A bit of good news for VinFast investors

Few electric vehicle (EV) startups are as interesting as this one. vinfast auto (VFS -3.35%), trying to disrupt the EV market all the way from Vietnam. It's hard enough to enter the EV industry from the U.S., but it seems even harder to enter from outside. However, VinFast has some initiatives in place that have some good news for investors. Let's dive in.

introduction

Most investors have probably never heard of VinFast Auto before, and there's a good reason for that. Before making a small splash by trying to break into the US EV market, the company was busy dominating its home market of Vietnam with electric scooters, cars, and buses.

The company's Hai Phong factory is state-of-the-art and can produce up to 300,000 units, many of which it hopes to ship to the U.S. market, especially SUVs. The company has a global production list of seven EV models and one pickup concept, and has financial backing from parent company Vingroup, which has invested billions of dollars in the young EV maker.

This is a brief explanation of VinFast Auto. But what is the good news?

distribution

One of the most difficult things for young EV manufacturers is connecting the dots between products and consumers.Please listen to me for a moment fisker What happens if you create a product but can't distribute it?The answer is not good.

Therefore, the company's addition of 12 franchised dealers to sell crossover EVs in the US market is great news for VinFast investors. Of those 12 dealerships, five of his stores are in Florida, four of his other stores are in Texas, and the rest are in Kentucky and Connecticut.

“Leveraging our store network, market experience and capabilities of our leading U.S. dealers, VinFast will quickly deliver high-quality, competitively priced electric vehicles,” said David Duncan, vice president of sales, in a press release. ” he said.

Having 12 dealerships may not sound like a lot, but it's in just seven states, excluding California, where it started selling in its own stores about a year ago. This represents a large portion of the total 18 stores. For the record, the company's sales model in California is still based on direct-to-consumer sales, but the rest of its distribution plans have pivoted to a dealer model.

What exactly does that mean?

This is good news as the first phase of VinFast's plan to have more than 100 dealerships in the US by the end of 2024 will see substantial growth. Currently, the company only sells one vehicle in the U.S., the VF 8 crossover, but dealers can expect the VF 9 and smaller VF 7 to be available soon this quarter.

Pricing for the VF 8 starts at $47,200 including shipping, making it competitively priced as leased vehicles qualify for the $7,500 federal EV incentive. But the key will be convincing American customers to trust and buy from emerging foreign companies that already offer advanced EV products, which is no easy task.

Although VinFast's story is still in its early stages, this is a bit of good news that the company is making legitimate progress towards building a genuine distribution network to connect people to its products. Investors should be pleased.