Looks like there’s no stopping VinFast in becoming one of the world’s leading electric and smart vehicle makers. Vingroup JSC on Sunday announced that it is closing its electronics devices unit VinSmart to focus its resources for electric vehicle production.
The conglomerate started manufacturing electronic devices in June 2018 and has so far launched 19 phone models and five TV models, Vingroup said in a statement.
VinSmart enjoyed decent popularity in the country for two years. In 2020, its smartphone unit Vsmart was named the third most preferred phone among Vietnamese, next to Samsung and Oppo. Vivo and Apple were in fourth and fifth places, respectively. Vsmart phones accounted for 16.7% of the market, according to global market research company GfK.
Deputy General Director of Vsmart said the company saw 260% growth in sales since 2019, and even said its goal is to “continue optimizing products to improve quality while catching up with new trends faster, along with more competitive prices so that Vietnamese phones not only meed the domestic market, but also reach the world market”.
VinSmart’s focus was on the low-end segment of the market, with all of its products priced below VND5 million ($200). When it launched its Joy 3 model in February last year, the company said it sold 12,000 phones in 14 hours, all thanks to its localized features and aggressive offline sales work. About 85% of sales in Vietnam take place offline, said Canalys mobility analyst Matthew Xie.
However, despite its initial achievements, “the production of smartphones or smart TVs no longer brings breakthroughs and creates values for users,” said Nguyen Viet Quang, vice president of Vingroup.
Shifting into higher gear
Vingroup plans to use VinSmart as producer of “infotainment” features for VinFast cars to make them more competitive and user-friendly. It will also research, design and manufacture electric engines, electronic parts and batteries for EVs to increase the localization ration of VinFast products.
“Developing smart cars, smart homes and smart cities will bring many outstanding benefits to humanity, therefore, the company wants to devote all its resources towards doing this,” said Quang.
VinFast aims to penetrate the US market next year, as it weighs a $2 billion US initial public offering. People familiar with the matter said it could take place as soon as this quarter. VinFast is seeking a valuation of at least $50 billion after a listing.
At $2 billion, VinFast’s IPO would be the biggest ever by a Vietnamese company after Vinhomes JSC’s $1.4 billion first-time share sale in 2018, according to data compiled by Bloomberg. The carmaker could also become the first Vietnamese company to list in the US if successful.
Once VinSmart finishes its TV and smartphone production, the facility will be used to manufacture new products.
Vingroup has been scaling back small business units, abandoned plans for an airline, and has raised hundreds of dollars in domestic and international loans to fund VinFast. It also reportedly temporarily closed VinFast Australian office and moved all its staff to Vietnam.
Vietnam’s first and largest carmaker plans to launch its electric vehicles in the US, and expand sales to Canada and Europe. It will roll out its first EV in Vietnam later this year.
VinFast has already finished engineering the prototype of three SUVs, with the first, VF31, to begin selling in Vietnam probably in November. The other two SUVs — the larger VF32 and VF33 — will reach Europe and the United States in 2022.
The company has already started installing electric vehicle charging stations at commercial centers at Vinhomes Ocean Park, Vincom Long Bien and other areas to serve the first electric cars released by the end of this year.
The company also obtained a permit to test its autonomous vehicles on public streets in California, a requirement for VinFast to commercialize its electric vehicles in the US market.