Richest man in Vietnam reinforces risky $8.2 billion wager on VinFast

Noodle beginnings

Vuong, 54, is Vietnam’s richest man, with a $3.9 billion net worth, according to the Bloomberg Billionaires Index.

He started his own business while studying in Moscow and has said he left Russia with $40,000 in debt. He started a dried-foods company in Ukraine in the early ’90s that sold instant noodles and mashed potatoes and sold it to Nestle for an undisclosed sum in 2010.

Soon after starting VinFast, Vuong spoke openly about his ambition to sell cars in the U.S. and his willingness to spend as much as $2 billion of his fortune toward achieving that goal.

VinFast made many headlines last year, starting with its announcement in January that it would cease making gas-powered cars. In March, President Joe Biden praised its plans to build a $4 billion EV factory in North Carolina. The following month, it filed confidentially for an IPO.

But there was trouble brewing at the top of the company around this time. Michael Lohscheller, a veteran auto executive hired away from leading German carmaker Opel, lasted only a matter of months as VinFast’s global CEO. The company said in December 2021 that Lohscheller left for personal reasons. Truckmaker Nikola Corp. hired him months later.

Weeks after its confidential filing, Vuong said during a Vingroup shareholder meeting that VinFast might delay the IPO until 2023, citing supply-chain issues and market uncertainties. The parent company nonetheless hosted reporters from Bloomberg and other outlets for tours of its car factory in Haiphong, north of Hanoi, treating media, influencers, customers and business partners to a champagne and lobster lunch.

Mixed reviews

The reviews were mixed. A writer for the blog Jalopnik called VinFast’s crossover “simply not ready for America.”

Car and Driver referred to some “quirks” — the accelerator was jumpy in one vehicle and laggy in another — while acknowledging these may have just been “prototype pains.” The Autopian headlined its post: “I drove a VinFast VF8 and it wasn’t as bad as I expected.”

VinFast plowed ahead, staging a ceremony in November at a port in Haiphong for the first 999 EVs it shipped to California.

Some arrived at the Port of Benicia in San Francisco Bay without battery power, according to people familiar with the matter who asked not to be identified.

The company said there were no issues with the vehicles, and that it’s normal for batteries to deplete while in transit for multiple reasons, such as doors not being fully shut.

VinFast’s plans for first deliveries to customers slipped from late December to January, then to February. Late that month, the company announced it would slash initial lease customers’ monthly payments in half, charging $399 a month. It finally handed over its first 45 crossovers to customers in California on March 1 and now has 310 vehicles on U.S. roads, with another 100 due for delivery soon.

Time and money

While Biden gave VinFast a small boost with his shout-out of the company’s US factory plans, his landmark climate bill was somewhat of a setback. The Inflation Reduction Act will benefit manufacturers that already have EV and battery plants up and running; VinFast has warned that its North Carolina facility won’t start production until 2025.

“The Inflation Reduction Act really puts a lot of pressure on them, because it undermines their cost and price advantage that they probably wanted to have until they can have manufacturing here, which is incredibly expensive,” said Mike Ramsey, an auto analyst for Gartner, the executive consultancy. “They did get kneecapped by the IRA, but they also got kneecapped by the reality of trying to pull off an expansion in a far-flung market.”

Setting up networks for distribution, replacement parts and service will be no easy tasks, and without them, consumers won’t have peace of mind that their vehicles can be repaired, said Steve Man, a Hong Kong-based automotive analyst for Bloomberg Intelligence.

“I believe their lofty goals are achievable,” Man said. “But it will take time and a lot of capital.”