Is This How VinFast Finally Gets a Foothold in the U.S. EV Market?

When it comes to electric vehicle (EV) stocks, VinFast Auto (VFS -2.52%) is certainly one of the more intriguing companies. The Vietnamese automaker has leaned on state-of-the-art production facilities with 90% automation to dominate its home market, but has yet to get its foot in the door of the U.S. market.

However, as it appears it’s less about legacy and size of the automaker, and more about innovation, VinFast could gain traction as it introduces new vehicles into the market. In fact, could its VF3 with a price tag of a shockingly low $20,000 be exactly what the doctor ordered?

Welcome, VF3

VinFast is gearing up to make its presence in America known. The VF8 crossover has already launched in the U.S. market last summer and the larger VF9 is due in 2024. At the CES conference, held recently in Las Vegas, VinFast debuted an edgy styled truck concept called the VF Wild, which could put rivals such as Rivian Automotive and Ford‘s F-150 Lightning on notice. The company also announced it would launch the DrgnFly electric bike starting at roughly $2,800.

But what should really intrigue investors is whether or not the much smaller VF3 SUV with a price tag of $20,000 could unlock mainstream consumers like no other EV has. While there is evidence that consumers are starting with a blank slate when it comes to EV brands, VinFast could still face challenges as a near completely unknown foreign brand.

“The competitive landscape of the auto industry has changed,” said Bridget McCarthy, head of China operations for Shenzhen-based hedge fund Snow Bull Capital, according to Automotive News. “It’s no longer about the size and legacy of auto companies; it’s about the speed at which they can innovate and iterate.”

But there’s more to just introducing an intriguingly priced SUV option when breaking into a new market. That’s where VinFast’s next strategic move comes in: dealerships.

Where art thou?

While many young EV makers have adopted Tesla‘s preference for direct sales, the truth is that the mainstream consumer coveted by many EV makers is probably still found at dealerships — at least, for now.

That’s good news for VinFast investors as the company just announced the signing of its initial handful of independent dealers in the U.S. market. The first group of dealers are located in North Carolina, New York, Texas, and Kansas and will initially sell the VF8 with plans to add the VF3, VF6, VF7, and VF9 when they launch.

While the initial group is small, VinFast plans to expand its network of dealerships to 125 points of sale across the U.S. It’s part of a larger expansion strategy backed by a $4 billion EV factory in North Carolina that can produce roughly 150,000 vehicles annually once finished in 2025, and a $2 billion factory in India.

Is VinFast the next big EV maker?

To compare any young EV maker to what Tesla has done since its founding is probably a little unfair. However, VinFast has the financial backing of a much larger conglomerate in Vietnam and has state-of-the-art production facilities, and its $20,000 price tag for the VF3 could open the door to sales like few, if any, EVs have.

Thus far, the industry rule of thumb was that to break into mainstream consumers for EVs, the price tag would have to be below $35,000. The VF3 would be the first vehicle to really shatter that price tag and come in far below it. 

Will that be enough to gain traction in the U.S. EV market? Only time will tell, but as far as young EVs go, VinFast appears to have a very solid plan for expansion, excellent production factories, and the financial backing of the larger VinGroup — good news considering VinFast is wildly unprofitable right now. VinFast is absolutely an EV maker to keep on your watch list.