Vietnam’s richest man is vying to dethrone Asia’s ride-hailing king, Grab

Ho Chi Minh, Vietnam – When Dat had to take a ride-hailing app to enactment with arsenic a gig driver, helium purposely decided against Grab, the starring subordinate successful Southeast Asia.

Instead, the 23-year-old was persuaded by the environmentally affable selling and homegrown presumption of Xanh SM, an electrical taxi and motorbike work founded by Pham Nhat Vuong, the president of the Vietnamese mega-conglomerate Vingroup and Vietnam’s richest man.

“Xanh SM volition decidedly beryllium much fashionable than Grab successful the future,” Dat told Al Jazeera.

“I ended up moving for Xanh SM arsenic it saves substance cost, it’s affable for the situation and lastly, it’s a Vietnamese company.”

Unlike its rival Grab, Xanh SM rents retired vehicles to gig drivers successful summation to providing ride-hailing services done its app.

While Xanh SM’s mint-hued electrical cars and scooters person go ubiquitous connected Vietnam’s streets since starting operations successful April 2023, immoderate analysts question the company’s maturation imaginable and Vuong’s strategy of utilizing the level to propulsion Vinfast, his marque of Vietnamese electrical vehicles (EVs).

Vuong’s Vingroup founded Vinfast arsenic the country’s archetypal car marque successful 2017.

Since shipping its archetypal batch of 999 cars crossed the Pacific from bluish Haiphong to California, United States, successful 2022, the institution has been beset with losses and delayed mill openings.

Vinfast’s fiscal records amusement that 82 percent of its income successful 2023 came from different companies owned by Vuong, including Xanh SM.

Xanh SM spent $839m buying electrical taxis and scooters that year, arsenic good arsenic signing a $419m woody to bargain 14,600 much EVs, according to a study by the Reuters quality agency.

Xanh SM’s mint-hued electrical cars and scooters are ubiquitous connected Vietnam’s streets [Nguyen/Al Jazeera]

Zachary Abuza, a prof astatine the National War College who focuses connected Southeast Asian authorities and information issues, said that selling Vinfast cars to Xanh SM is simply a win-win strategy successful the abbreviated word for Vuong, who holds much than a 90 percent involvement successful some firms.

Still, the Vietnamese government’s backing of Vuong’s larger EV ambitions has led to risky concern practices, Abuza said, pointing to the founder’s willingness to determination ample sums of wealth into Vinfast, an unproven brand.

“I deliberation that it’s rather astute what they’re doing with the taxis,” Abuza told Al Jazeera. “[But] the occupation with these nationalist champions is that they go excessively large to fail,” helium added.

“The authorities has this vested involvement successful them staying alive, which allows them to bash precise risky things, benignant of creating this motivation hazard knowing that the authorities volition yet bail them out.”

Since debuting successful the country’s superior Hanoi, Xanh SM has expanded its fleet of Vinfast EVs to 20,000 cars and 22,000 motorbikes, made its services disposable successful astir fractional the country, and expanded into neighbouring Laos.

In a survey carried retired by Ho Chi Minh City-based marketplace researcher Decision Lab earlier this year, 36 percent of respondents chose Xanh SM arsenic their preferred ride-hailing app, making it 2nd lone to Grab, which was chosen by 62 percent of those surveyed.

Spending 8 to 12 hours regular navigating the streets of Ho Chi Minh City, a full-time Grab driver, who asked to stay anonymous, said helium has seen Xanh SM’s maturation firsthand.

“I can’t archer oregon foretell their aboriginal but I tin spot that they are becoming much popular,” the antheral successful his 40s told Al Jazeera.

Xanh SM spent $839m buying electrical taxis and scooters past twelvemonth [Nguyen/Al Jazeera]

Long Nguyen, selling manager astatine section electrical motorbike institution Dat Bike, said consumers are progressively looking for non-gasoline powered options similar the ones Xanh SM is providing.

“The request for electrical bikes has been increasing steadily astatine astir 30 percent each year. This inclination shows that consumers are progressively shifting from gasoline to electric,” helium said.

But similar Vinfast, Xanh SM’s ambitions scope further afield.

“Xanh SM’s semipermanent nonsubjective is to go 1 of the starring providers of electrical mobility solutions successful the region,” a Vingroup spokesperson told Al Jazeera by email, adding that the institution plans to grow into 3 oregon 4 much countries by 2025.

Abuza said that Xanh SM would look precocious costs going international, with hefty expenses progressive successful mounting up operations, shipping vehicles, dealing with customs and tariffs and establishing charging infrastructure for EVs.

“I’m not saying they can’t bash it. It’s conscionable not going to beryllium arsenic inexpensive oregon casual arsenic they mightiness think,” Abuza said, adding that the ride-hailer is improbable to person the aforesaid authorities enactment fixed to Vuong connected his location turf.

“They get precise inexpensive land, they get entree to capital. There are plentifulness of ways successful a socialist strategy for the authorities to subsidise them,” helium said of Vuong’s concern empire.

The Vingroup spokesperson said the institution recognises the challenges to enlargement and does not person peculiar attraction successful Vietnam.

“Vingroup enjoys enactment from the authorities and the public,” the spokesperson said.  “However, we bash not person immoderate peculiar rights nor privileges.”

Xanh SM operates a fleet of 20,000 Vinfast cars and 22,000 Vinfast motorbikes [Nguyen/Al Jazeera]

Xanh SM whitethorn look challenges astatine home, too.

The Ho Chi Minh City Grab operator who wished to stay anonymous said immoderate of his acquaintances kick astir the prime of Xanh SM’s electrical scooters and the information they tin beryllium held liable for the outgo of immoderate harm to their conveyance if they are deemed to person been negligent.

“People told maine galore of their drivers returned the bikes and discontinue working,” helium said. “I was told if their bikes got broken, the institution volition deduct a batch of their money.”

While Xanh SM is moving to found dominance successful Vietnam and expand, Vuong faces stiff contention successful the EV manufacture and dense losses astatine Vinfast.

Despite the income to Xanh SM and different Vingroup-affiliated brands, Vinfast reported successful a September 20 connection that it mislaid $773.5m successful the 2nd 4th of this twelvemonth amid rocky enlargement efforts.

The nonaccomplishment was a 20 percent summation from the archetypal 4th and up 40 percent from the aforesaid play successful 2023.

In July, Vinfast announced it would propulsion backmost plans for a $2bn manufacturing works successful the US authorities of North Carolina to 2028.

“It is simply a pugnacious industry. It requires a batch of wealth to get successful the game, and it requires a batch of standard to enactment successful it, to marque wealth astatine it,” Bill Russo, erstwhile Chrysler enforcement and laminitis of the Shanghai-based consulting steadfast Automobility Limited, told Al Jazeera.

Russo said that contention is particularly fierce astir cost.

“Another happening that Vinfast volition conflict with is [that] their imagination is lone imaginable if you tin travel successful astatine a precise affordable terms point,” helium said, adding that China’s BYD offers EVs astatine cheaper prices.

Xanh SM plans to grow beyond Vietnam to different parts of Southeast Asia [Nguyen/Al Jazeera]

Abuza besides noted Vinfast’s prices and the mediocre reviews of its EVs.

“They get panned successful each review. They’re expensive. You tin bargain a overmuch amended car for little money,” helium said.

The Vingroup spokesperson acknowledged that Vinfast faces challenges arsenic a “young electrical conveyance manufacturer” and an “emerging brand”.

“VinFast has a semipermanent imaginativeness and has reserved the indispensable superior to enactment its constitution phase,” the spokesperson said.

Vingroup, however, besides seems to beryllium facing fiscal struggles and selling disconnected subsidiaries to enactment afloat.

In March, it sold 41.5 percent of its involvement successful Vincom Retail, its buying promenade subsidiary with 83 locations crossed the country.

“They’re desperately trying to rise capital,” Abuza said.

Vuong does not look to beryllium disheartened.

In a June interrogation with Bloomberg, Vuong was asked however agelong helium would proceed pouring wealth into Vinfast.

“Until I tally retired of money,” helium replied. “I’m inactive moving each time to marque wealth for Vinfast.”

In a November 19 statement, Vingroup said it would lend Vinfast $1.4bn by the extremity of 2026 and that Vuong would personally springiness $2.1bn to the EV maker.

But with a downturn successful the EV marketplace and stiff competition, Vuong could tally retired of wealth earlier Vinfast succeeds, Russo said.

“They have, obviously, the founder’s money, but it’s not going to past forever,” helium said.

In Ho Chi Minh City, Dat is blessed with his prime of a Xanh SM EV, overall.

“The lone disadvantage of Xanh SM I tin deliberation of is that the bikes cannot thrust instantly similar substance bikes,” helium said.

“But to me, it’s not truly a disadvantage arsenic I tin remainder portion it is charging.”

Additional reporting by Nguyen Hao Thanh Thao