Pham Nhat Vuong, Vietnam’s richest man, is making strides with his ride-hailing service, Xanh SM, as he aims to rival Southeast Asia’s leading ride-hailing app, Grab. However, some critics are skeptical about the company’s growth potential in an intensely competitive market.
When gig driver Dat needed to select a ride-hailing platform, he purposefully chose Xanh SM over Grab, motivated by its environmentally friendly branding and local roots. “Xanh SM will definitely be more popular than Grab in the future,” Dat remarked, citing benefits like reduced fuel costs.
Xanh SM offers electric taxis and motorbikes, renting vehicles to drivers in addition to providing ride-hailing services. The mint-colored electric vehicles have become a common sight on Vietnam’s streets since their launch in April 2023. However, some analysts are questioning the sustainability of Vuong’s strategy to integrate Xanh SM with his electric vehicle brand, VinFast.
Since shipping its first batch of vehicles to the U.S. in 2022, VinFast has struggled with financial losses and delayed factory openings. In 2023, a substantial portion of VinFast’s sales came from its affiliated companies, including Xanh SM.
Xanh SM’s expenditures include $839 million for electric transports and a $419 million deal for an additional 14,600 EVs. Although this partnership provides short-term benefits for Vuong, some analysts warn that reliance on government backing could lead to risky business practices.
Since launching in Hanoi, Xanh SM has expanded its fleet to include 20,000 cars and 22,000 motorbikes and is aiming to enter neighboring Laos by 2025. In a recent survey, 36% of respondents chose Xanh SM as their preferred ride-hailing service, just behind Grab at 62%.
Despite growing interest, issues remain within the company. Some drivers have reported dissatisfaction with the quality of the electric scooters and the liability they face for damages.
Although Xanh SM is positioning itself for growth, the broader EV industry poses challenges as VinFast has faced significant competition and financial difficulties, reporting a loss of $773.5 million in the second quarter of this year alone.
Despite the hurdles, Vuong remains optimistic, stating in a June interview, “I will continue to invest until I run out of money.” The company has pledged financial support to VinFast, but the downward trends in the EV market raise concerns about future sustainability.
In Ho Chi Minh City, Dat expressed overall satisfaction with his choice of a Xanh SM vehicle. “The only downside I can think of is that the bikes don’t start immediately like fuel bikes,” he said. “But I don’t mind waiting; I can rest while it charges.”
Credit: Aljazeera
