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 Instructor: PhD Tran Thu Trang Hanoi, May 2022 GROUP MEMBERS No Full name Student ID Lê Mai Chi 2012250018 Nguyễn Phương Hoa 2012150034 Nguyễn Ngọc Huyền 2014250204 Nguyễn Minh Ngọc 2013250022 Trần Ánh Phương 2012250058 Phạm Mai Phương 2012150079 Trần Cẩm Tú 2012250076 Đỗ Hoàng Bảo Trung 2012150096 Đỗ Ngọc Vũ 2014150225 I Contents I Research about company and factors affecting export potential General information about Vinfast Research about factors affecting export potential: a b c Global electric car market Consumer spending Policies Reseacrh about export products: a Products b Unique selling points of Vinfast electric car: II Screening export-oriented markets for Vinfast electric car .11 Selection criteria .11 Exclusion criteria .14 Conclusion 14 II Opting potential foreign markets for Vinfast Electric Car 15 Government policies 15 a b c d e UK 15 China 16 Norway 17 Sweden 17 Australia 18 Charging infrastructure 20 a b c d e UK 20 China 21 Norway 21 Sweden 21 Australia 22 Education 22 a b c d e UK 23 Norway 23 Sweden 23 China 24 Australia 24 Sales growth rate of electric vehicles (2020 - 2021) .24 Passenger plug-in market share of total new car sales from 2019 - 2021 26 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 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 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 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: • The specific policy scenario shows that by 2030, the global number of electric vehicles (excluding two/three wheelers) will reach nearly 145 million vehicles and will account for 7% of the global fleet • The second - and more ambitious - scenario known as EV30 predicts that 30% of all 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 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 (segment A), VF (segment B) and VF (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 and VF 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 world-renowned Italian design firms, Pininfarina and Torino Design b Unique selling points of Vinfast electric car: Product: • The products are combined with production lines and components from many big 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 • VinFast company has used its brand name in combination with the individual name of 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, • VinFast aims at quality, customer satisfaction for products brought about as well as the 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 • VinFast service workshops all operate according to a professional process with main services: warranty, maintenance, repair and rescue 24/7 Price: • Lower price but higher quality:The VinFast car always has the price of lower 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% • The pricing strategy that VinFast uses is a market segmentation strategy (Low - Mid High) • Vingroup's car company made the audience admire when offering a "3-no" price policy 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: • In Vietnam: - 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 5year 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 the global market (US): - 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: • For promotional programs, Vinfast implements unique sales policies such as: a 3-zero 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 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 • Combining both Push and pull promotion mix strategies will increase consumer 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 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 segments: A-class cars , Eclass Sedans and SUVs (statistics in 2020) • VinFast uses sponsorship tools to bring the Vietnamese brand image closer to 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 (F1) race in Vietnam with the name Formula 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 10 • Tax exemption: Fully electric cars are now zero-rated for road tax, often known as Vehicle Excise Duty (VED), and are exempt from the London Congestion Charge until 2025 in the United Kingdom • Purchase subsidies: • The PiCG is a type of electric-car subsidy that used to apply to all kinds of plugin automobiles, but now only to a specific group — and only to ones that cost less than £32,000 • The Department for Transport (DfT) made major changes to the grant in March 2021, and again in December of the same year, in order to make the funds earmarked for the scheme last longer The PiCG is now only available for automobiles costing up to £32,000, and it covers 35% of the purchase price up to £1,500 Before March 2021, that was half of what was available • The official body in charge of the award is the Office for Zero Emission Vehicles (OZEV) It selects qualifying vehicles based on factors such as emissions, safety features, warranty length, and top speed The plug-in car grant covers 35% of the cost of a brand-new car (up to £1,500) Cars that qualify must: b • Have official CO2 emissions of less than 50g/km • Be able to travel at least 70 miles with no CO2 emissions • Feature on OZEV's approved vehicle list • Have a list price of less than £32,000 China • Policy factors: • Tax exemption • Foreign automotive manufacturers have been encouraged by lower import tariffs, which have been lowered for whole vehicles from 70-80% to 25% since China joined the World Trade Organization (WTO) Import tariffs on Semi-KnockedDowns (SKDs) and Complete-Knocked-Downs (CKDs) have dropped from 50% 16 to 25%, while import tariffs on vehicle components have dropped from 15% to 10% • Purchase subsidies • China will go ahead with its plans to reduce subsidies for the purchase of newenergy vehicles (NEVs) by 30% in 2022, four central ministries announced recently According to the policy document, the subsidies will be completely withdrawn at the end of the year • In April 2020, Beijing announced that subsidies will be reduced from 2020 to 2022 by 10%, 20%, and 30%, respectively, for private NEVs and by 10 % in 2021 and 20% in 2022 for public transport c Norway Tax exemption: In Norway, the Government levies very high taxes on petrol cars while waiving or reducing many taxes on electric cars Electric cars are entitled to a 25% reduction in VAT, not subject to the environmental protection tax that petrol car drivers still have to pay By 2025, Norway will completely exempt electric cars from tax Purchase subsidies: Although the cost of producing or importing electric vehicles may be higher, the selling price to consumers is still appropriate and somewhat lower than that of fossil fuel-powered vehicles Besides, thanks to Norway’s waterfalls, dams and hydroelectric power, electricity is quite cheap It is estimated that the average annual charging cost of electric vehicles is £264 In addition, other related fees are also exempted, from ferry fees or parking fees d Sweden Tax exemption: Zero-emission vehicles and PHEVs (petrol) owners can benefit from low annual road tax Meanwhile, a person who buys vehicles with high carbon dioxide emissions will be burdened with increased tax during a period of three years 17 National Grants: From April 2021, EV buyers would receive a SEK 70,000 climate bonus Charging incentives • Charge the car grant – covers the cost of up to 50% of the cost of EVSE materials, up to a maximum cost per charge point of 10,000 SEK (€1,000) for individuals and 15,000 SEK (€1,500) for companies, municipalities, councils, and foundations • Swedish Transport Association Fast Charging Grant – grant for up to 100% of the costs of fast charging public-use EVSE Local grants: • Free access to HOV (high occupancy vehicle) and bus lanes in some areas, which means that people can avoid congestion, get to their destinations more quickly during rush hours • There are also local charging incentives throughout major cities in Sweden Stockholm Free charging of EVs and PHEVs – when car drivers subscribe to a parking space in Stockholm, they only have to pay the parking fee, charging is totally free Malmö Rent a charging point – pay a subscription and drivers can have access to available charging points in of the city center’s car parks Parking is free, and electricity costs just SEK/kWh (€0.30/kWh) e Australia Australia Capital Territory • Stamp Duty: $0 stamp duty charged on new electric vehicles purchases • Registration: New or used electric vehicles will receive two years of free registration 18 • Loans: ACT government offers interest-free loans of up to $15,000 to help cover the upfront costs of buying an electric vehicle Local grants: Queensland • Stamp Duty: Reduced stamp duty charged on electric and hybrid vehicles: $2 per $100 up to $100,000, and $4 per $100 value thereafter This is compared to up to $6 per $100 for other vehicles • Development of New Strategy: The Queensland Government is currently developing a new Zero Emission Vehicle (ZEV) Strategy Submissions are open until 11 pm, July 2021 South Australia • Tax: South Australia plans on introducing a tax that will see EV drivers pay 2.5 cents per kilometer and cents per kilometer for hybrid drivers The introduction of the tax has been deferred until July 2022 Victoria • Stamp Duty: Electric vehicles are exempt from the “luxury vehicle” rate of stamp duty, paying a flat rate of $8.40 per $200 of market value This is compared to up to $18 for polluting vehicles This is only applicable if the vehicle is worth more than the $68,740 threshold • Registration: All electric vehicles also receive a $100 annual discount on vehicle registration • Subsidy: Subsidy which can lower the cost of a new EV under $68,740 by $3,000 This offer has been limited to 4,000 registrations currently, with an additional 16,000 spots to be made available at a yet-to-be-determined time • Tax: July 1, 2021 Victorian EV drivers will also be charged a 2.5 cent per kilometer tax Western Australia 19 • Professional Drivers: Uber, taxi or charter electric vehicle drivers will be exempt from the 10 per cent on-demand transport levy in Western Australia • Charging: EV Home Plan Incentive, which offers $200 incentive for the first year, and 60km free per year for home charging during off-peak periods.Read the State Electric Vehicle Strategy for Western Australia here This criterion accounts for 35% of the final score Country UK China Norway Sweden Australia Score 4 Charging infrastructure Just like traditional cars use gasoline and oil to operate, electric cars also need to use electricity as energy to operate Whether a country can develop an electric vehicle market depends a lot on whether the charging system is developed and suitable for that country a UK • A recent NGO study found that the UK now has more rapid chargers every 100 miles of key strategic road than any country in Europe Industry statistics show that there are over 25,000 public charge points available across the UK and over 4,500 rapid chargers 20 ... 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... 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... 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