Tesla vs Vinfast - Is It A Like To Like Comparison?
If you have seen the newspaper headlines on EVs in the last few months, some of the most prominent ones were around:
Now, Tesla's rival VinFast looks to make it in India.
VinFast to come up with a $2 bn integrated EV facility in Tamil Nadu.
Now, Elon Musk-led Tesla’s rival VinFast wants India to reduce import duties on its electric cars.
India’s New EV Policy Introduces Conditional Import Duty Reduction; Set to Benefit Tesla, Vinfast
EV policy likely to attract Tesla, BYD, VinFast, and global OEMs, claim industry analysts.
Tesla Triumphs as India Eases EV Taxes, Rivalry with BYD And VinFast Heats Up: Report
Vietnam’s VinFast breaks ground for ₹4,000 crore EV factory in Tamil Nadu.
New scheme for electric vehicles may put global majors in the fast lane - While Vinfast has already announced an investment of Rs 4,000 crore to set up an electric vehicle (EV) plant in Tamil Nadu, Tesla's next move will be watched carefully.
Most of the above News headlines mention VinFast in the same breath as Tesla, thus indicating that VinFast is a Global Major in EVs and a big competitor of Tesla. So, who or what is VinFast and is it a Global EV Major and a big competitor to Tesla? We dive deeper into VinFast, and share our analysis to let you decide whether the current hype surrounding VinFast is justified?
Quick Overview Of VinFast
Founded in 2017 and making EVs since 2021, VinFast is owned by Vietnam's richest person, Phạm Nhat Vuong. The key highlights of its performance are:
Sales Performance
For the CY 2023, VinFast sold 34,855 4W EVs globally against a target of 50,000 EVs.
Out of 34,855 EVs delivered in 2023, 72% were to related parties of VinFast (mainly to Green and Smart Mobility Joint Stock Company, a Vietnamese taxi company controlled by parent Vingroup.)
Nearly all of VinFast’s retail sales in Vietnam were also aided by hefty discounts offered through a joint marketing campaign with Vinhomes. EV sales from the discount program generated around 14% of its EV revenues. Thus, almost all its sales in Vietnam were “related party transactions”.
In contrast, Tesla sold more than 1.8 million EVs in 2023 and Chinese manufacturer BYD is reported to have sold more than 2 million EVs in the same period.
In CY 2023, Tata Motors sold 69,153 4W EVs units in India. Yes, Tata Motors sold 2 times the number of EVs in India, than “Global major VinFast sold Globally”.
Tesla’s biggest markets are US, China, and Europe which are also the biggest markets for EVs, whereas VinFast's presence in the US is negligible with less than 1000 EVs sold in the USA in 2023.
VinFast sold 72,468 E-scooters in 2023 of which 46% were to related parties of the Company. Compare this with 8 lacs E 2 wheelers sold in India by various companies in the same period.
Financial Performance
VinFast was listed on NASDAQ by acquiring Black Spade Acquisition Co. in August 2023. Soon after listing, Newspaper headlines said, that an unprofitable Vietnamese electric vehicle manufacturer is not only the world's third most-valued automaker (after Tesla and Toyota), but VinFast's market capitalization is now well above the combined value of legacy automakers like Ford and General Motors and more valued than the likes of Goldman Sachs with Market Capitalisation of US $ 191 billion! But that hype was extremely short-lived
8 months later, On, April 16, 2024, VinFast market capitalisation was US $ 6.4 billion, down 96%.
Tesla on the same day was valued at US $ 490 billion over 70 times higher.
In the results for FY 23, declared in February this year, VinFast's Revenues were $ 1.1 billion and its Net Loss was $ 571 million. The corresponding figures for 2023 for Tesla were $ 97 billion and profits of $ 15 billion.
Current Year
The company has announced an “ambitious” sales target of 100,000 for 2024 by adding dealers in the US, the Middle East, and Indonesia. The company has also stated that sales to its Related party are likely to extend to 2024.
In the results announced on 17th April, Vinfast Q1 FY 24 Global sales were 9689 EVs (56% were to related parties) 28% lower than what was sold in Q4 FY 2023 and just 10% of the Annual target of 100,000 EVs.
In contrast, Tesla sold 3,86,000 EVs in Q1 FY 24 (A decline of 8.5% from a year ago) and Tata Motors sold close to 20,000 EVs from January to March 2024 and might end up selling close to 80 to 90000 EVs in India alone, in 2024 and that too without any Related party sales to boost the numbers.
Two majors in EVs Tesla and BYD have been engaged in intense competition and reduced prices due to slowing EV sales in two of the largest markets in the US and China. What does all this bode for VinFast?
VinFast Eyes India
Over the past year, three of the world’s top electric carmakers have announced their India entry plans.
In January 2024, VinFast, and the Tamil Nadu State Government announced a Memorandum of Understanding (MoU) on Saturday, through which both players will invest around $2 billion, with an intended commitment of $500 million for the first phase of the project, spanning five years. The actual proposed investment for the first 5 years is $500 million and no date/period for the 2 billion investments as newspapers screamed.
In India, the company claims plans to introduce a wide variety of eco-friendly premium-quality SUVs
So, is the Hype in India about VinFast justified?
Clearly, VinFast seems to be a company which,
Has been mentioned repeatedly as a Global EV major in the Indian press and compared to on equal terms with Tesla, which has 40 times higher sales, 95 times higher revenues, and 70 times higher market capitalization than VinFast.
And whose Global sales were significantly less than even Tata Motors EV sales in India for the full-year 2023 and JFM 2024
The company claims to be setting up a facility to “manufacture 150000 EVs in India, while its capacity of 300000 EVs in Vietnam is hugely (85%) underutilized and is also building a factory in the USA for the manufacture of 150000 EVs.
Negative free cash flow in the first quarter of FY 24 alone was a staggering $717.3 million, and by its own admission, the company only has $123.3 million left in the bank.
Whether VinFast succeeds in India will significantly depend upon how it is able to navigate the US market, where in Q1 FY 24, it sold just about 1000 EVs.
However, with all of the above, do you really believe that VinFast deserves all the headlines in the Indian press to be called a Global Major in EV business? You decide.
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We look forward to your honest feedback as we work to make it insightful for all of you.