Vietnam’s VinFast is in the middle of its North American expansion and with the new brand, Canadians will be introduced to a new sales scheme. The EV manufacturer plans to separate the cost of its vehicle and the cost of that vehicle’s battery, a strategy it believes will have a few advantages.
The company is currently in conversation with the local government to encourage it to expand federal tax incentives on EVs but also plans to lease the battery to customers in order to reduce the apparent base price of the vehicle, reports Automotive News Canada.
Although customers will have to pay a monthly fee for the battery, it will make the price of the vehicle look more like the price of a combustion vehicle. The lease bill will be roughly the same size as the gas bill that consumers with old-school vehicles have to pay anyway.
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“VinFast did collect both qualitative and quantitative market feedback regarding battery subscription,” VinFast Canada CEO Huynh Du An told ANC. “Key findings included that a lower price of entry was intriguing to consumers, and they appreciated support plans the subscription provides.”
That’s not just a clever way to market EV pricing, though, as leasing does come with other advantages. Under the plan, VinFast will replace batteries free of charge once capacity slips below 70 percent of what they were originally advertised as. Geotab reports that lithium-ion batteries in EVs lose about 2.3 percent of their total charging ability per year, though battery degradation isn’t linear (which complicates things a bit), so the battery should last more than ten years before VinFast has to replace it.
Replacing it, the company said, will have benefits for first owners, by increasing the resale value, for second owners, by giving used cars more life, and for the planet, since the company will recycle the batteries when they’re replaced.
That could also have benefits for VinFast because used batteries are a treasure trove of precious materials on the recycling market. By retaining control over the battery packs, the automaker is likelier to be able to retain the batteries and those packs are unlikely to go wasted in vehicles that are too old to drive. Vinfast is also setting up a certified pre-owned program so that “customers will see the preeminence of our battery subscription program.”
Canadian prices for the automaker’s vehicles, the VF 8 and the VF 9, have not yet been revealed, but in the U.S. they will start at $41,000 USD ($52,525 CAD at current exchange rates) and $56,000 USD ($71,741 CAD) respectively. Vinfast plans to open two storefronts in Toronto, as well as one in Vancouver and one in Montreal in the coming months. By the end of 2023, it expects to have 38 retail and service locations around the country.