Vingroup has officially started the construction of a battery cell factory for VinFast electric cars.
It is reported that President Nguyen Xuan Phuc was present at the groundbreaking ceremony on the afternoon of December 12 of VinES Battery Factory in Vung Ang economic zone, Ha Tinh province, a project worth $174 million.
Attending the ceremony were many retired and current senior leaders, including former President Truong Tan Sang, former National Assembly Chairman Nguyen Sinh Hung, and Deputy Prime Minister Le Van Thanh, Thanh Nien newspaper said.
Vingroup said that the construction of this factory will help it supply batteries for the group’s VinFast electric cars.
VinFast’s gasoline-powered car line became the first domestic car in Vietnam, having been put into use since 2019.
Now, with a bet on the US market, Vingroup plans to launch a number of battery-free electric SUVs to customers in the US next year, with the battery packs to be leased separately.
Last week, Vingroup said it hopes to be listed on the US stock market in the second half of next year.
The battery manufacturing project in Ha Tinh has been mentioned for a long time, with a plan to build a factory on an area of 8 hectares in phase 1 with a total investment of VND4 trillion, and the total area of use will be 12, 6 ha with a total investment of VND8.8 trillion ($387 million) in phase 2.
The investor, Vingroup, contributes 20% of the capital, and the remaining 80% is mobilized capital from banks and credit institutions.
“This is VinFast’s localization strategy in terms of supply,” said Thai Thi Thanh Hai, vice president of Vingroup and vice chairwoman of the VinFast Member Council, as quoted by Reuters.
“This strategy allows us to have our own supply chain for batteries and spare parts.”
The company said it wants to produce 100,000 battery packs per year in phase one and then increase capacity to 1 million.
It is known that phase 1 includes the construction of infrastructure, factories, equipment installation, and goes into production from the fourth quarter of 2022.
According to an October report, the project will operate at full capacity starting in 2025.
VinFast is currently coordinating with a number of partners in the battery sector, including StoreDot, Gotion High-Tech, and ProLogium, Reuters reports.
Before launching the electric car model, VinFast sold regular cars on the Vietnamese market.
In 2010, the company sold about 30,000 vehicles, accounting for 10% of the local market but still far from its annual target of selling 250,000 vehicles.
According to the financial report for the first half of 2021, VinFast lost VND11.3 trillion ($491.3 million). This is almost twice as high as last year’s loss – VND6.6 trillion.
Vingroup said that VinFast’s loss was foreseen and Vingroup accepted to cover the loss in 3 to 5 years.
Earlier this year, the quality of VinFast cars and its handling of customers sparked a fierce controversy on social networks in Vietnam.