VIETNAM REPORT
VinFast, an automotive subsidiary of Vingroup, the largest conglomerate in Vietnam, announced that it ended orders for two types of gasoline-powered vehicles in early July. The models covered are SUVs and sedans, and the company now will only sell the Fadil, a compact gasoline-powered vehicle. The company has announced its plan to withdraw from the production of gasoline-powered vehicles by the end of this year and is hastening its shift to EV production.
VinFast states that the reason for the suspension of orders for the two models is that “procurement of parts has become difficult and the number of units delivered to customers was not as large as expected.” The company did not mention the timing of the suspension of orders for Fadil. The company began selling EVs in Vietnam in December 2021.
Currently, only small SUVs are available, but the company plans to add two large SUV models by the end of 2022. The company also began taking orders for EVs in the U.S. and European markets in January and is preparing to start operations of a new EV plant in the eastern U.S. state of North Carolina in 2024. Vinfast announced that it sold 14,695 new vehicles in the January-June period. Of these, 2,141 were EVs.
Source: The Nikkei
PSR Analysis: Compared to EVs, gasoline-powered vehicles require more parts than EVs, and if even one of the thousands of parts is missing, the vehicle will not be completed. The switch to EVs is a rational decision at a time when parts procurement is becoming a problem worldwide. Of course, EVs also have parts shortage problems, but EVs can reduce parts procurement risks on a relative basis.
Vinfast, a newly emerging manufacturer, has been steadily increasing its sales volume and is expanding its sales network to the U.S. and other countries. For the U.S. plant mentioned in the above article, the company revealed that the incentives it will receive from the North Carolina state government will be worth a total of $1.2 billion. The incentive package will include job development investment subsidies, infrastructure development at the proposed plant site, and human resource development costs. The state is actively promoting clean energy, and this will be the largest incentive offering ever. PSR
By Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
