Vietnam’s Richest Man Bets $2B to Sell Cars to Americans
bloomberg.com
bloomberg.com
Mivina instant noodles were a staple food for me as a kid. It was a very Ukrainian brand to me. I was telling my Vietnamese friend about these glorious noodles, and she told me "You know that it literally means 'Noodles From Vietnam' in Vietnamese, right?".
Turns out, Mivina is a brand of Phạm Nhật Vượng's, which grew out of his (not too successful) restaurant.
He grew the Mivina business instead, and eventually sold it to Nestle for $150M - and then 10X'd that with a resort/real estate business in Vietnam.
A pity he didn't stay in Kharkiv, I say.
[1]https://en.wikipedia.org/wiki/Ph%E1%BA%A1m_Nh%E1%BA%ADt_V%C6...
https://www.wealthx.com/featured/2015/the-nepalese-billionai...
It's short for (Mi) (Vi)et (Na)m, which is basically Vietnamese Noodles. You can already guess "Mi" is noodles in Vietnamese.
This is why I think it makes total sense for good early stage investors to invest in people and teams (as opposed to the ideas). The category or industry they're operating in today is just a small taste of what they're capable of.
But American consumers will want to see roughly 5 years of reliable quality reviews before they trust the brand. Problems with Yugos and early Hyundai's left a trail of memorable Internet memes.
So, what do you do the first 4 years? That's a lot of years to take a loss in order to gain market share.
Maybe start in the rental markets by loaning the cars out to rental shops. If they are loaned on a short-term basis, then the rental shops won't have to eat quality problems, if they appear.
One thing they have to know: if you foul up quality early, it takes a long time to recover that reputation. Detroit brands are still recovering from the clunkers they made in the 70's and 80's. They are now on par with the Japanese brands, but that's not good enough to get a clean reputation. Hyundai had to include generous extended warranties AND low prices to restore their reputation and market share.
It's not really an advantage, though. Established makers have that same advantage, with the addition of having established dealer and service networks, established reputation, and so on.
He's about 10 years late to the EV party
The vehicles will probably end up as a loss, but it's going to get a lot of press. Then start selling them. Make the parking lots into car dealerships. Put them in college towns where people are just starting to get real jobs and have money to spend, and are also very online.
You say that as if it's gospel, but it sounds like "boomer thinking" to me. The demand for electric cars over the next ten years will mostly come form people who have different ways of making purchasing decisions than in decades past. And they've never heard of a Yugo.
You're trying to argue that "Boomers", which I took in good faith that you were not using as an epithet, are the only ones who would consider country-of-origin. That's, simply put, wrong.
Why is this term suddenly popular, especially here?
I'm downvoting comments using it, since it seems to be disparaging at best, if not offensive. It's also used inaccurately. The Yugo wasn't even produced until 1980.
It is offensive, 100%. It's grouping and stereotyping people based on age, meaning that for example my parents are subject to it, despite growing up in communist Poland and not getting any economic benefits normally attributed to "boomers". At 28, I'm probably 10x "wealthier" than they were at my age, but of course they are "boomers" by age so fuck them for ruining the economy, right?
If you're vicariously triggered by the word "boomer", it's because you have this attitude attached to it. As with the other commenter, I can't help you with words you're trying to put in my mouth.
There are strains of truth there -- life ain't grand for the millennial crowd -- but it's more of a meme than anything, IMO.
Also rather incongruous on HN, since there is a much stronger mid-career / older crowd on HN, aka the Slashdot refugees.
https://www.usatoday.com/story/money/cars/2019/11/14/consume...
Otherwise, decent car.
I would certainly trust a low end Ford Focus, more so than even a low end VW Golf / Skoda Scala.
As soon as you move into premium models both the American and European manufacturer start to show their weaknesses compared to the Lexus/Acura/Infiniti/etc brands from Japan.
Hyundai addressed this by offering a ten year warranty. They could do that right out of the gate rather than waiting until they have a bad reputation first.
Another possibility is to start off with a big leasing program. People aren't too concerned about repair costs or resale values for leased vehicles.
I would say that they are still recovering from the clunkers they made in the 2000s.
Detroit never really got into the quality mindset that the Japanese car makers became famous for. And they didn't get into the driving dynamics mindset of their European counterparts, except maybe a couple of Cadillac models starting with the CTS-V.
There are 2.2 million+ Vietnamese Americans so maybe some of those will buy on principle.
Know a lot of Vietnamese folks around the Washington DC area. Like the Cubans, most of the Vietnamese in the US are here because the NVA military cause them to flee. A lot of them vote Republican and probably aren't crazy about a former NVA officer selling them anything.
They still think all successful business in Vietnam has some ties with the regime (which they hate a lot).
This business is even more problematic to them since the owner is a Northerner, he had started on Eastern Europe, and his father was a military officer.
I may be wrong on this, but as I recall, Vietnam's domestic auto industry exists because they have escalating high tariffs on foreign manufactured cars with certain engine sizes (eg: 35% tariff on foreign made 4 cyl 1.6 L, 40% or more on 2.4L and larger engines, 50% tariff on things with 3.5 to 5L engines). Similar to China.
That said, there is so much insane wealth in Vietnam now, it doesn't matter. You see them all over Saigon.
(I've lived in Vietnam going on 4 years now)
It is not necessary for EVs to reach the price point you mention for adoption to take off, considering much lower fuel costs (total cost ownership). I know someone putting almost 2500 miles/month on their Model S commuting. The math worked out immediately for them to dump their Chevy SUV.
which is absolutely insane in my opinion, to have a shiny quickly depreciating status symbol. the amount of interest paid over the life of a 72-84 month loan is nuts. but people are short sighted and look at the monthly loan payment amount only. dealerships of course know this, and start naive people off in the negotiating with "how much do you want to pay a month?". they'll never show an amortization table.
If your 8-year-car is going to make you substantially more money than a cheap car that maybe doesn't require you to take a loan, you have a point. But since cars are about to go from A to B and the status symbol itself doesn't pay for anything, a cheaper car would do.
Why do people by expensive clothes that are no better than clothes a fraction of the cost?
The appearance of status might beget more status.
http://wws.princeton.edu/news-and-events/news/item/split-sec...
and with the current political climate in the US, I don't think they'll get revived for a while if ever.
https://evadoption.com/ev-sales/federal-ev-tax-credit-phase-...
In other words, current electric vehicles are about 2 price classes above equivalently positioned gas cars, maybe 1.5 price classes if you consider TCO.
[0]Sadly.
That advantage mostly fell to hybrids and full electrics, because now you can make a fast car that satisfies the rules, but by that point the ship had already sailed and now people don't feel safe in a sporty little thing next to the neighbor's hausfrauenpanzer so now people want it to be fast and big.
If I'm sitting in traffic 45 min, one way, on my way to work around DC or LA, what's a wicked good 0-60 going to get me?
Battery capacity price in China is already below $100 per kwh.
EVs are simpler to engineer, have lesser parts, and supply chains for them are shorter.
At $5000-6000 per battery pack, the rest of the car will cost around $3000-4000 if you use super duper cheap Chinese steel.
More importantly, switch to electric will facilitate further physical downsizing of cars, and this will further increase the battery/payload mass ratio: EVs don't have to have engine compartment, nor structural tricks to contain heavy wobbly engine block, nor a need to provide a lot of rigidity for heavy mechanical components. A car with less "dead volumes" will of course be cheaper.
This way you may be getting 300km electric ranges even in reasonably cheap EVs in the future.
For various reason I believe FCA, Nissan, Mitsubishi and Ford are going to fail.
I can't imagine any upstart without any compelling unfair advantage/killer product is going to fair well in an imploding auto market.
If he started this endeavor 8-10 years ago, he'd have an advantage. Now nearly every car maker is either producing or on the verge of producing at least one EV model.
Of course, the US may sail in and prop those two up. Kind of a "Too political to fail" type thing. But on their own, absent help like that, yeah, I don't really see how they make it without some sort of market event. Failure, fire sale merger, etc.
Vietnam doesn't really care too much about WTO rules, so they provide not only enormous resources to their firms through the back door, but also slap enormous tariffs on foreign auto dealers at the front door.
So yeah, what we may term unfair advantage, they call command capitalism.
I'd be sad to see Nissan go.
I have no idea how Mitsubishi hangs on; they're just too small a player now. What they really should do is get out of the car business, and jump into the airliner business. The market is screaming for alternatives to Boeing and Airbus. Boeing has proven itself untrustworthy, and Airbus just doesn't have the production capacity to handle increased orders. On top of that, I'm sure ANA and JAL would love to buy domestically-made airliners if they could.
>Bayerische Rundfunk reports that Ocean Lotus (also known as APT32), a hacking group associated with the government of Vietnam, has been detected in the networks of BMW and Hyundai. Engadget calls it cyberespionage.
There’s nothing magical about electric cars that takes away all the hard parts of building a car. Look at all the maintenance issues Teslas have with falcon wing doors and so on to see the potential issues that can turn customers away even on an electric car. Just because you have an electric motor instead of an engine doesn’t mean you don’t have all the other parts of a car to deal with and tweak.
There’s plenty of room for differentiation between electric cars, even the ones that already exist are plenty different. (Just like my ICE vehicle is different from other ICEs in many, many ways besides the engine)
That's astonishingly less than a car's cooling systems (radiator, A/C, oil pump, etc.) It'll be fun to see what other EV makers come up with.
For the average "enthusiasts" seen in the comments section of Car and Driver's facebook page it would be more along the lines of; 0 to 60mph time, nurburgring lap times, 0 to 100mph times, quarter mile times, looks. But for actual enthusiasts who have an interest in Electric Vehicles i would say all the things you mentioned are fairly important. But really, to the average consumer who purchases something like a Camry or Accord, I feel as if reliability/range/technology (by that i mean things like apple car play, lane assist, and other QoL technologies) and value are really what the average person is looking for.
You forgot the most important thing: price.
And, if you have a problem with a new or used vehicle, call Steve Lehto, a hilarious Lemon Law lawyer I watch on YT.
If you go by HN discussions, you'll quickly find out that Tesla makes terrible cars and has no special technology, so you might want to try a non-HN source of data :-D
I want to turn my car on over the internet from my phone and heat it up 15 min before I leave the office two blocks away. Then I want to put it in autopilot for the mind-numbing straightforward freeway traffic on my commute.
I don't care what other car manufacturers have to offer if they can't do the above. And as long as it's under $60k I don't care what the price is either.
I think if you are breaking into the car market at the low end you have to offer a total lifestyle package. Maybe a very long term lease with full maintenance program package or some other Mechanism that allows people that have no spare cash to continue operating a vehicle for a long time and build a reputation for reliability. That being said the low end is kind of a trap because you get stuck as a low end brand (Hyundai) and in the USA you need a dealer network but a low end dealer won’t be able to sell high end due to bad dealership environment.
More modern "communist" countries are Big-C Communist, more correctly titled Capitalist Authoritarianism. You can have as much of anything as you want, as long as you're loyal to the government and agree that the government can take everything you own any time they want. Including your business or your billions of dollars.
China has hundreds of billionaires even though they're "Communist" because they're not actually communist, they're Authoritarian Capitalist.
“Since the mid-1980s, through the Doi Moi reform period Vietnam has made a shift from a highly centralized command economy to a mixed economy that uses both directive and indicative planning through five-year plans.”
Vietnam has already shifted out of the communist styl e(goverment-managed-everything) since 1986 https://worldview.stratfor.com/article/vietnams-political-ec...
Once you introduce capitalism without proper checks on the bureaucracy, it takes on a life of its own as the newly created capitalist class begins to advocate for itself at the expense of the people and the bureaucrats begin to see themselves as the rightful heirs of private wealth. This is one analysis I read of what happened in China.
I'm not sure who to believe, but introducing elements of capitalism is on its face a dangerous move for the Vietnamese revolution. Honestly, I'm shocked that they've let it go so far they have a billionaire. I hope they have things actually under control because they fought and bled for decades to eject imperial influences from France and America and to ensure the people control their own fate.
I'm sure a politically active Vietnamese person would have a different take than me (and certainly a multitude of takes), given they understand their circumstances better than a dabbler foreigner like myself.
* I say existing because the Soviet Union briefly attained this, but the leadership shut down the workers councils (which many saw as a betrayal). So this idea isn't necessarily inimical to Marxism-Leninism, but in practice only a sparse number of examples have been realized.
I always view the so-called communism in China and Vietnam is a modernization of Confucianism.
Only time will tell.
Second, the Vietnam government probably subsidizes the company for exporting, even they just claim to do so.