Motor Mouth: VinFast is lowering EV prices—by renting you the battery

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The Vietnamese company is aiming for electric-gasoline price parity by selling you only part of the car

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At first blush, the prices are fantastic. VinFast, the Vietnamese automaker, just unveiled its complete lineup of electrified SUVs, and the big news — besides the fact that a barely four-year-old automaker is launching not one, not two, but five brand new EVs simultaneously — is the pricing. Its VF8, a D-segment electric SUV, will retail for $41,000, while the larger VF 9 will start at $56,000 .

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Now, that’s U.S. pricing which means, using current exchange rates — and VinFast, unlike most automakers, is looking at maintaining consistent pricing across all markets — that its Chevrolet Equinox/Ford Edge-sized VF 8 will cost a little more than CDN$52,000 when it goes on sale in Canada later this year, its VF 9 Jeep Grand Cherokee/Hyundai palisade equivalent to about CDN$71,500.

Neither MSRP is competitive with its fossil-fueled equivalent, but compared with the Tesla Model Y, the VF 8 is some CDN$20,000-plus cheaper, and the VF 9’s 70-large is about half of what Tesla wants for a Dual Motor Model X. If VinFast can hold that pricing, the Vietnamese would seem to have solved the price parity problem that continues to plague the electric vehicle segment. The one teeny, tiny caveat to this seemingly bright news is that—

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You don’t own the whole car.

Oh, you do own the twin electric motors. Ditto the tires, wheels, and seats. In fact, you own the entire shell, everything inside the cabin, and all the high-tech-ery that goes into running a modern electric, semi-autonomous automobile. The only thing you don’t own is, well, the battery. That you rent — in perpetuity — from VinFast.

This sales model of course opens up all sorts of questions, not the least of which revolve around insurance; liability if you don’t pay the rent; and whether this sort of pricing qualifies VinFast EVs for federal and provincial subsidies. But the bottom line in VinFast’s gambit nevertheless remains simple: Will buying only part of the car actually save you money?

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The answer is that we simply don’t know. VinFast revealed no clues as to what the battery rentals might cost in Canada, saying only that its monthly battery stipend plus the electricity required to power those batteries would be roughly equivalent to what the owner of an ICE-powered car would spend monthly on gasoline. That’s quite a claim, one which Motor Mouth thought worth investigating. So, we looked into how the same plan works back in Vietnam. This is what we found out.

The Vinfast VF 5 EV
The Vinfast VF 5 EV

In its home market, VinFast is already selling its VF e34, an electrified compact ute roughly the size — and, unfortunately, roughly the same shape — as Ford’s EcoSport. In Vietnam, it costs the equivalent of about CDN$38,715. Judging from the slight currency discount VinFast seems to be offering in North American markets, the e34 would probably retail for around $37,000 here in Canada.

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Meanwhile, back home, you can either rent the battery for 500 kilometres a month (at a CDN$30 rate, plus a five-cents-a-kilometre overage) or pay CDN$80 for 1,400 klicks. Add in the cost of charging the battery, and a good guesstimate for the roughly 15,000 kilometres the average Canadian drives in a year — split 55-45 between urban and highway use, says Transport Canada — might be about $150 a month. So how does that compare with the aforementioned EcoSport?

Well, here in Canada, Ford will sell you — actually more like beg you to take it off their hands — an EcoSport for as little as $25,599, and as much as $32,099. And, according to Transport Canada, an EcoSport — which averages a not-that-frugal-for-its-size 9.3 L/100 km — would consume about $1,400 a year in gasoline. That’s about $120 per month.

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This sales model of course opens up all sorts of questions, but the bottom line is: Will buying only part of the car actually save you money?

So that’s not quite the price parity promised. On the other hand, there is one interesting anomaly to VinFast’s pricing strategy. We’ve long been told — by parents and economists alike — that one of the premier maxims of home economics is that it is always cheaper to buy than to lease. However, according to Desario.com , at current exchange rates, buying the VF e34’s battery would cost CDN$11,200 . That — I’ll save you reaching for the calculator — is equivalent to 196,000 kilometres (122,500 miles) of battery rental, which may be why, at least so far, VinFast has made no mention of whether North Americans will be allowed to buy their batteries outright.

That purchase price looks even worse when you factor in that the VF e34’s battery offers but 42 kilowatt-hours of lithium-ion. That — again, don’t reach for your iPhone — works out to CDN$265 per kWh, quite a premium over the US$135/kWh commonly ascribed to the manufacturing cost of a modern lithium-ion battery.

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Two things stand out from that calculation. First, according to Current Automotive, the retail price of a 75-kWh Tesla Model 3 battery — installation not included! — is US$13,500 . Applying that same iCal app and currency adjustment, that works out to CDN$230 per kWh. Yes, that means a Tesla battery is less expensive than VinFast’s in its home market.

A worker assembles a battery on a VinFast production line in Hai Phong City, Vietnam.
A worker assembles a battery on a VinFast production line in Hai Phong City, Vietnam.

It would also mean that the 106-kilowatt-hour battery that electricvehiclespecs.com says powers the top-of-the-line VF 9 — good for 550 kilometres of range, by the way — would cost a little over 28,000 Canadian loonies. That would seem to indicate that the VF 9’s real retail price might be closer to $84,000.

So, to finally answer your question: Yes, if the numbers from VinFast’s home market hold true — and, as I said, the company seems to be sticking close to a strict one-world pricing system, adjusted according to currency fluctuations — it makes a lot more sense to rent its batteries than pay for them. But does that mean VinFast’s EVs have reached price parity with their ICE-powered equivalents? I don’t think so.

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And lastly, here’s two final curve balls. Like all EV automakers, VinFast is hoping to take advantage of the generous ZEV incentives currently being offered here in the Great White Frozen North. But the federal government’s current $5,000 subsidy is only available for cars with a base price below $45,000. Now, never mind that Hans Ulsrud, VinFast Canada’s Chief Growth Officer, is already lobbying the Canadian government to adjust that limit upward; of much more importance is how his cars’ eligibility will be determined.

Vehicle bodies await assembly on a VinFast production line in Hai Phong City, Vietnam.
Vehicle bodies await assembly on a VinFast production line in Hai Phong City, Vietnam.

For instance, if the aforementioned VF e34 were to be imported to Canada, would it qualify as a $37,000 vehicle — the price sans battery — or one costing $48,200, the actual value of the complete car? It’s an important distinction because, you can be quite sure that Tesla — which got up to all sort of shenanigans when it initially tried to have its Model 3 qualify for the below-$45,000 incentives — is watching. No doubt, Lord Elon is already imagining selling all his vehicles sans batteries — and wheels, brakes, and tires.

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Meanwhile, that “true value” calculation will also affect insuring VinFast vehicles. Using the same logic, how will insurers evaluate VinFast insurance premiums? Will they be based on the car’s selling price, or the actual value with battery? For this one, at least, we have some precedent. Renault initially sold some of its early EVs — it’s since discontinued the offer — on a battery-lease basis. Nonetheless, European insurance companies based their premiums on the real value of the cars, calculated by gogreenautos.co.uk to be as much as an additional 6,000 pounds . In the VF 9’s case — if my numbers held up — your premium would be based on a replacement value of $84,000, not $56,000.

The Vinfast VF 9 EV
The Vinfast VF 9 EV Photo by Vinfast

So, does this make VinFast’s battery leasing pricing structure worthwhile? I really don’t know. On the one hand, it does not appear to reach the magical price-parity-with-ICEs that protagonists project will be a major inflection point in our switch to electrification. On the other hand, at least with the numbers I’ve been able to gather, leasing VinFast’s batteries certainly appears cheaper than buying them, especially since the company says that it will replace any battery that falls below 70 per cent of its peak charge, cost-free.

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As to whether all these machinations will work, all that I can say is that I may be a poor judge. I never lease anything. My Depression-Era parents never paid a cent of interest in their life, and I’ve never once taken out a bank loan. On the other hand, 96-month auto loans have become increasingly popular despite the frequent admonishments from watchdogs and journalists alike of how much more costly such extended indenture is over the long run.

Could such a buy-the-shell-lease-the-battery deal become popular? I just can’t say. I do know that it’s a question important to more than just a tiny Vietnamese upstart hoping to get a toe-hold in the lucrative North American auto market. Indeed, the answer could mark a major upheaval in how our economy works. Should we, for instance, attack the problem of Canada’s outrageous housing prices through traditional means like higher interest rates? Or have we really gained so much trust in modern monetary theory that we think it’s wise to allow cash-strapped Canadians to buy their houses separate from, say, their kitchens?

Which we’ll be plenty happy to rent them, of course.

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