VinFast transforms business growth plan

May 09, 2024 | 10:26
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VinFast is expanding its global market presence by exploring carbon credits as a new revenue stream while advancing facilities to boost its international production capabilities.

Pham Nhat Vuong, chairman of Vingroup, shed light on VinFast’s strategic growth at its AGM last month, particularly focusing on the promising revenue potential of carbon credits.

Responding to a shareholder’s query about VinFast’s strategy in this emerging market, Vuong announced, “We have formed a task force to accelerate the sale of carbon credits, targeting not just the domestic market but globally as well.”

This move represents a strategic pivot from mere vehicle sales to leveraging environmental assets, indicating a multi-billion-dollar opportunity for the group.

VinFast transforms business growth plan
VinFast now has a presence in the likes of India, North America, and Indonesia, Photo: Le Toan

Coinciding with this development, Prime Minister Pham Minh Chinh on May 2 ratified a directive to enhance the management of carbon credits, aligning with the nation’s self-determined contributions towards climate action.

The directive aims to propel Vietnam towards its commitment to achieve net-zero emissions by 2050, enhance carbon credit management, and promote the market’s growth.

Industry experts note that while carbon credits do not directly influence vehicle buyers, they serve as vital assets for carmakers, enabling them to sell surplus credits accrued from electric vehicle (EV) production to other manufacturers. This assists them in complying with stringent global emission standards.

This approach has proven lucrative for pioneers like Tesla, which reported earnings of $1.79 billion from carbon trading in 2023 alone.

The increasing demand for carbon credits is driven by stringent regulatory frameworks in major markets such as the United States, the European Union, and China, emphasising the global shift towards sustainable manufacturing practices.

Meanwhile, Vuong also addressed concerns about the transparency and stability of Vingroup’s financial practices amidst extensive international investments.

“The scepticism surrounding our liquidity and financial practices lacks foundation. Vingroup has never delayed a single interest payment,” he assured stakeholders. “For the first time, VinFast became the top-selling company in Vietnam. Yes, challenges are inherent in any significant venture; if it were easy, we wouldn’t need to strive as hard.”

Vuong further discussed the company’s strategic international expansion, including the construction of major factories in the US, India, and Indonesia, aimed at capturing substantial market incentives and positioning VinFast as a formidable player in the global EV industry.

He emphasised the dual role of VinFast as both a business endeavour and a social responsibility project aimed at leading in the global market. On the environmental front, Vuong highlighted the role of EVs in addressing urban pollution challenges, citing historical improvements in cities like Beijing. “I’ve pledged $1 billion and will arrange another billion. It’s not just about business – it’s about setting a standard and fulfilling national pride,” he said.

The EV maker is advancing the construction of its $4 billion plant in North Carolina of the US, a project that marks a significant expansion of its global manufacturing capabilities and is expected to create nearly 2,000 jobs by year-end.

During VinFast’s first-quarter earnings call, the company outlined a 2024 capital expenditure forecast of $1-1.5 billion, primarily allocated to the new US facility and additional assembly plants in Indonesia and India.

The North Carolina site was originally intended to have a 92,500 square metre assembly area, promising annual production capacity of 150,000 EVs and employment for 7,500 people. In December last year, VinFast revised its factory blueprint, reducing the assembly area to around 72,600sq.m.

According to David Camp, director of Licensing and Inspections for Chatham County in North Carolina, the change from a U-shaped to a more rectangular layout followed the elimination of a central container staging area.

“This modification does not reduce the projected production volume or the number of jobs. It likely indicates a more efficient use of space within the facility,” he explained.

VinFast delivered almost 1,000 EVs in Q1 in the US, placing the company in the top nine carmakers for the fastest-growing EV sales in the US, alongside established brands such as BMW, Ford, and Hyundai.

Additionally, the company expanded its US distribution network during the quarter by securing contracts with 10 new dealerships, bringing its total to 16 partners across seven states. These newly onboarded dealerships are scheduled to begin sales in this quarter.

Also at the AGM, Vuong revealed plans to list Vinpearl this year and highlighted aims for his private company GSM in global expansion and an initial public offering in an international market.

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By Trung Duong

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