VinFast is setting new expectations in the Middle East and beyond after missing its 2023 target

Vietnamese electric vehicle (EV) manufacturer VinFast took another step in its international expansion strategy by signing an agreement with Bahwan Automobiles Trading (BAT) in Oman. The EV startup expects to ramp up production and sales in 2024, with operations in other regions.

Backed by VinGroup, Vietnam’s largest conglomerate, VinFast is a Vietnamese electric vehicle (EV) manufacturer continuing its ambitious expansion plan. Now, through an agreement with BAT to enter the Middle East market, VinFast is focusing on Oman.

The agreement follows the Initial Memorandum of Understanding for Cooperation signed at the COP 28 meeting in the United Arab Emirates (UAE) in 2023. It makes BAT the official distributor of VinFast in Oman. Under the agreement, BAT will establish 13 VinFast stores and service points over the next three years. Initial sales are expected to begin in mid-2024, with VinFast offering its SUV lineup, including the VF 6, VF 7, VF 8, and VF 9.

From VinFast’s point of view, Oman represents a market that is interested in growing sustainably and environmentally friendly transport solutions. The partnership with BAT aims to establish an immediate presence in Oman by improving the EV options available to customers.

Is it too fast of expansion?

Like many international EV brands, VinFast is eager to capture the attention of consumers by filling their needs with alternative and cost-effective models while capturing large market shares in emerging markets. To that end, VinFast has launched an ambitious expansion strategy, a plan to reach market presence in 50 markets worldwide by the end of 2024. Thus, since its inception in 2018, VinFast has spread operations to North America, Europe, India, and now the Middle East.

In May 2023, VinFast announced a SPAC (Special Purpose Acquisition Company), business combination agreement with Black Spade Acquisition, ahead of its US IPO (initial public offering), reaching an equity value of over $23 billion.

Following the SPAC merger, VinFast debuted on the Nasdaq exchange in August 2023, which increased the brand’s market capitalization to $85 million, even more than Ford’s. Since then, this value has dropped to $ 12.7 billion.

VinFast began construction of a $4 billion US plant in North Carolina in 2023, aiming to produce 150,000 EVs annually. In early 2024, VinFast announced the ‘Wild’ EV pickup concept for the US market and revealed plans to sell the state-of-the-art VF 3 globally.

Following an infusion of $1.2 billion in cash from its founder, Pham Nhat Vuong, in October 2023, VinFast began operations in India and announced the construction of a factory in Tamul Nadil, India, earlier this year. The Tamul Nadil plant, which is expected to start operating in 2026, also followed the Memorandum of Understanding with the local government, launching an investment of 500 million dollars to produce 150,000 EVs per year and provide thousands of jobs, like the plan in the United States.

Sales figures are currently ‘Fair’

VinFast fell short of its 2023 target of selling 40,000 EVs, falling short by 5,000 units. The company attributed the shortfalls to slowing EV adoption in some countries, increased competition and an uncertain economy. However, the Vietnamese EV startup started its performance in the last quarter of 2023, selling 13,513 units, an increase of 35% compared to Q3 2023.

VinFast announced in February that the loss for Q4 2023 increased by 3.4% compared to Q3 2023 and reached $650.1 million. This amount is 1.3% higher than the same period in 2022.

The sales target in 2024 is 100,000 units, and VinFast will try to reach this target by expanding internationally with all the cars the brand has to offer, including a right-hand drive model, chairman Le Thi Thu Thuy told Reuters. According to Thuy, VinFast expects to increase sales with new dealers, especially in the North American market, where less than 1,000 units were sold in 2023.

VinFast relied heavily on domestic sales, with nearly 70% of products sent to Green SM (or GSM), a prominent service provider in Vietnam owned by CEO Pham Nhat Vuong. VinGroup’s significant financial support aims to change this situation in the long term.

The following targets on the international expansion map include countries in the Middle East, Latin America and Asia. India is the most important country, next to the Chinese brands, and it provides an important opportunity for VinFast to conquer the market with Tesla.

Main image courtesy of Shutterstock, 2234442561.