Despite layoffs and product delays, VinFast picks a U.S. finance arm

Vietnamese automaker VinFast has yet to deliver its first electric vehicle to U.S. customers but is already cutting staff and prices amid competition from rivals such as Tesla and Ford, which have trimmed prices on their popular EVs.

The Asian newcomer, however, is not giving up on the North American market despite starting off on the wrong foot.

VinFast announced it has chosen U.S. Bank as its preferred provider for vehicle finance and leasing. The deal comes as the automaker is preparing to open more showrooms in California, followed by an expansion to other regions of the country.

"With the goal to make electric vehicles accessible to everyone, VinFast is constantly looking for optimal solutions for customers," Le Thi Thu Thuy, CEO of VinFast Holdings, said in a statement Monday. "Thanks to this agreement, VinFast customers will have access to competitive finance and lease rates and world-class customer service."

But drumming up vehicle buyers remains a challenge for the brand, which is virtually unknown in North America. VinFast has about 12,000 U.S. reservations for its VF 8 and VF 9 electric crossovers, the company said last month.

The two-row VF 8 was the first to arrive on U.S. shores, in December, but deliveries of the first batch of 999 vehicles have been delayed until the second half of February in order to update software, VinFast said.

In the meantime, Tesla cut prices for its Model Y crossover in mid-January, to $56,630 with shipping, and Ford followed suit with its Mustang Mach-E, reducing the sticker to $47,495 with shipping. Those price cuts come on top of a new $7,500 federal tax incentive for EVs made in North America. VinFast's imported vehicles don't qualify, putting the newcomer at a disadvantage on price, brand recognition and key features.

VinFast is offering a lease deal on the VF 8 that cuts the $56,700 starting price to $50,200. Both prices include shipping. But the debut model has just 207 miles of range — on the low end compared with rivals at a similar price point.

The automaker announced the consolidation of its U.S. and Canadian operations on Jan. 25, and Bloomberg reported about 80 employee layoffs as part of the move this week.

VinFast's North American headquarters is in Los Angeles.

VinFast said in a statement to Automotive News that it was proceeding normally with its plans for the North American market, including the construction of an assembly plant in North Carolina.

Last month’s consolidation of its U.S. and Canadian operations is designed to optimize efficiency and “will not affect VinFast’s retail expansion plans,” the company said. VinFast has opened 10 stores in California and nine in Canada. “The consolidation doesn’t affect the production in Vietnam or the factory plans for North Carolina.”

VinFast said that its first vehicle to arrive in the U.S., the VF 8 City Edition, has been updated with the latest software and certified by the EPA for 207 miles of range. “The vehicles are expected to be delivered to U.S. customers by the second half of this month,” the company said.

The automaker has enjoyed mostly upbeat media coverage, starting with the presentation of its first vehicles at the Los Angeles Auto Show in 2021. VinFast presented additional vehicles at CES last month, drawing praise for their attractive styling and modern interiors.

But the company's compelling origin story in Vietnam, where it started production of gasoline vehicles in 2019 before moving into EVs two years later, is coming up against the realities of a highly competitive North American car market.

"I think VinFast is starting to quickly learn the United States is not the easiest place to launch a new car company," said Robby DeGraff, industry analyst at AutoPacific. "These sweeping job cuts are definitely alarming, especially when you look at VinFast's product road map beyond the VF 8."

VinFast is also planning a factory in North Carolina for its four-vehicle lineup. The future VF 6 and VF 7 are smaller than the VF 8 and VF 9, which are positioned as premium models. The VF 9 starts at $84,200 with shipping.

In December, VinFast said it had filed for an initial stock offering in the U.S. to raise money for its expansion.

From an outsider's perspective, DeGraff said, VinFast burst onto the U.S. scene with strong marketing, ample media events and confidence in its global expansion. Recent events now raise questions about the automaker's momentum.

"There have been grand, rock star-like press trips over to Vietnam, flashy debuts at auto shows, and more places in California are seeing standalone VinFast stores come on the map," DeGraff said. "But is the hyperambitious Vietnamese automaker realizing it needs to slow down and make cuts for long-term success? Maybe."

In addition to the job cuts and price cuts, VinFast suspended its plan to launch with a battery-leasing program. That sales model would have allowed it to lower sticker prices by selling vehicles without their battery pack. VinFast then would have leased the battery for a separate monthly payment depending on miles driven. The company has said it may revive the plan.

"This year, I feel, is going to be very interesting for VinFast," DeGraff said.

Reuters contributed to this report.