China may be the most difficult market for automakers, but also the one they are most unwilling to give up.

In recent years, the domestic automotive consumption market has become increasingly competitive, prompting automakers to refocus on overseas markets as the best way to break through sales bottlenecks.

On July 29, Xpeng Motors announced that its right-hand drive G6 pure electric SUV had successfully entered the Singapore market and officially launched presales. On August 2, the electric vehicle brand Zeekr under Geely Group announced its official entry into the Singapore market, with plans to enter the Indonesian market in the fourth quarter of this year and Malaysia in 2025.

After Thailand and Malaysia, Vietnam has become the next blue ocean. Chery Automobile plans to establish a 200,000-unit-per-year auto manufacturing plant in Vietnam; Great Wall has also launched the GWM brand in Vietnam, with its first store in Hanoi now open; and BYD has also been rumored to be interested in establishing automotive parts production facilities in Vietnam.

Just as domestic brands are making inroads in Vietnam, this Vietnamese automaker is preparing to enter China, the most fiercely competitive automotive market in the world.

In a technology industrial park in Songjiang, Shanghai, a number of VinFast models, a new force in Vietnam's automotive industry, were boldly displayed in the park, some without even camouflage wraps.

The models on display included not only the VF e34 and VF 5, but also the VF8, which was released in 2022. Even the latest compact pure electric SUV, the VF 3, which was officially launched in Vietnam in May and began deliveries in August, has appeared in China, where it is undergoing a series of tests, including charging.

VinFast released the new VF 3 model in January this year and positioned it as its main sales force. Four months later, VinFast began presales at a discounted price of 235 million Vietnamese dong (approximately $9,248) and received 27,649 orders within 66 hours.

VinFast stated that the VF 3 would first be launched in Vietnam, followed by the Philippines later this year, and then in other overseas markets such as Europe, Southeast Asia, and the United States in 2025.

The appearance of this new model in China has led to speculation that VinFast, a rising new force in Vietnam's automotive industry, is about to enter the domestic market.

The name VinFast may be unfamiliar to domestic audiences. In simple terms, its parent company is Vietnam's largest real estate group, which began its automotive business in 2017. The group's chairman is Vietnam's richest man, giving it a reputation akin to that of China's Xu Jiayin.

Since announcing its entry into the automotive industry in 2017, VinFast has vacillated between being called "Vietnam's Tesla" and "Vietnam's Xu Jiayin," ultimately settling on the moniker "Vietnam's BYD." In the first half of this year, it delivered over 21,000 vehicles, becoming the pride of Vietnam's domestic automotive brands.

This Vietnamese automotive newcomer listed on the Nasdaq in the United States last year, even briefly creating a share price miracle.

On its first day of trading, VinFast's share price surged 255%, pushing its market value to $86 billion. As of August 28, 2023, VinFast's market value had soared to over $190 billion, ranking it third among global automakers by market value.

However, the bubble soon burst, and its current market value has shrunk by over 90%.

Although VinFast is a Vietnamese newcomer, all of its components are sourced from around the world, with a significant portion coming from China. This approach mirrors that of Xu Jiayin, who embarked on a global buying spree when he first entered the automotive industry.

Components include Bosch's software and hardware, Renesas chips, Siemens equipment lines, Durr painting lines, Ningde Times' skateboard chassis, Guoxuan High-tech's power batteries, Weidong Industry's battery pack assemblies, and an entire electric drive system provided by Chinese companies such as Dalian Haosen, Jinbei Electric, and Juyi Technology. Additionally, there are Flylong's electronic water pumps and thermal management control valves, Xingyidao's millimeter-wave radars, Huayang Electronics' HUDs, Neusoft's smart cockpits, and Baolong Technology's corner radars.

In fact, as early as 2019, VinFast's camouflaged test vehicles were spotted outside Huayang Electronics' headquarters, fueling speculation that the company was about to enter the Chinese market. However, the rumors were quickly denied, and it turned out that VinFast had only signed a large procurement order with Huayang Electronics for HUDs.

With its global sourcing, global manufacturing, global sales, and Nasdaq listing, VinFast has followed a path that Evergrande has long dreamed of.

According to the Vietnam Automobile Manufacturers' Association (VAMA), sales of member automakers have continued to decline in the first few months of 2024. In the first five months of the year, cumulative sales totaled only 108,000 vehicles, a year-on-year decrease of 5%, with a 14% drop in locally assembled vehicles and an 8% increase in imported vehicles.

As a small market within Southeast Asia, VinFast, with its global ambitions, is not content with its domestic turf but has set its sights firmly on overseas markets.

As part of its global development strategy, VinFast has invested in markets including the United States, Canada, Europe, and more recently, Indonesia, India, and Thailand. On May 9, 2024, VinFast announced its official entry into the Philippine market by the end of May, introducing electric vehicles, motorcycles, and bicycles.

In August 2024, VinFast announced that it had signed an agreement with Al Mana Holding to distribute electric vehicles in Qatar, marking Qatar as a key destination in its overseas expansion.

If VinFast truly aspires to become a historic automaker rather than simply a vehicle for covering up its parent company's financial troubles, as was the case with Evergrande, it cannot afford to ignore China, the world's largest single market.

While VinFast is often seen as the product of Pininfarina's design prowess, it actually has deep ties to a Chinese design company. The latest models spotted were located at the Longchuang Design Park in Songjiang, Shanghai, where the company's website lists the VF e34 and VF 5 among its design cases.

However, the appearance of VinFast's new VF3 model has sparked much speculation. After all, this model encapsulates many of the popular elements in China today, including compact SUVs, boxy designs, and battery leasing, among others.

From a practical perspective, as a wholly foreign-owned enterprise, VinFast may need to explore alternative strategies if it is unable to secure the same preferential treatment as Tesla when entering the Chinese market.

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