VinFast Auto, an electric vehicle startup, has provided battery-range data that highlights a problem for both investors and drivers aiming to understand a crucial aspect of these cars. Additionally, the data raises concerns about one of VinFast's models.
The VF 8 SUV: A Range Dilemma
During the first half of the year, VinFast managed to sell 850 units of the VF 8 SUV in the U.S. market. On some specification sheets, the company boasts a battery range of 260 miles for the Eco trim model. However, according to the EPA, the range is lower at 207 miles.
The variance in these figures can be attributed to the testing methods employed. The 260-mile range is determined using the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), which involves driving an electric vehicle at a consistent speed of 35 miles per hour on a cool day until it depletes its battery. This standard is predominantly utilized in Europe.
Conversely, the EPA estimate takes into account additional factors such as air-conditioning usage during hot weather and variations in driving conditions (highway vs. city). Such considerations align with the U.S. standard.
While VinFast does disclose the EPA range on its website and U.S. spec sheets, it faces a predicament due to the fact that a 207-mile range falls below the average.
Falling Below Average Range
On the other hand, the VinFast VF 9, a full-size SUV, boasts a commendable range of 330 miles according to the EPA's assessment. This figure puts it in a favorable position when compared to other EV models.
The disparity in range between VinFast's models can be attributed to differing battery pack capacities. The VF 8 is equipped with a 60 kWh battery pack, while the VF 9 features a more powerful 123 kWh battery. As expected, a larger battery capacity correlates to a greater range.
Specifically, the VF 8 achieves an efficiency rate of approximately 3.3 miles per kWh, while the VF 9 attains 2.7 miles per kWh. This discrepancy in efficiency can be explained by the weight disparity between the two models. Comparable EVs suggest that the VF 9 likely weighs close to 6,000 pounds, while the VF 8 weighs approximately 4,200 pounds.
At the time of writing, VinFast has not responded to a request for comment regarding these weight specifications.
Evaluating Electric Vehicles based on Range per kWh
When comparing electric vehicles (EVs), it can be challenging to assess their efficiency solely based on range per kWh, as the weight of the vehicle plays a significant role. For instance, the Rolls-Royce Specter, weighing 6,600 pounds, achieves a range of 2.5 miles per kWh. On the other hand, the Tesla Model 3, weighing approximately 4,000 pounds, offers a range of 3.8 miles per kWh.
To gain a clearer perspective, we plotted the miles per kWh against the weight of 15 cars analyzed. Some EVs from various automakers exceeded the trend line, indicating superior efficiency, while others fell below it.
However, it's important to acknowledge that there isn't much differentiation within the group close to the trend line. This analysis suggests that most companies can design reasonably efficient cars by utilizing batteries effectively.
Automakers have several approaches to enhance these numbers, but they often come at a cost. For instance, battery chemistries with higher nickel or cobalt content offer greater power density but are more expensive.
For U.S. car buyers, the key is to consider the EPA range, which should accurately represent their real-world experience. When making comparisons, it is crucial to compare similar metrics and avoid comparing WLTP numbers to EPA ranges.
Investors, on the other hand, have additional factors to consider. While consumers primarily focus on ranges for comparison purposes, investors should also pay attention to gross profit margins. This metric provides valuable insights into the underlying business strength as it encompasses various factors like battery choices, car design, and manufacturability.
VinFast, a relatively new player in the market, has yet to achieve the scale necessary for consistent profits. In the company's registration statement, their gross profit margin was reported at approximately minus 200% for the quarter. In contrast, Tesla's gross profit margin for the second quarter was closer to 20%.
Despite its below-average range for a model, VinFast boasts an impressive market value of $85 billion, with shares priced at almost $37 per share. This valuation places VinFast among the most valuable automakers globally.
In the latest trading session, VinFast's shares experienced a modest 0.8% increase to reach $37.03, while the S&P 500 and Nasdaq Composite indices rose by 1.1% and 1.6%, respectively.