A Vietnamese EV manufacturer is now worth more than legacy US carmakers Ford and GM

Vietnamese electric vehicle (EV) manufacturer VinFast saw its valuation surpass that of legacy US carmakers Ford and General Motors (GM) on its first day of trading on Nasdaq yesterday (Aug. 15).

VinFast, which debuted its first two gasoline-powered car models at the Paris Motor Show to accolades in 2018, has been producing and exporting two- and four-wheelers in the EV segment in its homeland since 2021, and abroad since the end of 2022.

The loss-making company’s finances are still in the red with losses upwards of half a billion dollars, but it has several things going for it: a deep-pocketed backer in parent company Vingroup, spearheaded by Vietnam’s richest man Pham Nhat Vuong; a rapidly rising economy; and the growing opportunity to replace China as the world’s factory.

VinFast is “not in a rush” to raise additional capital, finance chief David Mansfield said after the listing, but it is in talks with sovereign wealth funds and other investors about additional investment, which could be finalised in the next 18 months.

VinFast’s blockbuster Nasdaq debut, by the digits

$22: Stock price at opening—more than double the $10 per share agreed with VinFast’s SPAC partner Black Spade Acquisition

$23 billion: Black Spade Acquisition’s valuation for VinFast

$37: Share price at market close

$85 billion: VinFast’s valuation at close, beating Ford and GM, both of whom are valued under $50 billion

Charted: VinFast vs top US and Chinese EV makers on Aug. 15, 2023

Quotable: Vietnam as an EV manufacturing hub

“Investors are continuing to believe that the future is in electric and that a low-cost East Asian country will emerge as a competitor in the US. The markets believe that given geopolitics that Vietnam, not China, will be that country.”

Bill Russo, Founder and CEO of Shanghai-based Automobility, told the BBC.

A brief timeline of VinFast’s milestones

June 2017: Vietnamese-founded and Singapore-headquartered automotive company VinFast is launched by Pham Nhat Vuong under his conglomerate Vingroup. Its first hub in Hai Phong boasts up to 90% automation

October 2018: David Beckham unveils VinFast’s two gasoline-powered car models, Lux A and Lux SA 2.0, at the Paris Motor Show. The cars garner accolades

December 2021: VinFast delivers the first batch of 100 VF e34 electric crossovers to local customers. It’s not only VinFast’s first EV model but also the first ever electric vehicle to be manufactured and sold in Vietnam

May 2022: VinFast announces it’s moving its headquarters to Singapore. “We feel that Singapore is a jurisdiction that will give investors more confidence,” CEO Le Thi Thu Thuy says at the time. While Singapore will be its legal and financial headquarters, Vietnam remains the operational headquarters

November 2022: VinFast ships 999 VF 8s, an all-electric crossover with 402 horsepower, 472 pound-feet of torque, around 290 miles of range, and a starting price of $40,700, to the US—with the aim of handing over the first cars to North American preorder customers by the end of December

May 2023: VinFast recalls all 999 electric sport utility vehicles it had shipped to the country over a software issue

July 2023: VinFast breaks ground on its first EV factory outside Vietnam. The $4 billion project in North Carolina is expected to create 7,500 jobs. It is poised to start production in 2025, with an annual production target of 150,000 vehicles

August 2023: VinFast makes its public market debut on Nasdaq via a special purpose acquisition company (SPAC) deal—a gateway often used by startups to speed up the often slow and expensive process of taking a private company public simply by merging with a shell company that is already listen on the stock exchange

Person of interest: Pham Nhat Vuong

Pham Nhat Vuong, VinFast chairman and founder, was already Vietnam’s richest man before the company’s Nasdaq debut. Yesterday’s listing added $39 billion to his wealth and made him Asia’s fifth-richest person, according to Forbes.

Vuong directly and indirectly controls 99% of the firm’s outstanding shares. The large stake limits shares available to other investors, making the stock prone to large swings. “The stock will be very volatile until more shares are available for trading,” said Jay Ritter, a finance professor at University of Florida, told Bloomberg.

Companies of interest: Other struggling EV makers

Whether VinFast’s valuation is justified and sustainable remains to be seen. After all, several EV makers that saw major stock market debuts have since seen their shares plummet in the last few years.

Ohio-based Lordstown Motors, which went public via a SPAC deal in 2020, has filed for bankruptcy. Faraday Futures, another EV maker that used the SPAC route, has been facing a cash crunch and a governance battle.

Nikola Corp, which came under fire because its founder Trevor Milton advertised technology that didn’t exist, has seen its stock value plunge 98% since its peak in June 2020, the month it went public via a SPAC merger. Most recently, the share price was hit by a recall that affected 209 of the company’s Tre trucks and also prompted a sales halt.

Rivian, once touted as a formidable Tesla rival, saw its stock fall so much from its IPO peak that it got booted from the Nasdaq 100.

VinFast needs to tamp down losses and up its cash reserves in the face of stiff competition like US-based Tesla and China’s BYD, especially since both these behemoths have been slashing prices to boost sales world over. For context of how big the gap between the leaders and the Vietnamese player is, VinFast delivered 11,300 EVs in the first half of 2023 whereas Tesla delivered 888,000.

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