VinFast’s reliance on GSM for growth faces uncertainty

Vietnam’s top electric vehicle (EV) maker VinFast has relied on its largest buyer, Green and Smart Mobility (GSM), to drive sales. But as players flock to the domestic fleet electrification market and international competition heats up, GSM may no longer be a key growth engine for the firm in the future.

Founded by VinFast CEO Pham Nhat Vuong, GSM, which operates electric taxi brand Xanh SM, has scaled up its fleet over the past two years to gain dominance in Vietnam’s ride-hailing sector and enter new countries in Southeast Asia.

However, its contribution to VinFast’s sales has dwindled, as the latter has recently managed to diversify its customer base. VinFast’s EV deliveries to related parties, mainly GSM, fell from around 72% in 2023 to just 38% in the first nine months of 2024, the carmaker’s earnings reports showed.

GSM CEO Thanh Nguyen / Photo credit: GSM

For this reason, “we believe that GSM is unlikely to be VinFast’s main growth driver,” Phan Thanh Huyen, an analyst at VNDirect Securities Corporation, tells The Business Times.

This drop is notable given that GSM has continued to expand its offerings in Vietnam.

SEA expansion route

Launched in March 2023, Xanh SM now has nearly 100,000 vehicles in Vietnam, including electric cars, e-scooters, and partner-operated units. It serves as a major distributor of VinFast cars to local taxi operators, partnering with more than 73 transportation and traditional taxi companies in the country.

Still, GSM’s influence in the local EV sector may diminish as Vietnamese taxi fleets become fully electrified in the short term, says Koketso Tsoai, an automobile analyst at BMI. Unless “it expands its fleet or explores other growth strategies,” its role in VinFast’s sales could become limited, he says.

The company appears to be doing just that.

The taxi operator expanded into two new markets – Laos in November 2023 and Indonesia in December 2024 – less than two years after its launch. This year, the company plans to scale up Xanh SM’s fleet with at least 10,000 taxis in Indonesia and expand into countries like the Philippines and other parts of Asia.

GSM taxis in Laos / Photo credit: GSM

But analysts say this is no magic bullet. “(It) will not be simply about adding many vehicles, which is possible but unlikely to be feasible,” Tsoai notes.

The success of GSM internationally will hinge on how well it navigates the competitive landscape and establishes a sustainable presence in the new countries, he says. “If GSM aims to capture market share by slashing prices and introducing many vehicles into its ride-hailing fleet, it could potentially drive sales, albeit at lower margins.”

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