Why are VinFast electric cars cheaper in foreign countries?

VinFast, the Vietnamese automaker, has recently announced the surprising price difference between their VF e34 electric car in Indonesia compared to the domestic market. The Indonesian version of the car is priced at 315 million rupiah (equivalent to 497 million dong), which is 200 million dong cheaper than the domestic price of 710 million dong. This price difference has left many people puzzled.

The Pricing Gap

The VF e34 is not the only VinFast electric vehicle sold at a lower price abroad. Earlier, the VF 8, the first electric car exported by VinFast, had a listed price in the US of $37,300 (for the eco version) and $44,300 (for the Plus version), equivalent to approximately 882 million to 1 billion dong. This is around 200 million dong less than the current domestic price.

The Reason Behind the Price Difference

Many people wonder why there is such a significant gap in pricing between domestic and foreign markets, especially considering that the cars sold overseas are imported and incur additional costs for transportation and higher sales expenses.

In reality, the price difference is due to the tax and fee incentives provided to electric cars in these foreign countries.

Tax and Fee Support

In the US, the VinFast VF 8 qualifies for a $7,500 credit, similar to many other electric cars produced in the country. This credit effectively reduces the price of the car and makes it more competitive.

In Indonesia, the government has implemented a maximum subsidy program for 50,000 electric vehicles. These vehicles receive 80 million rupiah (5,200 USD) for pure electric cars and 40 million rupiah (2,600 USD) for hybrid cars. Furthermore, as of February 20, 2024, the country has eliminated the special consumption tax (11%) on electric vehicles until the end of the year, as well as import duties. This means that electric cars sold in Indonesia are supported by incentives and subsidies of up to 7,400 USD for buyers and tax exemptions for sellers, equivalent to around 174 million dong.

Conclusion

The lower prices of VinFast electric cars in foreign markets compared to Vietnam can be attributed to the tax and fee support provided in these countries. In the US, the government offers credits, while Indonesia provides substantial subsidies and tax exemptions. These incentives make it possible for VinFast to offer their electric cars at more competitive prices abroad.