VinFast banks on battery rentals as key part of unfolding EV strategy

As it prepares for worldwide expansion, Vietnamese upstart carmaker VinFast intends to woo buyers with a novel approach — decoupling the ownership of its electric vehicles from the batteries that power them.

VinFast plans to rent batteries to customers at a price that's similar to their monthly gasoline expense — about $100 to $150 a month depending on the battery chosen, according to Le Thi Thu Thuy, the company's newly appointed global CEO.

It's a blueprint that would buffer EV buyers from the risk of degraded battery performance over time. VinFast says it will replace a battery if it falls below 70 percent of its initial charging capacity.

It is a strategy that the young automaker laid out last week during CES in Las Vegas.

For VinFast, founded in 2017, the rental concept would help lower the upfront sticker prices of its EVs to a level similar to cars with internal combustion engines.

"The powerful point that should come across to consumers is they don't have to worry about the battery," Thuy told Automotive News. In current EV sales, she said, "after five to seven years, if the battery dies and they still have the car, it's going to cost $20,000 to replace the battery. Now they don't have to worry about it."

The strategy hits a middle ground between the conventional practice of including the battery as standard equipment on an EV, just as engines come with the purchase of a traditional vehicle, and the more unconventional model of swapping batteries. VinFast is offering a 10-year, 125,000-mile warranty.

Unclear is how U.S. consumers will respond.

"It makes a lot of sense, especially for a new brand, to take that risk out of the equation," said Michael Dunne, founder and CEO of ZoZo Go, a consulting firm specializing in Asian markets. "Across the board, VinFast is a highly sophisticated startup that's done its homework for the U.S. market."

While other Asian automakers built momentum at home before attempting to enter the U.S., Dunne said VinFast's modest home-market volume of around 30,000 annual sales necessitates an early jump to achieve volume. But that doesn't mean it's entering the U.S. too early.

"This is a change from the old ways, when you had Japan, Korea, even Chinese companies doing their thing at home, then exporting and crossing their fingers that they can make incremental improvements along the way," he said. "With technology and electrified cars, they're global out of the gate."

But not everyone is enthusiastic about a sales model that relies on separately leased batteries.

"Customers will only embrace it if there is something in it for them," said Mike Ramsey, senior research director at global tech consulting firm Gartner. "If that lease means that in two years, their battery gets upgraded to a longer-range battery at the same price, then yes. If this leads to a net cheaper car, yes. If it's just an unbundling that serves only the manufacturer, then no. It's just a gimmick in that case."

But Thuy says the rental approach is merely one way it intends to separate itself from the onslaught of EV upstarts hoping to find a foothold in the market.

VinFast, a subsidiary of Vietnamese conglomerate Vingroup, began deliveries of its first electric SUV in its home market last month. It intends to phase out production of cars with internal-combustion engines and deliver six EVs to international markets by the middle of 2023. That includes two models, the e35 and e36, that made their debut in November at the Los Angeles Auto Show.

Last week at CES, the company detailed pricing for those two models, with the midsize e35 — now called the VF 8 — starting at $41,000 and the three-row e36 —renamed the VF 9 — starting at $56,000. Of course, those prices are without the battery.

"It's something new and probably takes some time for people to understand this, but we've put ourselves in our customers' position, and we want to make this worry-free, simple and seamless," said Van Anh Nguyen, VinFast's U.S. CEO. "There is a lot of anxiety concerning the battery, and we take that anxiety away."

The three new EVs, battery rental model and pricing were part of a sweeping set of plans VinFast detailed at CES. The company is partnering with global supplier ZF for driver-assistance features and automated-parking functionality. Next up, the company will continue its search for a U.S. manufacturing center.

From CES, Thuy said she will travel to three sites that are finalists for an American factory that will include production of vehicles and battery packs, as well as electric buses.

She said the objective is a plant to accommodate 250,000 EVs a year.