VinFast sets sights on Indonesia with $1.2 billion expansion

Invest Global 10:04 14/09/2023

VinFast pursues Asian expansion with a $1.2 billion foray into the Indonesian market.

VinFast has pinpointed Indonesia as a focal point in its strategic expansion, with the country's abundant nickel resources - a crucial component for electric vehicle (EV) batteries - presenting a considerable attraction for EV manufacturers globally.

VinFast sets sights on Indonesia with $1.2 billion expansion

According to Reuters, as part of its long-term vision for the Indonesian market, VinFast intends to invest approximately $1.2 billion. This would include between $150 million and $200 million for a manufacturing facility, set to commence operations in 2026, with a capacity of 30,000 to 50,000 vehicles per year.

The new facility would complement VinFast’s primary plant located in Vietnam's northern port city of Haiphong, and its upcoming site in North Carolina in the United States, which is to be up and running by 2025.

Furthermore, fresh off its recent Nasdaq listing, VinFast has also expressed its intention to widen its global footprint by establishing itself in India, Malaysia, the Middle East, Africa, Latin America, and Europe. Such expansionary moves are ostensibly geared towards establishing distribution units and inaugurating additional showrooms.

Speaking at the ASEAN Business and Investment Summit in Jakarta, VinFast’s CEO Le Thi Thu Thuy said, “The burgeoning EV ecosystem in Southeast Asia is a catalyst for VinFast’s growth. Indonesia, with its rich nickel reserves making it a major player in the region's battery production industry, offers grounds for optimism in the ASEAN EV sector."

"We see potential joint ventures in places like Malaysia and Thailand. From a supply chain perspective, we have confidence in our ability to source all essential components regionally. Indeed, we have the potential to elevate the ASEAN EV industry and be the major exporter to the rest of the world,” Thuy added.

According to data from the Indonesian Automotive Industry Association (GAIKINDO), EV sales in Southeast Asia's most populous nation have surged over the past three years.

In 2010, only 125 EVs were sold in the country. This figure rose to 687 in 2021 and jumped significantly to over 10,300 vehicles in 2022. In the first half of 2023, the country recorded sales of 5,850 EVs.

The Indonesian government is also strongly pushing for the development of EVs for daily use by announcing subsidies of up to 10 per cent for EV buyers during this period.

Additionally, despite several brands having entered Indonesia earlier, only two names, Wuling Motors and Hyundai, dominate the lion's share of the market, opening up competitive opportunities for VinFast.

GAIKINDO's figures indicate that Wuling Motors held an impressive 75 per cent of Indonesia's EV market share in 2022, followed by Hyundai with 20 per cent, attributed entirely to the Ioniq 5 model, with Toyota trailing at 1.4 per cent.

At an exhibition in August, Wuling Air EV was the best-selling vehicle with 885 units, followed closely by the Hyundai Ioniq 5 with 776 units. The Wuling Air EV is priced between approximately $15,800 and $19,500, while the Hyundai Ioniq 5 ranges from $44,350 to $50,930.

According to Bloomberg, VinFast intends to introduce two models, the VF3 and VF5, to Indonesia. The VF3 is poised to rival the Wuling Air EV directly, while the VF5 might offer a budget-friendly, compact alternative suitable for navigating the frequently congested and tight urban areas of Indonesia.

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By Celine Luu