Hello from Tokyo. Nikkei Asia reporters recently gained rare access to VinFast's electric vehicle factory in Vietnam. The cutting-edge facility, equipped with brand-new European machinery, was completed in just 21 months. From looking at the video footage, it seems that cars are being assembled with a level of efficiency comparable to the Japanese automakers that I have covered extensively in the past.
Vingroup, a Vietnamese conglomerate, established VinFast in 2017 as a key domestic automaker, 14 years after Tesla was founded in Silicon Valley. VinFast shifted to become an EV-only manufacturer in 2022. And in just two years, it surpassed Toyota Motor, the world's largest automaker, to claim the top spot in Vietnam's new car market, marking an astonishing pace of growth.
Behind this impressive evolution lies a fundamental shift in the automotive industry. Compared with internal combustion engine (ICE) cars -- which require decades of accumulated know-how and the mechanical integration of numerous intricate parts -- the structure of EVs, powered by batteries and motors, is remarkably simple. The number of components is significantly lower than in ICE vehicles. Free from the need to invest in "legacy" engine technology, VinFast and Chinese startups have been able to leverage EVs as a leapfrog innovation, enabling them to enter with relative ease an industry that Japan, the U.S. and Europe have spent a century cultivating.
That said, VinFast and many other emerging EV manufacturers continue to post large losses. The shift to electrification has lowered entry barriers, leading to a proliferation of players and intensifying price competition. Similar patterns have played out in the past with digital products such as personal computers and flat-screen TVs, which eventually consolidated into a handful of dominant players. Will VinFast survive the fierce EV race? Follow the story on Nikkei Asia.
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Wishing you a wonderful weekend!
Akito Tanaka
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