In 2017, Dyson announced that it would launch its own electric cars on the market in just three years. The, supposed ease to produce a vehicle that lacked the mechanics of combustion cars was very juicy. It was about taking advantage of all his knowledge producing electric vacuum cleaners to launch a line of electric vehicles on the market.
In October 2019, he threw in the towel: “it is not commercially viable”, they explained at the time. Along the way they had burned 250 million euros until they understood that the car would only be viable if it sold for around 170,000 euros each unit.
“Other manufacturers have a competitive advantage because they already come from the traditional automobile, but we started from scratch”, a Dyson source confirmed to my colleague Javier Lacort just a few days ago, who lamented not being able to carry out the project.
Dyson’s electric car story is not unique. In recent years we have seen how brands that were called to revolutionize the automobile have ended up in bankruptcy or rejecting projects because they are extraordinarily expensive. Yes, traditional manufacturers are suffering tremendously, but they already have a lot of cattle: assembly lines, staff, cooperation agreements…
Meanwhile, new brands or companies, up to now, outside the automobile market, are looking for ways to break into the industry. And, for most of them, there is a common denominator: burning a lot of money. As much as the one that has invested (and will continue to invest) VinFast.
From scratch
Almost following the times of Dyson, VinFast was born in 2018 carrying the banner of “the first Vietnamese car manufacturer”. The coming-out was quite a declaration of intent: at the Paris Salon and with two Pininfarina designs. The company was sheltered within VinGroupa huge conglomerate dedicated to the real estate sector, construction, tourism… and which also bought BQ in our country.
The decision to launch VinFast was a personal bet by Pham Nhat Vuong, president of the Vietnamese giant who saw how Elon Musk had hit the key: an electric car that opted for good performance and a technological load that was breaking the market.
six years later and $8.5 billion spent By the way, VinFast’s results are modest to say the least. According to Bloomberg, the company has only managed to put 93,000 electric cars and 162,000 motorcycles, also electric, on the market.
The figures are the best example of how difficult it is to launch a car brand from scratch. That of facing rivals who have “a competitive advantage” as they said from Dyson. Except for Tesla, which in 2021 had not yet achieved profitability from its vehicles (he started making money with them in 2022), many others have fallen by the wayside. Sony has realized that it needs a very established partner in the industry, like Honda. Already in 2016 there was talk of Apple investments related to the electric car.
Rivian It has been trying to manufacture its electric cars since 2009 and, above all, fighting for survival. Until 2021 he did not manage to produce his first electric pick-up. That same year it ranked as the third most valued car manufacturer on the stock market, despite having no income. This same year they have announced that they expect losses (without taking interest or amortization into account) of 4,300 million dollars.
Things are no different in China, a mecca for the electric car. Manufacturers like XPeng or NIO are losing more than 11,000 and more than 19,000 dollars for each electric car sold, according to Reuters accounts. Fisker has needed a decade to deliver the first electric car. If we go to more ambitious projects, both Lightyear and Sono Motors, champions of the solar car, face bankruptcy.
Well, I put 1,000 million dollars
All this background does not seem to intimidate Pham Nhat Vuong, president of VinGroup and a man richest in vietnam.
The company plans to launch its VF8 very soon, a new electric SUV that will also set foot on European soil. This car, in which the brand has high hopes, has not been well received by the American press, which has come to publish articles with titles such as I drove a VinFast VF8 and it was not as bad as I expected.
In Europe they have announced prices that exceed 40,000 euros and, for the moment, it seems that like many other companies they arrive very late to the electric car. The traditional industry, pushed by the European institutions, will move en masse to this type of technology and the context is radically different from that faced by Tesla. When Elon Musk’s cars began to become popular in the United States they had no rival.
Brands that start from scratch are already late for the electric car
In addition, it comes just at the time when the price war for the electric car has begun. China, once again, is once again the benchmark market in this regard, but the fight has moved to Europe and the United States, driven by Tesla. Traditional manufacturers can assume lower prices but this only makes the situation more difficult for new companies that want to enter the market.
But VinFast seems to continue with his adventure. Pham Nhat Vuong, who has a net worth of about $3.5 billion, according to Bloomberg, has already announced a new $2.5 billion investment in the brand and 1 billion of them will come out of your own pocket. In 2019 he already announced that he was willing to invest 2,000 million dollars of his fortune to move the company forward.
The economic analysts themselves point out that they consider the production and sales objectives that have been set by VinFast to be achievable. The formula, as always, goes through more money. “Can VinFast run a marathon and sacrifice the short term for the long term?” asks Alexander Vuving, a professor specializing in power politics and Vietnam at the Honolulu-based Center for Asia-Pacific Security Studies.
For now, the company announced that it would invest 4,000 million dollars in a plant in the United States, encouraged by the economic advantages that the Joe Biden government is using to attract capital and talent related to the electric car. However, experts believe that this same law may be the one that make things even more difficult to VinFast, as they will lose a competitive advantage in the prices at which they can offer their cars, taking into account that other manufacturers will also take advantage of these tax advantages.
VinFast’s future hangs in the balance. At least if they want to become an electric car firm in Europe and the United States. In both markets, the brand needs to make a huge investment to make itself known and its economic situation is worse than other giants like BYD, which are beginning to appear on our continent. His solution, for now, is to withdraw another 1,000 million dollars from the founder’s bank.
In Xataka | “The electric car by law is not the solution”: the industry and the ban on combustion engines in the EU
Photo | VinFast
