PARIS — VinFast has had to do a lot more in-house and in its home market than it expected to keep pace with its ambitious timelines to launch the brand in Europe and the United States.
The reason for this include the COVID-19 pandemic, the chip shortage and volatile prices for raw materials.
Therefore, the Vietnamese automaker makes everything from plastic injection moldings, to subassemblies, to seat frames at its factory in Hai Phong, which is 120 km east of Hanoi.
“VinFast had to internalize more activities than would be usual for a startup, and we had to localize a lot in Vietnam,” VinFast Chairwoman Le Thi Thu Thuy told the Automotive News Europe Congress on Wednesday.
A big advantage of doing things itself and relying on suppliers in its home market is that labor costs in Vietnam are low and the work week is 44 hours, rather than 40 or less in Europe and the United States.
Thuy estimates VinFast’s current localization rate in Vietnam is between 60 and 65 percent.
VinFast’s in-house products include much of the software used in its vehicles.
“That means our software can then be tweaked in a matter of hours or days, instead of weeks,” Thuy said. VinFast also makes its own electric motors, power distribution units and infotainment system.
The company was founded in 2017 and debuts its first models in 2019, assisted by license agreements with BMW for things such as the platform and engine. It was also helped by companies such as ZF Friedrichshafen, Magna International and Pininfarina.
VinFast decided last year to stop production of combustion-powered cars and to become an electric-only brand.
Thuy said VinFast is now making electric cars at its Hai Phong plant, which was built in 12 months and has a maximum capacity of 300,000 vehicles per year. The company also plans to add a factory in the U.S. state of North Carolina, with production slated to start in 2025.
Although construction hasn’t started, Thuy said the project is on track. She said it has taken the company longer than it expected to get things moving because the company as not as familiar with the regulations in the U.S. as it is in Vietnam, where its parent company, Vingroup is a leading real estate developer.
VinFast planned to begin deliveries in Europe last year of the VF 9 and VF 8 SUVs but it was unable to complete the homologation process in time. The company’s market launch in Germany, France and the Netherlands is also being slowed by more challenging safety regulations that took effect this year in Europe, Thuy said on the sidelines of the event.
Along with the VF 9 large SUV and VF 8 midsize SUV, VinFast showed the VF 6 small crossover and VF 7 compact crossover at last year’s Paris auto show. It aims to offer all four cars in Europe.
Thuy said VinFast one day would like to produce cars in Europe and she will visit some possible locations before she returns to Vietnam.
“VinFast will choose a location based on factors such as the availability of financial incentives, skilled labor, clean energy, good logistics and a strong supply base,” she said.