BY  ANIRUDDHA GHOSAL

HANOI, Vietnam (AP) — Vietnamese automaker VinFast, for a short time the third-most valuable car company in the world, has a big problem: It just can’t sell enough cars.

Idle factories bleed money and the company’s financial health is at stake. After finding the U.S. market a tough nut to crack, Vinfast is hoping its tiniest and cheapest car yet — a roughly 10-foot-long pure battery electric mini-SUV priced at $9,200 and called the VF3 — will become Vietnam’s “national car” and win over consumers in Asian markets.

Designed specifically for the Vietnamese and other Asian markets, the VF3 is priced for “mass appeal”, according to VinFast. It expects bigger sales for it than from earlier models that were meant mainly for export to western countries, Le Thi Thuy, Vingroup’s chairperson, said in an earnings call in April.

VinFast was dreaming of breaking into the big leagues of global automakers when it launched sales in the U.S. last year and listed its shares on the Nasdaq, where its market value briefly surpassed those of General Motors Corp. and Ford Motor Co. in late August.

Investor enthusiasm has since cooled, and its shares are trading below $4 from a peak of $82.35. VinFast is facing delays in construction of a $4 billion factory in North Carolina, where the company said in an email that it is reviewing and evaluating “all aspects of the construction process.” It’s facing legal troubles over a crash that killed four people in California. It’s also dealing with allegations of patent infringement.

VinFast’s future matters for Vietnam, both because its ambitions dovetail with the Communist Party’s own goals, and because of parent company Vingroup’s large role in the Vietnamese economy. The conglomerate began as an instant noodle company in Ukraine in 1990s and now runs all sorts of businesses.

VinFast reported a net loss of $2.39 billion last year, despite a 90% increase in revenue. To patch its tattered finances, Vingroup recently sold its profitable commercial property arm, Vincom Retail. Vingroup’s founder, Pham Nhat Vuong, has committed $1 billion of his personal wealth, on top of the $11.4 billion of financing the parent company injected into VinFast in 2017-2023, according to a filing to the U.S. Securities and Exchange Commission.

“We will never let VinFast go,” he told Vingroup shareholders at their annual general meeting in April, according to state media.

The VF3 initially will be sold in emerging markets in Asia, where car buyers graduating from motorcycles to four-wheelers might not be as finnicky as Americans, said Tu Le, the founder of the consultancy Sino Auto Insights.

Just 3.1-meters-long, and 1.6 meters wide and high (10 feet long and 5.2 feet wide and high), it can squeeze into narrow lanes in Asian cities, but still seats five people.

VinFast aims to sell 20,000 of these cars in Vietnam this year and deliveries will begin in August. It’s being sold on the Southeast Asian e-commerce website Shopee, with an initial deposit of about $2,000. The company says more than 27,000 people applied to buy the car in the first three days after orders opened on May 13.

Many, like Dieu Linh, 32, are first-time car buyers. A businesswoman, she and her husband wanted to switch from motorbikes to a car, which is safer and more comfortable during extreme heat or rains.

“The VF3 price is tempting. But I’ll wait and see how it performs on the road before I make my deposit,” she said.

VinFast plans to start selling VF3s in the Philippines this year and in Indonesia, Thailand, the U.S., and Europe by next year.

It opened its first showroom in Jakarta, Indonesia’s capital, in April and says it has sold about 600 SUVs to Indonesian companies. It has begun construction of a factory in India.

Even in Asian markets, VinFast faces plenty of competition, especially from Chinese EV maker BYD, which has already achieved a big enough scale for cost-efficient manufacturing. Chinese EV makers like BYD and Haima are rapidly expanding in Southeast Asia. But in Vietnam, VinFast’s near-monopoly over charging infrastructure — charging stations dot the country, not just in big cities but also in more remote hilly provinces — consumer mistrust of Chinese products and nationalist sentiment may give it an initial edge, said Le Hong Hiep, a visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute.

BYD plans to launch three models — the Atto 3, Dolphin and Seal — in Vietnam next month.

VinFast must increase its sales to reduce per unit costs for its sprawling factory in northern Vietnam’s Haiphong province, which has the capacity to make around 250,000 EVs a year but is making a fraction of that.

“An idle factory just burns through money,” said Tu Le, the auto consultant.

India, the world’s third-largest car market by sales, offers the promise of scale, but only if VinFast builds its own factory there to enable it to benefit from policies that protect local carmakers. High import taxes mean that even at $9,200, the VF3 would be too expensive for Indians, said Ishan Raghav, the managing editor of the Indian car magazine autoX.

The VF3 might appeal to Indian families looking for a compact car with a range suitable for getting around in India’s crowded cities. But newcomers have to set up broad sales and EV charging networks and that will take a few years, he said. “All of these — manufacturing, sales and service and charging networks — are capital intensive and take time,” he said.

Vingroup has launched a company called V-Green to build its own charging infrastructure in Vietnam and other key markets. In Thailand, it plans to build its own charging infrastructure, Vu Dang Yen Hang, chief executive officer of VinFast Thailand, told The Associated Press in an interview in March.

VinFast is racing against time.

Despite prioritizing sales in the U.S., it sold fewer than 1,000 cars in North America last year and only around 35,000 cars globally, below its target of at least 40,000 cars. About two-thirds of VinFast’s revenue in 2023 came from sales to a taxi service owned by Vingroup, according to a filing to the U.S. Securities and Exchange Commission.

VinFast’s main challenge is to improve its financial performance, said Hiep.

“If they cannot sustain it long enough, they may go bankrupt,” he said.

AP