VinFast wants you to subscribe to your own car battery. Here’s what you need to know
The software-as-a-service, subscription-to-everything business model has unfortunately caught on in the automotive world. We here at The reader don’t particularly care about that, and we’ve continually berated brands for their crazy subscription prices. But VinFast, the new Vietnamese automaker with aggressive aspirations in the US market, plans to have subscription-style pricing as a cornerstone of its business. When VinFast sells you an electric car, it rents the battery to you. Exactly how it will work is shrouded in mystery, but I’ve dug into as many details as possible to help you figure it out.
The VF8 and VF9 are the two future electric crossovers from VinFast. The two-row VF8 is about the same size as the Volkswagen ID.4, more or less. The VF9 is about the same size as a Hyundai Palisade and has three rows of seats. The VF8 can travel a minimum of 248 miles from its standard range pack or 292 miles on its range-enhanced battery in Eco trim. The VF9 will hit 369 miles in Eco trim with an improved range battery. These are two manufacturer estimates, no EPA testing or range certification has yet been released.
On paper, the VF8 and VF9 are very competitive. The VF8’s base price of $40,800, with no destination charges to be determined, undercuts the ID.4 Pro while offering more power and more range. But, unlike the ID.4, the base price of the VF8 does not include its battery. Like an old-school R/C car, the batteries are sold separately, even though they are factory installed. This is where the price gets a little murky.
For an additional $35 (VF8) or $44 (VF9) per month, the driver is awarded 310 miles per month. That’s a measly 3,720 miles per year. For reference, the average mileage per driver over a year is 13,476, according to the Federal Highway Administration. Anything over 310 miles is charged $0.11 per mile (VF8) or $0.13 per mile (VF9). That’s not enough miles for most drivers, so VinFast offers an unlimited plan for $110 and $160 for the VF8 and VF9 respectively.
The contract never ends
I pressed three different VinFast contacts for details, including a salesperson from the VinFast store in San Mateo, a customer service representative from the VinFast hotline, and a VinFast public relations representative. There are no setup fees for the lease itself. There are also no price differences between renting the smaller battery and the larger battery. VinFast says when the battery drops below 70%, it will replace the battery with a new one. That’s great, but the battery payouts never end. If you buy a VinFast EV, you’re locked into a forever lease, paying on the battery in perpetuity, at least until you sell the vehicle to the next owner. VinFast calls this an “ongoing subscription fee for the life of the product.” VinFast does not offer a battery purchase option, insisting that the lease could save the heartache of “15 or 20 thousand dollar battery replacement.” Whether or not this number is the actual cost of a VinFast EV battery is unclear.
The careful formulation of VinFast on his location also tells us that contractual pricing is not necessarily fixed either. “For VinFirst pioneers who purchase a VF 8 or VF 9 in 2022 or 2023, customers will benefit from ongoing subscription rates for the life of their vehicle,” the website states while implying that the subscription price is not immutable. I asked the VinFast seller if there was any possibility that the battery rental payment amount would change in the future, and the seller said no, citing the lock-in price for first-time owners. Yet it gets complicated for second, third and beyond owners.
According to the VinFast rep, “When a VinFast vehicle is sold to a secondary buyer, the new owner would either assume the remaining terms of the existing Battery Subscription Agreement/Contract or enter into a new Battery Subscription Agreement/Contract.”
I asked if the price could change when the contract renewed or changed hands, and none of the contact points gave me a concrete answer. Anyone who buys a used VinFast will pay a lease no matter what. Ten years from now, when VinFast vehicles will inevitably make their way to low-priced used car lots, will a cheap dealership or cash-strapped buyer be willing to pay a purchase price and a monthly subscription? Hell, will new EV buyers be willing to be financial for a key part of the vehicle’s functionality, for as long as they own the vehicle?
At the very least, the car doesn’t really cost $40,800
At $40,800, the VinFast VF8 could be a dark horse alternative to electric crossovers from established manufacturers. But it’s not really $40,800. In the era of 72-month loans, a VinFast VF8’s battery would add an additional $7,920 to its base price over the same period. That is, if the rental price of $110 does not change. Except that at the end of the loan, you’re still paying for a part of the car that’s needed to run the vehicle, and it seems like you can never own it for some reason. ADAS is also a subscription. VinFast offers first-time buyers one year of free ADAS, but from then on it will be a subscription. Pricing has yet to be announced, but VinFast expects to tell us soon.
From my perspective, VinFast’s business model doesn’t seem that different from furniture rental places like Rent-A-Center or Aaron’s. These attractive prices per week add up, with terms that result in buyers paying a lot for a shoddy item. Are VinFast’s offers worth the real price not so low? Maybe not.
There are rumblings that VinFast could offer a battery buyback option, possibly in 2024, but the price, timing and logistics of such a deal are unknown. VinFast hasn’t even ironed out the terms of its current battery rental structure. I asked what would happen if a battery renter didn’t pay, and VinFast doesn’t seem to know yet.
“VinFast will work with banking partners to include default terms in our finance/vehicle lease and battery subscription agreements/contracts so that all parties are aware of what action may need to be taken in the event of non-payment. battery subscription fees,” said a VinFast rep. Another rep, the one I spoke to via the VinFast customer service hotline, said the car would be limited to “minimum mileage.” I asked what the ‘minimum mileage’ threshold was, and she said she didn’t know.
Can you default on a battery, even if the car is fully paid off? It seems very possible, unfortunately. In the world of EV startups, high flash, big promises, but vague implications, don’t seem so uncommon to manufacturers who don’t have much to show from a sleek computer render or a body-in-white prototype that barely moves under its own power. VinFast, however, has opened stores, is taking money from reservations and promises to deliver cars as early as November. Yet no one seems to know what the process of buying and owning will look like.
If VinFast expects Americans to shell out upwards of $40,800 and possibly hundreds more per month, it needs to take the terms of its battery lease seriously. From what we can tell right now, VinFast seems to be the epitome of car via microtransaction making inroads in the industry. Where is the line?
We are very curious to see how VinFast will eventually find its way into the US market. It has already opened six stores in California, plans 27 more and has even committed to building a factory in North Carolina. Creativity in sales models and pricing isn’t necessarily a bad thing, but coming out with such an opaque cost structure that resembles an open-ended lease is worth being skeptical about.