The High-Stakes EV and Ride-Hailing Play in Southeast Asia: Can Xanh SM Dethrone Grab?

The Southeast Asian mobility sector is witnessing a seismic shift as Xanh SM, a government-backed electric ride-hailing platform, challenges Grab's long-standing dominance. With Vietnam's ride-hailing market projected to reach $2.5 billion by 2030, the stakes are high for investors evaluating the sustainability of Xanh SM's aggressive vertical integration strategy versus Grab's diversified super-app model. This article dissects the capital-intensive dynamics, strategic risks, and long-term viability of both players in a race to redefine urban mobility.

Xanh SM: Vertical Integration and Government-Backed Momentum

Xanh SM's meteoric rise in Vietnam's ride-hailing market is underpinned by Pham Nhat Vuong's Vuong Group, which has orchestrated a vertically integrated ecosystem linking electric vehicle (EV) manufacturing, ride-hailing, and green mobility. By 2025, Xanh SM had captured 44.68% of Vietnam's ride-hailing market share, surpassing Grab's 36.08% (Mordor Intelligence). This growth is fueled by Vuong's $839 million investment in 2023 alone to acquire 20,000 electric cars and 22,000 motorbikes, creating a closed-loop system where Xanh SM serves as VinFast's largest buyer of EVs.

The Vuong Group's strategy hinges on cross-subsidization: Xanh SM's fleet purchases account for 82% of VinFast's 2023 sales, ensuring a stable revenue stream for the EV manufacturer while accelerating Xanh SM's market penetration. This vertical integration reduces supply chain risks and locks in demand for VinFast's vehicles, which are exclusively deployed in Xanh SM's fleet. However, the model's sustainability depends on Vuong's continued financial commitment. In 2024, Vuong personally pledged $2.1 billion to VinFast, with Vingroup converting $3.3 billion in loans into preferred shares—a move that stabilizes short-term liquidity but raises concerns about over-reliance on internal capital.

Government support further amplifies Xanh SM's advantage. Vietnam's push for net-zero emissions by 2050 has incentivized EV adoption through tax breaks and infrastructure investments. Xanh SM's 820 million kilometers of emission-free travel by mid-2025 (equivalent to 100,000 tonnes of CO2 reduction) aligns with national climate goals, securing regulatory tailwinds. Yet, this model is vulnerable to policy shifts or reduced subsidies, which could strain Xanh SM's profitability.

Grab's Super-App Resilience

Grab, the regional giant, has maintained a 55% app usage frequency in Vietnam (Rakuten Insight Global), driven by its diversified ecosystem of food delivery, logistics, and financial services. While its ride-hailing market share has dipped to 36.08% in Q2 2025, Grab's super-app model generates recurring revenue streams that buffer against sector-specific volatility. For instance, Grab's AI-powered features—family accounts, personalized food recommendations, and international travel packages—enhance user stickiness, even as Xanh SM gains traction in the EV niche.

Grab's financial resilience is evident in its ability to reinvest in innovation. The company's 2025 GrabX event in Singapore highlighted AI-driven personalization and expanded logistics partnerships, signaling a focus on long-term user engagement. However, Grab's reliance on a broad ecosystem may dilute its focus on EV adoption, a critical frontier in Southeast Asia's decarbonization agenda.

Capital Allocation and Long-Term Viability

Xanh SM's capital-intensive strategy contrasts sharply with Grab's diversified revenue model. Vuong's $11.4 billion in cumulative investments since 2017 (with 92% of VinFast's revenue coming from Vingroup-related transactions) has enabled rapid scale but raises red flags about financial transparency and dependency. By contrast, Grab's revenue diversification—spanning ride-hailing, food delivery, and digital payments—creates a more stable cash flow, though it lacks the same level of government backing.

The sustainability of Xanh SM's expansion also hinges on its ability to scale beyond related-party transactions. While VinFast's 2025 break-even target is ambitious, external sales remain a challenge. In 2024, VinFast reported a $773.5 million loss, with its U.S. plant delayed until 2028. Investors must assess whether Vuong's $2.1 billion personal commitment can offset these losses or if the model will collapse under its own weight.

Investment Risks and Opportunities

For Xanh SM, the primary risks include over-reliance on Vuong's financial health, regulatory changes, and competition from Chinese EV manufacturers. However, the company's first-mover advantage in Vietnam's EV market and strategic partnerships (e.g., with Taxi G7 and VinFast) present opportunities for sustained growth. Investors should monitor Xanh SM's ability to expand into Laos and Indonesia, where Vuong has already established manufacturing hubs.

Grab's risks lie in its slower EV adoption and vulnerability to regulatory pressures in markets like Vietnam. Yet, its super-app model offers a hedge against sector-specific downturns. The company's recent foray into AI-driven personalization and logistics could enhance long-term profitability.

Conclusion: A High-Stakes Bet on Green Mobility

The Southeast Asian mobility sector is a battleground of contrasting strategies: Xanh SM's government-backed vertical integration versus Grab's diversified super-app. For investors, the key is balancing short-term volatility with long-term potential. Xanh SM's rapid market share gains and alignment with Vietnam's climate goals make it an attractive high-risk, high-reward play, particularly for those betting on EV adoption. However, its reliance on Vuong's capital and regulatory tailwinds introduces significant uncertainty.

Grab, while slower to pivot to EVs, offers a more stable investment with its diversified revenue streams. Its ability to adapt to AI-driven personalization and logistics could sustain its dominance in the broader mobility ecosystem.

In a capital-intensive industry, patience and diversification are paramount. Investors should consider hedging their bets by allocating to both players, while closely monitoring Xanh SM's financial health and Grab's innovation pipeline. The winner of this high-stakes race may well be determined by who can balance ambition with sustainability in Southeast Asia's evolving mobility landscape.