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The Star
4 days ago
- Automotive
- The Star
Vietnam's richest man shifts strategy after US$14bil bet on EVs
HANOI: Pham Nhat Vuong (pic) spent billions of dollars on an unsuccessful push to turn his upstart electric automaker into a major player in the US and Europe. Now, Vietnam's richest man is changing tack - betting his path to halting deep losses at VinFast Auto Ltd runs instead through Asian markets like India, Indonesia and the Philippines. It's the latest twist in an against-the-odds quest by the 57-year-old property tycoon to build a global carmaker. At least US$14 billion has already been poured into VinFast, including funding from Vuong's conglomerate Vingroup JSC, its affiliates and external lenders - as well as more than $2 billion of his own fortune. He says he's willing to support VinFast until his money runs out. Vuong's commitment has kept the company afloat even as losses mount. Last year it booked $1.57 of costs for every $1 of sales and logged a $3.2 billion loss. It's a race against time, said Tu Le, founder of Detroit-based auto consulting firm Sino Auto Insights. While VinFast is now gaining traction in Vietnam, it's unclear whether it can build a presence in Asia quickly enough to compete against rivals from China and elsewhere. The opening of its first overseas assembly plant in India earlier this month is a crucial piece in Vuong's Asia pivot. The factory near Thoothukudi, the Indian port city, will be capable of producing 150,000 vehicles annually for South Asia, the Middle East and Africa. It's part of $500 million VinFast will spend in its initial India foray - an investment the company expects to eventually grow to $2 billion. In June, the company inaugurated its second Vietnam plant that initially can produce 200,000 vehicles annually, and it's months away from a planned opening of a smaller factory in Indonesia. The new target markets are "late bloomers' in terms of EV sales "but hold tremendous potential and are currently entering a vibrant phase of growth,' the company said. The expansion plans follow VinFast's push to establish itself in North America and Europe. But the effort was marred by initial bad reviews of its cars and a recall over malfunctioning software. Of the company's 97,399 global deliveries in 2024, about 90% were in Vietnam. Last year it delayed a planned North Carolina EV factory until 2028. The southern half of Asia, however, is home to rapidly growing economies with well over 2 billion consumers. Rates of car ownership are lower than in the West and there are fewer established domestic brands. But it's less affluent, meaning demand likely will be driven by smaller cars with slimmer profit margins. "Like many other companies, VinFast makes short-term adjustments to its business plans in response to changing circumstances,' the company said in a statement. Since VinFast commenced operations in 2017, competitive and inexpensive Chinese EV-makers have emerged, a threat not just to startups but also giants like Volkswagen AG and Tesla Inc. While there's less competition in South-East Asia than in the West, "that's going to change when the Chinese bring the price war,' Le said. If VinFast can't establish itself before this, "I don't know how much future it'll have outside Vietnam.' Vuong expects VinFast to break even at the end of next year. Filings show that 92% of its cumulative revenue over the last four years came from Vietnam. One-third of that total came from related parties. GSM Green and Smart Mobility Joint Stock Co., a taxi company in which Vuong holds a 95% stake, has purchased thousands of VinFast vehicles. In other words: Vuong is moving money from one pocket to another. Establishing a new car brand isn't easy. It takes time to gain brand recognition and customer trust, and to build out networks of service centers and charging stations, said Thanachai Vorachaivanich, a managing director with automotive analytics firm Proliance Co. Several analysts said VinFast would've been better off establishing itself in Vietnam first instead of its everywhere-at-once approach, which is costly and uncertain. VinFast grew out of Vingroup, a conglomerate involved in everything from real estate to hospitality and whose revenue amounts to around 1% of Vietnam's gross domestic product. Its property development arm is the most profitable, and has helped bankroll the EV maker. Vuong has channeled at least $8 billion from his corporate group into VinFast as grants, loans and conversions of debt to equity. VinFast remains a financial drag on Vingroup's results, said Ken Foong, an analyst with Bloomberg Intelligence. But that might not matter all that much to Vuong, who controls Vingroup and has a $11 billion fortune, according to the Bloomberg Billionaires Index. Barring an economic downturn in Vietnam or a drastic change in Vingroup's access to capital, the real estate business might generate enough money to sustain the carmaker as long as Vuong wants, Foong said. Dan Gittleman, managing partner at automotive software consultant SanBoca Insights, has turned from skeptic to believer in Vuong's vision. Two to three years ago, "I said: 'Zero chance that this guy could do it',' Gittleman said. But the company has learned from its mistakes, grown well in Vietnam and is now in a good position to expand overseas, according to Gittleman. "The name pops up way more than you would think with people in the automotive world,' he said. "Even here in Florida I've seen a few of 'em on the road.' - Bloomberg
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Business Standard
5 days ago
- Automotive
- Business Standard
EV adoption surges in developing nations, challenging oil demand narrative
There's a comforting story that oil bulls like to tell themselves to stave off worries about the future: While the privileged few in Europe and California might have lost their minds over electric vehicles, billions of drivers in the Global South are readying themselves to provide the next wave of petroleum demand. Those who believe this might want to have a look at the cars and two-wheelers that people are actually buying right now. Far from trailing the rich world in their enthusiasm for battery cars, developing nations are surging ahead. China (where plug-in vehicles have nearly half the market) gets most of the attention, but neighboring Vietnam isn't far behind: Pure-play EV-maker VinFast Auto Ltd. accounted for more than a third of car sales in the first half of this year. Turkey's 13 per cent sales share for fully electric vehicles in the first quarter was about double the penetration rate in Spain and Australia, according to a survey by Strategy&. In Indonesia, the share was about the same as in the US, at 7.4 per cent. In Malaysia, it was 8.6 per cent in the first half. Those countries all have legacy car industries still pumping out internal combustion engines. Things are moving even faster in nations wholly dependent on imports. More than three-quarters of the value of vehicles brought into Nepal, Sri Lanka and Djibouti last year was purely electric. Import shares in Ethiopia and Laos were 40 per cent and 30 per cent respectively. Plug-in sales increased by 60 per cent in developing countries as a whole in 2024, according to the International Energy Agency. As with the wave of EVs taking over the Gulf's oil producers, it's a sign of a world switching to electric mobility with breathtaking speed. The pace of the change makes the Organization of the Petroleum Exporting Countries, which expects developing economies' oil consumption to increase by half by 2050, look deluded. It's not impossible this rapid electrification will slow down. EV buyers in emerging markets over the past few years have been encouraged by a range of exemptions from import tariffs, licenses and sales taxes. These subsidies may be removed as local markets mature. That's a thin reed on which to base hopes of a gasoline resurgence, though. In major emerging markets, battery cars were already around price parity with conventional ones last year (in Thailand, they were cheaper). Falling battery costs and rising volumes have since driven down the price of market-leading Chinese EVs by another 10 per cent, while a weaker US dollar has improved purchasing power in many countries. Combined with the lower ownership costs of EVs — a major consideration in emerging markets, where a larger share of vehicles are used as taxis and to transport goods, rather than as private cars — that's likely to keep battery automobiles competitive with conventional ones, even without government support. Policymakers are also likely to extend such incentives for purely macroeconomic reasons. In India and Pakistan, oil and gas account for as much as a third of the total import bill, compared to around 10 per cent in the US and European Union. That makes the economy unusually vulnerable to swings in the price of crude, and ensures that money spent on transport fuel is enriching other countries, rather than being recycled through domestic supply chains where it can enhance economic growth. Switching half of India's car fleet to electricity — still a far-off ambition, to be sure — would be sufficient to eliminate the country's persistent current account deficit, according to one 2022 study. Conventional cars will still be guzzling gas for years after they disappear from dealers' lots. BloombergNEF doesn't expect the fleet of plug-free cars to peak until 2028. That will provide an ongoing market for gasoline and diesel — but it's still a declining one. By 2030, BloombergNEF forecasts EVs will be displacing about 5.3 million barrels of oil a day, equivalent to about a 10th of all road fuel consumed globally at present. The stronger argument for the resilience of road fuel at this point isn't that emerging markets are going to start using more of it. It's clear this battle is already being lost. Instead, it's that rich countries have raised tariff barriers, bungled charger rollouts, and loosened fuel-economy rules to the point where they've sabotaged their own transition plans. That's giving incumbent carmakers a chance to eke a few more years out of their obsolete businesses, while competitors in the Global South seize the technological lead. Most of the world is already taking advantage of cleaner, cheaper road transportation. By the time developed countries realize how far they've fallen behind, it will be too late to catch up.
The Star
04-06-2025
- Business
- The Star
Asean manufacturing sector records slight uptick in May amid challenging conditions - S&P Global
Workers assemble VinFast Auto Ltd. Feliz S electric scooters at the company's manufacturing plant in Hai Phong, Vietnam. - Bloomberg KUALA LUMPUR: The ASEAN manufacturing sector recorded a slight performance uptick in May, with the leading index inching up to 49.2 from 48.7 in April, according to the latest S&P Global ASEAN Manufacturing Purchasing Managers' Index (PMI). In a note, S&P Global said the modest uptick was supported by a softer and marginal rate of output contraction. "As a result, firms aligned their employment levels, purchasing activity, and stocks of input accordingly, with downturns in all areas showing less severity compared to April. "That said, new orders received at the ASEAN manufacturing sector fell at a quicker rate,' it said. S&P Global stated that key indicators, including output, new orders, employment, and raw material inventories, have all registered declines. "Vendor performance also deteriorated, (with) delivery times for inputs lengthening after remaining relatively stable the previous month,' it said. On a slightly more positive note, S&P Global noted that cost pressures have eased, with companies raising charges only marginally. "This adjustment, however, partly reflects a broader trend of declining demand within the market,' it said. S&P Global said new orders from international markets also weakened, signalling an overall challenging demand environment. "Though modest, the rates of contraction were the most marked since August 2021 and over the past five months, respectively,' it said. Regarding the output prospects, S&P Global stated that ASEAN manufacturers exhibited a slightly more optimistic outlook for the year ahead, despite the sector's subdued performance. However, it said the level of confidence remains historically weak, ranking as the second-lowest since July 2020. Commenting on the data, S&P Global Market Intelligence economist Maryam Baluch said the region's manufacturing sector continued to face challenges as it reached the midpoint of the second quarter, with operating conditions further worsening. She said the PMI data indicated that while the latest downturn has been milder -- partly due to softer contractions in output, employment, and purchasing activity -- the decline in new orders has intensified, marking the steepest drop since August 2021. "This notable decrease, along with a general sense of subdued optimism among industry panellists, suggests that the sector may face ongoing difficulties in achieving growth in the coming year,' she added. - Bernama
Time of India
30-05-2025
- Automotive
- Time of India
VinFast India to delay its Tamil Nadu factory inauguration due to loan talks
VinFast Auto Ltd . is reportedly seeking a loan of up to $200 million from Indian state-owned banks as it prepares to enter the Indian car market, although the inauguration of its Tamil Nadu factory has been delayed to July 30, reports Bloomberg. ETAuto earlier stated that Vietnamese electric vehicle maker is in discussions with lenders like Central Bank of India Ltd. and Union Bank of India Ltd. to secure funding for its initial $500 million investment plan in India, aiming to establish a presence in the competitive Asian market. The company plans to launch its VF6 and VF7 models soon, followed by the VF3 in 2026, while also expanding its global footprint with a new plant in Indonesia expected by October. VinFast 's India factory, located in Tamil Nadu, was initially scheduled to open on June 30. The company has now announced a revised inauguration date. According to sources familiar with the matter told Bloomberg, VinFast is engaging with Indian lenders for the first time. The loan under discussion may be structured in rupees or as foreign currency through the external commercial borrowing route. The terms of the loan are still under discussion and subject to change. The loan is part of VinFast's broader investment strategy in India. The company has earmarked $500 million for its initial foray into the country. VinFast is actively building its distribution network in India.
Time of India
29-05-2025
- Automotive
- Time of India
VinFast Auto in talks to secure $200 mn loan from Indian banks
VinFast Auto Ltd. , the Vietnam-based EV maker, is reportedly in discussions to secure a loan of up to $200 million from Indian state-owned banks as it prepares to enter the Indian electric vehicle market, Bloomberg reports. The automaker's move into India is part of a larger $500 million investment plan, with the loan potentially structured in rupees or as foreign currency. This marks VinFast's first engagement with Indian lenders as it shifts focus to Asian markets amid challenges in North America and Europe. Central Bank of India Ltd. and Union Bank of India Ltd. are reportedly in talks with VinFast regarding the loan, as per the sources quoted in Bloomberg's report. As per the report, the loan's structure may be in rupees or as foreign currency through the external commercial borrowing route. The terms are still under discussion and subject to change. VinFast India plant VinFast intends to inaugurate its plant in Tamil Nadu state on June 30. The company is also finalising its local distribution network. The company plans to open bookings for its VF6 and VF7 models in the coming weeks. Bookings for the VF3, a compact EV, are expected to follow in 2026. However, the firm has yet to announce pricing for these models in the budget-conscious Indian market. VinFast's expansion into India is a strategic shift away from North America and Europe, with high logistics costs prompting this change in focus.
