As the domestic and longstanding foreign automakers work to launch more electric and hybrid options for would-be American buyers, Vietnamese automaker VinFast Auto Ltd. is rapidly expanding its U.S. dealer network to sell its EVs.

VinFast in November announced its expansion across the country with plans to have “hundreds” of points of sale by the end of this year. It's also building a manufacturing plant in North Carolina, a tangible signal of its competitive intentions in the world's richest car market.

The company is yet another competitor to legacy U.S. automakers, but experts and reviewers of the VinFast product aren’t so sure how much of a concern the EV maker should be. Still, they say its U.S. expansion shouldn't be ignored, either.

“They have a massive uphill battle ahead of them,” said Paul Waatti, director of industry analysis at AutoPacific, a market research and consulting firm. “The fact that they've broken into this market at all is noteworthy, and the fact that they're building a plant is very noteworthy.”

VinFast still has much to prove in the U.S. market, just like other foreign automakers did when they set up shop. "When the Germans came in, and the Japanese and the Koreans, it wasn't pretty," Waatti said. "It took decades to build American trust and name recognition, and VinFast is going to be no different."

VinFast's expansion in the United States comes at a moment when President Joe Biden, Republican presidential front-runner Donald Trump and lawmakers from both parties are raising concerns about competition from Chinese automakers, primarily in the electric-vehicle, battery and related components space.

Less than two weeks ago, the Biden administration unveiled plans to investigate the national security risks posed by internet-connected vehicles from Chinese companies. That announcement came after reports that Chinese electric vehicle powerhouse BYD Co. Ltd. was considering building a manufacturing plant in Mexico, stoking fears the company's comparatively cheap EVs could come into the United States under the USMCA trade deal and crush competitors.

VinFast has escaped the scrutiny and handwringing over Chinese competition.

"The fact that they are building a factory here in the U.S. ... they have the backing of the U.S. government, North Carolina government, that's something that a Chinese company probably wouldn't be able to pull off right now," Waatti said.

VinFast's US push

VinFast entered the U.S. market last March with deliveries of 45 VF8 City Edition all-electric SUVs through nine storefronts in California. The company, after deciding to use the dealership route to reach consumers, has signed on six dealers in five states: New York, Texas, Kansas, Florida and North Carolina, and has 13 California retail stores.

Expanding in the United States through auto dealerships was not VinFast’s first choice. The company, according to Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc., had previously wanted to use a direct sales model similar to Tesla Inc.'s.

Expanding through dealerships is considered a lower-risk, more old-fashioned approach for VinFast. It provides a crucial network for vehicle maintenance. When VinFast cars need service, customers will be able to return to the dealerships for help.

VinFast last month reported a net loss of $2.4 billion in 2023 — 14.7% larger than in 2022 — and $167.7 million in cash and cash equivalents. A subsidiary of Vingroup, VinFast is backed by Vietnam billionaire Pham Nhat Vuong, who founded the EV automaker in 2017 and was named CEO in January in place of Le Thi Thu Thuy.

Thuy, now chair of VinFast's board, told Reuters after the automaker's earnings report last month that fewer than 1,000 units were sold in North America last year, but the company expects the new dealerships to boost sales this year.

Thuy told investors on the automaker's February earnings call that the "dealer model starting in the U.S. has quickly proven itself, with recent sales improving ... we plan to do the same for Canada and many other markets."

In January, VinFast said it delivered 13,513 electric vehicles worldwide in the fourth quarter, a 35% increase over the previous quarter. It sold 42,291 EVs globally between its launch in 2021 through the end of 2023. That includes 34,855 EVs sold in 2023, which was below the automaker's forecast of between 40,000 and 50,000.

Tran Mai Hoa, VinFast’s deputy CEO of sales and marketing, said in a statement when the company released its delivery totals that "amid economic headwinds, slow EV adoption rate in certain regions has adversely affected deliveries plan.”

The company, which provided statements to questions and did not make itself available beyond that, is aiming for 100,000 sales by the end of 2024. It plans to use dealerships like North Carolina's Leith Automotive Group to help it get there. Adding VinFast gives Leith 27 rooftops in the Raleigh market, Leith COO Danny Williams said in an interview.

"The company itself is very impressive," Williams said. "They do have cash; they're not like one of these startups that is hoping to make it. And they're building the first-ever manufacturing plant for automotive in North Carolina, which is going to be about 35 minutes from where our store's at."

VinFast announced in 2022 that it would invest up to $2 billion to build a manufacturing plant in North Carolina with the capacity to make 150,000 vehicles a year. Production is expected to start in 2025. VinFast leaders broke ground last summer for the plant in the Triangle Innovation Point in Chatham County.

The brand has been well received because of the publicity around the plant, Williams said. The Leith VinFast store had 36 sales in January, its first month selling. Williams was hoping for 20. The overachievement may be because VinFast came out of the gate with an ultra-competitive offer: a lease payment of $249 a month for the $46,000 VF8 ECO.

"It's a very nice vehicle with probably the best lease in the market," Williams said. "The way they're coming into the market with aggressive leasing is something that's been lacking."

Rhett Ricart, owner of Ricart Automotive Group in Columbus, Ohio, was also impressed by VinFast after visiting the company's Vietnam operation earlier this year. He's now looking into adding the brand to his lineup.

"I went to the plant, I saw them make them ... it's a first-class facility," Ricart said. "I saw the quality of the people that they hired. I saw the amenities that they put on these vehicles."

Ricart says he reminds everybody that when Hyundai, Kia, Volkswagen and others entered the U.S. market, "they weren't that good of cars." VinFast, he said, is "way ahead of them."

VinFast's presence in the Tar Heel State led Arthur and Tracey Sprinczeles of Hillsborough to consider purchasing their first EV. The consistent Ford customers, with a 2007 Edge and a 2015 F-150 Platinum in the driveway, liked what they saw with VinFast's aggressive lease offer. They considered Ford's all-electric Mustang Mach-E, but the price for the model they wanted felt steep. The Mach-E starts at $39,895 for the entry-level model and goes up to a starting price of $52,395 for the GT version.

"We would have probably went with a Ford if it wasn't so expensive," said Arthur, recalling the price for the one they wanted being around $70,000. "It was just a little too much, and we wanted the better model."

The Sprinczeleses spent about $2,000 out of pocket to get a VF8 Plus, the higher-end model, from the Leith dealership. Their monthly payment is about $365.

They've liked the vehicle but had an incident a week after purchasing it. The couple were driving down North Carolina's Highway 147 last week when the car made a "boom" noise and slowed down into "crawl" mode. They got out on the side of an exit ramp and called for help; a VinFast technician told the couple to get out of the car, lock it and wait for its system to reboot. After 45 minutes, as the pair waited for a tow truck, they got back into the car and found everything turned on again, so they drove home. They are sending it back for an inspection by the dealer.

Even with the somewhat jarring experience, the Sprinczeleses are sticking with their new VinFast. "Things happen," Tracey said. "You can't expect everything to be 100%. It's a baby company ... things happen. And the people couldn't be nicer."

Bay Area resident Greg Chew was also intrigued by VinFast's competitive lease offer. Chew's had his VF8 Plus for about three weeks and wants to increase his mileage allowance because he drives it so often.

"It's so easy to drive that I want to drive it everywhere," he said. "It's been very comfortable. There's some minor quirks here and there but it's all reasonable."

Skeptics remain

VinFast didn't receive much praise last year from industry reviewers. Headlines on VF8 reviews included "VF8 Proves Building Cars Is Hard" from Car and Driver and "2023 VinFast VF8 First Drive: Return to Sender" from MotorTrend.

MotorTrend's Scott Evans, after testing a VF8 with multiple malfunctioning parts, wrote that the 2023 VF8 "is nowhere near ready for public consumption, yet it's already being delivered to customers." VinFast did recall the VF8 last year for a malfunctioning head unit display that could go blank because of a software error.

Thuy, the chairwoman of VinFast’s board, acknowledged during the automaker's earnings call that VinFast received "some critical but important product feedback" and has "listened to our U.S. customers," adding: "I'm really proud of our team for rapidly implementing a number of important improvements and updates across all aspects of our vehicles. We will continue to deploy resources and act decisively to meet and exceed customers' expectations."

Abuelsamid of Guidehouse remains skeptical of the vehicles and of the company's strategic decision-making since it did not come in offering a more affordable vehicle — precisely how foreign automakers historically entered the U.S. market.

"VinFast is not playing in that (affordable) market right now ... which does make them different from when, for example, Hyundai and Kia entered the U.S. market in the early '90s, and similar to the Japanese before that in the late '60s and early '70s," he said. But Abuelsamid credited VinFast for setting "pretty aggressive" lease prices.

VinFast did recently discuss plans to bring its VF3 model, a tiny hatchback SUV, to the U.S. at a price point of $20,000. But the vehicle probably won't reach American soil until the 2026 model year, according to Car and Driver. In the meantime, VinFast will have to fight through a crowded field with its SUV fleet.

"The designs are fine. There's nothing wrong with them from a design perspective," Abuelsamid said. "But there's nothing about them that sets it apart sufficiently from any of the competitive set."

Abuelsamid listed the Volkswagen ID.4, Hyundai Ioniq 5, Kia EV6, Toyota bZ4X and Subaru Solterra as main competitors for the VinFast VF8, adding that the Tesla Model Y and Mustang Mach-E are, arguably, in the mix too.

"It's hard to justify spending more money for something from a relatively new company with a limited service network," he said. "And who knows how long they're going to be around, if there's going to be support for this thing in two, three, five years."

©2024 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.