Vietnam's Vingroup JSC became a corporate juggernaut in its home country, operating everything from luxury resorts to hospitals, shopping malls and supermarkets.
Now, it wants to break into the U.S. car market with a little-known electric-vehicle startup, called VinFast, that has a novel way of pricing its models.
The young Vietnamese car manufacturer opened its first U.S. showrooms in July in California and is moving aggressively to expand its operations in the states, including a plan to spend $2 billion to build a new EV factory in North Carolina.
To fund its growth, VinFast has also filed paperwork with U.S. regulators for an initial public offering to be held later this year or next, making it the latest company to test investors' appetite for seemingly out-of-nowhere startups focused on the increasingly competitive EV market.
"We are well on the way to entering this market," Craig Westbrook, VinFast's chief customer officer, said of the retail store openings in California.
VinFast is starting with six outlets in California and plans to open another two dozen locations in the state this year, before expanding to other U.S. markets. The sites don't sell vehicles, but rather act as galleries, where shoppers can browse options and work with staff to place reservations online.
The EV company, established in 2017 in Vietnam, plans to sell two all-electric sport-utility vehicles in the U.S. to start: a midsize SUV, called the VF 8, that starts at $40,700, and a larger VF 9, starting at $55,500. U.S. buyers can place orders now with deliveries expected to start at the end of 2022.
Unlike other EV rivals in the U.S., VinFast has a unique business model in which buyers pay one price for the vehicle, but then lease the battery for a monthly fee.
The company offers two battery-subscription plans, costing anywhere from $35 to $160 a month, depending on how much the owner wants to drive, the model purchased and the type of battery.
The fee includes maintenance of the battery and replacement when charging capacity drops below 70% of its original capacity.
VinFast has said the battery leasing model brings the upfront price of its vehicles down $15,000 to $20,000, roughly on par with what many gasoline-powered models sell for today.
The company also said it eliminates risks for the consumer because the service covers all repairs, maintenance and replacement costs, including swapping out the battery for a newer one.
Like electric-vehicle makers Tesla Inc., Rivian Automotive Inc. and Lucid Group Inc., VinFast wants to sell its vehicles directly to consumers, bypassing the traditional dealership network that has long been a fixture of the U.S. car business.
VinFast enters a contested race by a host of new electric-vehicle entrants, including Rivian, Fisker Inc. and Polestar Automotive Holding UK PLC, companies that are selling or plan to sell similar electric models.
It will also have to contend with more established rivals such as Tesla and Ford Motor Co. that have better brand recognition and are investing billions of dollars to expand their EV lineups.
Buyers so far have shown demand is high for battery-powered vehicles with EV orders outstripping supplies and wait lists stretching out months, and sometimes years, auto industry executives say.
Still, convincing U.S. car shoppers to take a chance on an unknown brand from a country not widely recognized as an auto-manufacturing hub will be a challenge, analysts say.
Even in Vietnam, VinFast remains a relatively small player with the startup selling only 36,000 vehicles there last year, or about 13% of all vehicles sold in the country.
"We have never had a Vietnamese company sell cars in the U.S. and don't know how that will be received by Americans," said Michelle Krebs, an analyst with Cox Automotive.
Some of the aspects of VinFast's strategy, including battery leasing, are untested with U.S. car shoppers and it is unclear if those consumers will embrace it, she said.
And Chinese car makers have sought to set up a retail network in the U.S. for years, but failed despite a history of experience making cars in their home country, Ms. Krebs added.
Mr. Westbrook said VinFast thinks its affordability play will resonate with U.S. buyers, and the battery-leasing program is key to lowering ownership costs.
"We're not just coming to market with an idea," he said. "We have a vehicle that has been driving around in Vietnam for years now."
Vingroup, the diversified conglomerate behind VinFast, is a recognized name in Vietnam with revenue of $5.58 billion last year and major real estate holdings and investments in technology services.
It traces its origins to an instant noodle business that the current chairman, 54-year-old Pham Nhat Vuong, established in Ukraine in 1993, which he later sold.
Mr. Vuong used the proceeds from that sale to help establish Vingroup, which grew to become the country's largest private enterprise, accounting for 1.5% of Vietnam's nominal gross domestic product in 2021.
In 2017, VinFast broke ground on a $1.5 billion assembly plant in northern Vietnam that can produce 250,000 vehicles a year.
The company got its start building gasoline-powered vehicles in 2019, including a rebadged version of the Chevrolet Spark called the Fadil, but has since transitioned to EVs, saying it would stop selling gasoline vehicles by the end of this year.
To help fund VinFast's entry into the U.S. market, the company said it would plan to go public by the end of this year. As recently as last year, investors piled into electric-car startups with lofty ambitions and little-to-no revenue, hoping to discover the next Tesla.
But investor interest has since cooled. Rivian shares are trading down 57% from its initial debut price. Polestar fell short of its initial fundraising target of $995 million when it went public through a merger with a special-purpose acquisition company in June.
Vingroup has said it could delay VinFast's public offering to 2023 and has signed agreements with Credit Suisse Group AG and Citigroup Inc. to raise a total of $4 billion through debt or private issuances of shares.
Access to investor cash presents one of the biggest challenges for VinFast, said Michael Dunne, chief executive of ZoZoGo, an EV consulting firm.
"To be successful like a Tesla would require an uninterrupted access to a flow of capital in the billions of dollars for a decade," he said.
Mr. Dunne, who recently visited VinFast's production facility in Vietnam, said the company was making the right investments in manufacturing technology, but the ultimate arbitrator of its success will be the American consumer.
"Anyone can say anything at this juncture, positive or negative, but no one knows until people get the cars," he said.
