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How VinFast's battery subscription fits the EV market

Alan Neuhauser
Illustration of a car with a remote control battery compartment in the top

Illustration: Sarah Grillo/Axios

Drivers seeking an EV SUV in the U.S. don't have much to choose from — especially if they want one with a third row of seats.

  • The Tesla Model Y, for example, starts at $63,000, plus an extra $3,000 for a cramped third row of seats. It has an estimated 318 miles of range.
  • By contrast, the larger VinFast VF9 starts at $56,000 for up to 369 miles of range.

Why it matters: Only about 10% of EV buyers accurately calculate the lifetime cost of the vehicle and make a decision based on that result, Ram Chandrasekaran, head of road transport at Wood Mackenzie, tells Axios.

  • "Most financially inclined people would say, 'Never lease a vehicle, you lose money over the lifetime of a vehicle.' But leasing is still a very popular market," he says.
  • Plenty of car-buyers purchase extended warranties or tire-and-wheel coverage, even if the math doesn't ultimately work in their favor.
  • "If some segment of consumers do worry about the battery being unproven, perhaps subscription batteries can solve that pain point," Rob Haslehurst, a managing director at the consulting firm L.E.K., tells Axios.
  • After all, Americans are used to buying a cellphone then having to pay for a monthly service plan to use it.

Yes, but: Battery-subscription pricing adds yet more complexity to a product that's already unfamiliar for most Americans.

  • "Many things are new for people buying these for the first time, and battery subscriptions add a new layer," Michael Bakunin, managing director in FTI Consulting’s power, renewables and utilities practice, tells Axios.
  • Moreover, the mileage surcharge encourages buyers to do the opposite of what the EV value-proposition calls for: drive as little as possible.

Reality check: VinFast says its program includes free replacement of the battery once it falls to 70% of its charging capacity.

  • However, when Tesla studied the longevity of its own batteries, it estimated they'd retain 90% of their charge capacity at 200,000 miles.

What we're watching: "This is what every carmaker hopes to actually put in place at some point in time," Bakunin says. "But it’ll be a technology culture-clash."

  • VinFast last fall said it expected to begin U.S. deliveries at the end of 2022. It delivered its first vehicles in Vietnam in December.
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