VinFast's Franchise Pivot: A Strategic Play to Dominate U.S. EV Markets

The electric vehicle (EV) revolution is no longer a distant promise—it's a present-day reality. In California, the nation's largest EV market, VinFast is executing a bold strategy to accelerate market penetration and build customer loyalty. By shifting from a costly direct-to-consumer (DTC) model to a franchised dealership network, combined with industry-leading warranties, VinFast is positioning itself to capitalize on soaring U.S. demand for affordable, high-quality EVs. For investors, this pivot presents a compelling opportunity in a sector ripe for disruption.

Franchise Expansion: Lowering Barriers to Scale

VinFast's transition to franchised dealerships marks a strategic retreat from the high-cost, capital-intensive DTC model that failed to generate sufficient sales. By June 2025, the company had closed all 15 corporate-owned showrooms in California, replacing them with over 30 franchised locations across 16 states by year-end. This shift, anchored by partnerships like the San Diego dealership with Sunroad Automotive Group, lowers entry barriers in two critical ways:

1. Cost Efficiency: Franchisees bear the burden of real estate and operational costs, enabling VinFast to focus on production and innovation. This is particularly advantageous in high-cost markets like California, where DTC operations strained the company's finances.
2. Rapid Market Reach: Franchised dealerships leverage existing networks to penetrate local markets quickly. For example, the San Diego partnership offers VinFast instant access to a region with strong EV adoption rates, supported by Sunroad's established customer relationships.

Warranty-Driven Customer Acquisition: Building Trust in an Unproven Brand

VinFast's industry-leading warranties—10 years or 125,000 miles for the vehicle and a 10-year unlimited-mileage battery warranty—are a masterstroke in a market dominated by established brands. These terms address a key barrier to EV adoption: skepticism about the longevity and reliability of new manufacturers.

In California, where buyers are price-sensitive yet demand top-tier service, VinFast's warranties create a compelling value proposition. For instance, the VF 8 starts at $39,900, undercutting rivals like the Tesla Model Y (starting at $55,000) while offering comparable range and performance. Pairing this affordability with long-term coverage reduces perceived risk, potentially accelerating purchase decisions.

The Strategic Payoff: Overcoming Past Pitfalls

VinFast's earlier struggles underscore the necessity of this pivot. Its DTC model faltered due to high operational costs and low sales—only 89 vehicles sold in Canada in 2023—leading to store closures and a $3.18 billion net loss in 2024. The franchise model, however, has already shown promise:

• Market Penetration: By late 2025, VinFast's U.S. dealership count surpassed 38 locations, with plans to expand further.
• Financial Sustainability: Reduced capital expenditures and shared operational risks with dealerships could improve margins.

Investment Thesis: VinFast's Undervalued Growth Potential

VinFast's stock (VFS) currently trades at a valuation that does not fully reflect its strategic advantages. Key catalysts for upside include:
1. EV Market Growth: California's EV incentives, stringent emissions rules, and a growing charging network are fueling demand. By 2030, 100% of new car sales in the state must be zero-emission vehicles.
2. Warranty-Driven Loyalty: Long-term warranties reduce customer churn and could create a recurring revenue stream through maintenance and parts sales.
3. Global Scalability: The franchise model is replicable in other markets, such as Indonesia and Europe, where VinFast plans to expand.

Risks and Considerations

• Production Delays: VinFast's North Carolina plant, delayed until 2028, could strain supply chains and limit U.S. inventory.
• Competitive Pressures: Tesla and legacy automakers like Ford are ramping up EV production, intensifying price wars.
• Regulatory Shifts: Federal EV incentives may wane over time, impacting affordability.

Conclusion: A Strategic Play with Asymmetric Upside

VinFast's pivot to franchised dealerships and warranty-heavy offerings is a calculated move to dominate the U.S. EV market at a fraction of the cost of its failed DTC approach. While risks remain, the company's aggressive pricing, California-focused strategy, and brand-building through warranties create a compelling investment case. For investors willing to look past near-term headwinds, VFS presents an undervalued opportunity to profit from the EV boom—provided VinFast executes its plan with discipline.

In a sector where execution often trumps vision, VinFast's adaptability could prove decisive. The coming quarters will test whether its strategy can deliver the growth needed to justify its ambitious vision—and investors' faith.