinfast, Vietnam's only complete car manufacturer, announced that it will completely stop producing internal combustion engine vehicles and focus solely on the electric vehicle sector. This follows the recent trend of complete car manufacturers switching to electric vehicles, and there is an analysis that global automobile manufacturers' investment and marketing activities should be closely watched.

The Korea Automotive Technology Institute (KATECH) stated in its industry trend report "The Future of Vinfast, Fully Committed to Electric Vehicles," released on the 28th, "Vinfast, now in its fifth year since entering the automobile business, plans to stop producing internal combustion engine vehicles this year and aims to sell over 1 million electric vehicles by 2028."

Recently, Vinfast has been laying the groundwork for expanding related businesses such as ▲ converting all production lines to electric vehicles ▲ establishing battery pack factories ▲ installing electric vehicle charging stations. Unlike the usual pattern of targeting domestic markets first and then overseas markets sequentially, Vinfast plans to proactively challenge the US market.

In July, Vinfast opened a showroom in California, USA, providing promotion and test drive services for electric vehicle models, with plans to expand throughout the US in the future. Additionally, at the EV International Conference held in Oslo, Norway, in June, Vinfast announced plans to open more than 50 stores across Europe, including 25 in Germany, 30 in France, and 5 in the Netherlands.

However, KATECH pointed out that the US Inflation Reduction Act (IRA) is considered a risk factor for entering the US market. Vinfast originally planned to establish electric vehicle and battery factories in North Carolina by the first half of 2024, but due to the enactment of the IRA, it will no longer be eligible for electric vehicle subsidies.

A KATECH official said, "Challenges include initial public offering (IPO) in the US, building sales and maintenance infrastructure, and improving brand awareness. However, due to the trend of decoupling from China, the ASEAN region is likely to gain a positive effect, and among them, Vinfast, which has an excellent manufacturing base, is expected to benefit."

He added, "As competitors aggressively increase investment and marketing in the global market (for electric vehicles), Vinfast's moves should be continuously monitored."