The Vietnamese manufacturer Vinfast is accumulating complications when launching its first electric vehicles on the international market: shortage of semiconductors, delays, recalls and layoffs.
Embarking on the adventure of the electric car is not a long calm river. If the historical manufacturers encounter certain difficulties in producing their first electric cars, new entrants, such as Vinfast, must deal with even more constraints. The first European and American customers should have received their VF 8 or VF 9 before the end of 2022, but they are still waiting.
The first VF 8s, in particular, are soon to be delivered to American customers. But, Reuters indicated on February 19, 2023 that nearly 2,800 Vinfast VF 8 sold in Vietnam are facing a recall campaign. The event combines with many other hiccups for Vinfast. We offer you a summary of the situation.
Delays at Vinfast due to semiconductor shortages
Vinfast is part of a large Vietnamese conglomerate, which operates in a wide variety of areas in the country. On the local market, the group already produces thermal cars and two-wheelers, however its international ambitions focus on electric cars. The company embarked several years ago on a rather ambitious conquest of the American and European market. Perhaps a little too ambitious, with the current context.
Unlike other new players in electric mobility like Rivian, the production plant was not the main obstacle for Vinfast to launch its electric vehicle. Vinfast has already built its gigafactory in Vietnam which Numerama had the opportunity to visit. Production capacities could quickly meet the demand for vehicles.
Nevertheless, while the Vinfast factory is able to produce the brand’s first electric vehicles, the shortage of semiconductors, a result of the Covid pandemic, continues to disrupt the entire global production of electric cars. Vinfast does not cut it.
It is also the shortage of semiconductors that justifies the wait in Europe, without it being known precisely when the brand will schedule the first deliveries. In November 2022, Vinfast estimated to launch the cars in France, Germany and the Netherlands in early 2023with a delay of more than 6 months.
A false start also for the American market
A first boat with 999 brand electric cars left Vietnam in November for the USA, for deliveries initially scheduled for the end of December 2022. But these models have not yet been delivered to customers on site.
Once they arrived at their destination, these 999 models were stored awaiting a software update. This update should allow models to display a greater EPA autonomy (the American standard) of 333 km. It is only after this update of all vehicles that deliveries will take place.
According to information relayed by Reuters on February 3, the first American deliveries were then to take place during the second half of February. This was without counting on a recall that took place on February 18 on 2,800 models delivered to the Vietnamese market. The problem is a loose bolt between the brake caliper and the knuckle bracket. This recall also affects vehicles shipped to the US market, which will once again delay the delivery of the first models. But, Vinfast reassures: “ this is a relatively simple procedure that can be done quickly and will not affect the delivery schedule, which is expected to start at the end of February 2023. »
Layoffs and additional investment needs
Vinfast announced on February 6 a restructuring plan for its American branch. Even if it concerns “only” 80 people, the rumors of restructuring of the headquarters in Vietnam, targeting nearly 3,000 employees, were quickly mentioned. Managers have been told to prepare slates to cut headquarters staff by up to 30%, but Vinfast says this is not a net downsizing.
A bit like Elon Musk, the company wants to part with the least efficient people to replace them with new employees who better meet their requirements. We have had no feedback on the staff of the brand’s European offices.
As Vinfast accumulates delays and layoffs, its founder, billionaire Pham Nhat Vuong, told Bloomberg that he does not want to invest more in Vinfast. It has already put in nearly $7.5 billion for major expenses and investments, according to Autonews. If the group that owns Vinfast will continue to provide the financial support necessary for day-to-day operations, Vinfast will nevertheless have to go through a loan or external financing.
These financing needs could notably concern the plant under construction in the USA. This plant will allow the manufacturer to benefit in 2024 from subsidies of $7,500 on electric vehicles produced in the USA, which is not possible with the vehicles currently produced in Vietnam.
Despite significant losses, Vinfast still looks pretty solid. In December last year, the brand confirmed that it had registered 55,000 firm orders worldwide, of which 12,000 came from the American market. This probably explains why this market has priority over Europe. Too bad for European customers who are waiting for their VF 8 or VF 9, and hope to see VF 6 and VF 7 arrive quickly in Europe.
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