MIDTERM REPORT INTERNATIONAL EXPANSION MARKET STRATEGY FOR ELECTRIC CARS OF VINFAST

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS & INTERNATIONAL BUSINESS *** MIDTERM REPORT INTERNATIONAL EXPANSION MARKET STRATEGY FOR ELECTRIC CARS OF VINFAST Course International Marketing Class code[.]

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS & INTERNATIONAL BUSINESS

-*** -

MIDTERM REPORT

INTERNATIONAL-EXPANSION MARKET STRATEGY FOR

ELECTRIC CARS OF VINFAST

Course: International Marketing Class code: MKTE401(2.2/2021-2022)CLC.1 Submitted by: Group 9

Instructor: PhD Tran Thu Trang

GROUP MEMBERS

I Contents

I Research about company and factors affecting export potential 5

1 General information about Vinfast 5

2 Research about factors affecting export potential: 5

a Global electric car market 5

b Consumer spending 6

c Policies 7

3 Reseacrh about export products: 8

a Products 8

b Unique selling points of Vinfast electric car: 8

II Screening export-oriented markets for Vinfast electric car 11

1 Selection criteria 11

2 Exclusion criteria 14

3 Conclusion 14

II Opting potential foreign markets for Vinfast Electric Car 15

1 Government policies 15

a UK 15

b China 16

c Norway 17

d Sweden 17

e Australia 18

2 Charging infrastructure 20

a UK 20

b China 21

c Norway 21

d Sweden 21

e Australia 22

3 Education 22

a UK 23

b Norway 23

c Sweden 23

d China 24

e Australia 24

4 Sales growth rate of electric vehicles (2020 - 2021) 24

5 Passenger plug-in market share of total new car sales from 2019 - 2021 26

6 Summarizing evaluation criteria and scoring 27

REFERENCES 28

INTRODUCTION

Environmental pollution, especially air and noise pollution, is a pressing problem that makes governments around the world to tighten protective measures, including emissions management from gasoline-powered vehicles One of the most popular measures today is to limit the use of cars using internal combustion engines and encourage the production and use of zero-emission vehicles such as electric cars

Electric cars are increasingly proving to be dominant in the auto industry when they have experienced tremendous growth in recent years According to a report by the International Energy Agency (IEA), there were 10 million electric vehicles in the world by the end of 2020, marking a decade of rapid growth for the electric vehicle industry Despite the impact of the COVID-19 epidemic on the world auto industry, causing car sales to decline by 16%, the number of electric cars sold increased by 41% in 2020

The electric vehicle market in Vietnam is also considered an attractive market with a rapidly increasing number of manufacturers and assemblers of electric vehicle products In January 2021, VinFast officially introduced the first electric car model, which has created a historical turning point for the electric car market in Vietnam Since then, Vinfast has become the first Vietnamese brand to produce electric vehicles in the country and launched more new electric cars models with many smart features recognized by the world

However, the export of Vinfast's electric car will certainly face many difficulties when traditional car manufacturers and supporting industries also begin to change their strategies to match the new trend Not only car manufacturers, but technology giants are also starting to enter the market, posing a big challenge for Vinfast's penetration into foreign markets Understanding the potentials and challenges of Vinfast in the export process, with our knowledge and market research, we have synthesized, positioned the brand and searched for new potential foreign markets to expand its market share We hope that our report will make some contributions to the clear picture of Vinfast’s car exporting future

I Research about company and factors affecting export potential

1 General information about Vinfast

Vinfast is a company specializing in the segment of vehicles (motorcycles, cars, ) under the Vingroup Group, also the first and only car company that produces cars in Vietnam up to now The company's name is abbreviated from the phrase “Việt Nam – Phong cách – An toàn – Sáng tạo – Tiên phong" ("Vietnam - Style - Safety - Innovation - Pioneering") (The letter Ph changed to F)

In addition to selling and manufacturing vehicles using gasoline, oil, Vinfast is developing more electric vehicles, especially electric cars At the end of 2020 and early 2021, Vinfast launched its first electric car product

VinFast envisions a sustainable future for people and the planet through green, clean and safe mobility Following its US debut at the 2021 LA Auto Show, VinFast is taking important steps towards a sustainable future of mobility as it is announcing it will stop producing vehicles with internal combustion engines (ICE) by the end of 2022 This is a future built on intelligent services, outstanding customer experience, and a deep care for the planet and future generations VinFast is committed to innovative vehicle design, quality, and technology, along with excellent customer service They even aspire to greater achievements - to be one of the leading electric vehicle manufacturers in the world while inspiring our customers to be boundless together and join hands in the electric vehicle revolution, creating a sustainable future for all

2 Research about factors affecting export potential:

a Global electric car market

After a decade of rapid growth, in 2020 the global electric car stock hit the 10 million mark,

a 43% increase over 2019, and representing a 1% stock share Battery electric vehicles (BEVs) accounted for two thirds of new electric car registrations and two-thirds of the stock in 2020 China, with 4.5 million electric cars, has the largest fleet, though in 2020 Europe had the largest annual increase to reach 3.2 million

About 3 million new electric cars were registered in 2020 For the first time, Europe led with 1.4 million new registrations China followed with 1.2 million registrations and the United States registered 295.000 new electric cars

2020 is an important year for electric vehicles According to Global EV Outlook 2021, the global supply of electric cars reached 10 million units, 41% higher than in 2019

The leading countries with a large share of electric vehicle sales are Norway with a record 75%, followed by 50% in Iceland and 30% in Sweden

When it comes to the future, according to the EV Market Outlook 2021, there are two possible scenarios:

(excluding two/three wheelers) will reach nearly 145 million vehicles and will account for 7% of the global fleet

vehicles except two-wheelers will be electric by 2030 In absolute terms, that means global sales will reach 43 million and thus almost double the prediction of the specific policy scenario

b Consumer spending

Consumers spent USD 245 billion on electric car purchases in 2021, a 50% increase from

2020 The rise in average prices reflects that Europe, where prices are higher on average than in Asia, accounted for a bigger proportion of new electric car registrations

Sources: IEA analysis based on EV Volumes (2021) and Climate Policy Initiative (2021)

c Policies

Over the last decade a variety of support policies for electric vehicles (EVs) were instituted in key markets which helped stimulate a major expansion of electric car models But the challenge remains enormous

The measures – primarily purchase subsidies, and/or vehicle purchase and registration tax rebates – were designed to reduce the price gap with conventional vehicles Such measures were implemented as early as the 1990s in Norway, in the United States in 2008 and in China

in 2014

CO2 emissions standards in the European Union played a significant role in promoting electric car sales, which in 2020 had the largest annual increase to reach 2.1 million

Convenient and affordable publicly accessible chargers will be increasingly important

as EVs scale up To help address this, governments have provided support for EV charging infrastructure through measures such as direct investment to install publicly accessible chargers

or incentives for EV owners to install charging

3 Reseacrh about export products:

a Products

During the VinFast Global EV Day at the Consumer Electronics Show (CES 2022), VinFast announced a new development strategy and revealed its complete electric vehicle lineup covering five segments

• Three models debuted in the A-B-C segments, VF 5 (segment A), VF 6 (segment B) and VF 7 (segment C);

• Two models VF e35 and VF e36 in the D and E segments (introduced at the

2021 LA Auto Show) now renamed as VF 8 and VF 9 The removal of the "e" (electric) prefix in the names affirms the company's consistent all-electric orientation

All five electric vehicles, with impressive and modern exteriors, were designed by

b Unique selling points of Vinfast electric car:

Product:

corporations in the world such as: BMW, General Motors, Bosch, IntalDesign to improve the quality of their products The product design has a strong direction in accordance with the customer's personality, the safety of the products is equal or even higher than the products in the same segment with other brands

each product (VinFast + product line name) The advantage of the strategy is that it both helps customers remember the unique imprint of the product while taking advantage of the brand's reputation, thereby optimizing advertising costs, creating good sympathy for customers, and approaching quickly Eg: VinFast Lux A 2.0, Vinfast Lux SA 2.0, Vinfast President, VinfastFADIL, Vinfast VF e34,

development of environmentally friendly Vinfast products to affirm the core of

"Vietnamese-branded products" enough to compete with customers compete with car brands in the world as well as promote "Vietnamese people use Vietnamese goods" in the country

• VinFast develops many product lines : car targeting many different customer segments

services: warranty, maintenance, repair and rescue 24/7

Price:

classification and quality of higher classification Many opinions on automobile forums believe that VinFast cars have good quality, even if to compare with German or American car brands Specifically, a famous motorist said that the Lux SA2.0 has the same quality as about 85% of a BMW in the same segment, but the price is only 45%

High)

to support consumers (no depreciation, no financial costs and no interest)

=> With this price, VinFast affirms its desire to bring world-class products to a large number of consumers, in order to join hands in building a Vietnamese brand

Place:

- VinFast will enable 40,000 charging ports in 63 provinces and cities in

2021 and will continue to expand in the coming years

- 107 service workshops in all provinces and cities across the country by Q2/2022

- Free 24-hour emergency assistance during the warranty period • A year warranty for gasoline cars (Lux A2.0 and Lux SA2.0) and a 10-year warranty for electric cars (the longest warranty on the market)

- In 2022, VinFast expects to open 60 showrooms across California These include 1S facilities for product display and customer experience, and 3S, which include service workshops

- VinFast is actively cooperating with partners to help develop a public charging station infrastructure that provides a convenient and accessible network for customers In addition, VinFast is looking into the possibility and opportunity to partake in building and developing charging station systems in global markets to bring more convenience to our customers

Promotion:

price policy (no investment depreciation, no financial costs and no profit) on the first day of launch, preferential "0 registration tax and 5-year warranty", 10% discount when paying directly, no interest for the first 2 years for installment customers At the same time, 5-year installment policy and after-sales service also help VinFast retain old customers and even turn them into "brand ambassadors" of this car company

demands while also pushing products to showrooms and VinFast's distributors have been built to cover all provinces in Vietnam The result of that great strategy is that after only

2 years of debut, VinFast has defeated a number of industry giants reach rank fourth in market share and the cars quickly have sales leading in 3 segments: A-class cars , E-class Sedans and SUVs (statistics in 2020)

consumers Some special sponsorship of VinFast:

- VinFast sponsored 393 cars to serve the ASEAN Conference to transport delegates during their arrival in Vietnam to attend the Conference

- VinFast has sponsored and cooperated with ministries, agencies and local authorities to use VinFast cars for the public system and public cars such

as bringing VinFast Lux A and Lux SA cars to serve in the industry of the traffic police

- VinFast is the main sponsor of the Formula 1 (F1) race in Vietnam with the name Formula 1 VinFast Vietnam Grand Prix 2020

⇒ It can be seen that VinFast wants to bring a brand image for the people and the country

in order to gradually change the way Vietnamese people view the domestic car company

II Screening export-oriented markets for Vinfast electric car

1 Selection criteria

Criteria 1: GDP per capita

The analysis demonstrates that consumer uptake of electric cars is directly linked to a country’s GDP per capita, indicating that affordability remains a major issue

High GDP per capita illustrates the affordability for electric cars of consumers as they have higher standards of lives and beliefs High GDP also means that there is a higher budget for research and development, which could be useful in solving remaining issues with the current electric vehicles

Criteria 2: Political stability

Political stability is a variable of great importance in a country's evolution since, across time, it was identified as causing low levels of economic growth, but also it was presented as a consequence of poor economic development

The purchasing and consumption of electric cars is under the control

of related departments due to the effects of electric cars on society It is better for consumers

to purchase electric vehicles in a country with a stable policy as using this kind of transport requires a variety of infrastructure, namely battery replacement, charging place, parking lots,… The stability of policy is crucial as the more attention the government pays to citizens' lives, the better infrastructure investment is made to develop a green lifestyle Overall, political stability plays a vital role in the process of buying behaviour of consumers in most nations as the need for authority approval to expand the quantity of electric cars

Criteria 3: Sales growth of Electric Car in 2021

The greater a country's rate of sales growth, the greater the market's potential This factor demonstrates the product's ability to be consumed in the market Following the number statistics from Statistics Time about Growth rate of sales, countries with the highest sales growth of Electric Car are listed in the table below

Criteria 1: Key markets in VinFast’s initial business expansion plan

The 5 key markets in VinFast’s initial business expansion plan are the US, Canada, France, the Netherlands and Germany VinFast has already developed a suitable plan for each

of these markets

3 Conclusion

Considering the three above criteria for screening exporting markets, the authors have selected 5 following potential markets: China, United Kingdom, Sweden, Australia, Norway

China UK Sweden Australia Norway

GDP per capita (USD) 11,891 46,200 58,639 62,619 82,244

Sales growth of Electric Car in 2021 1st 5th 12th 10th 11st

II Opting potential foreign markets for Vinfast Electric Car

1 Government policies

Policymakers at all levels of government—local, regional, and federal—can use a number of policies to encourage the adoption of electric vehicles (EVs), only some of which involve direct financial assistance Tax credits, rebates, and reduced import tariffs all contribute to lower the upfront cost of buying an electric vehicle Other financial advantages, such as decreased car registration costs and specific tariff design, can help to lower the cost of owning, fueling, driving, and parking an electric vehicle EV sales can potentially be boosted by fuel economy regulations and zero-emission car mandates Preferential parking, toll road access, and other non-financial initiatives can also help to promote an EV-friendly environment

a UK

The UK Government has expressed a commitment to encouraging the uptake of Electric Vehicles (EVs; comprising both pure battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVS)) (OLEV, 2013), which are viewed as representing a means by which significant reductions in GHG emissions from the transport sector can be realized (CCC, 2013) Moreover, the UK Government considers EVs to represent the way in which the UK's strength

in propulsion system technology can be maintained (BIS, 2013) and a mechanism to generate consumer demand for low carbon products (BIS, 2010)

Policy factors: