VinFast makes its move to disrupt e-vehicle industry

VinFast started construction of a massive facility in North Carolina last month

After its very first day of trading on the Nasdaq in New York on August 15, VinFast’s shares closed at over $37 per share, contributing to a market capitalisation of $85 billion, which was significantly higher than Ford’s $48 billion and GM’s $46 billion.

With these figures, the Vietnamese manufacturer firmly established itself as a major participant in the global electric vehicle (EV) industry, rocketing to the third-largest EV company by market capitalisation, after Tesla and BYD.

After that first-day high, trading inevitably dipped over the following two days, with VinFast’s stock market value hitting about $46 billion by the end of last Thursday, compared to GM’s value of $45 billion and Ford’s $47 billion value.

With 99 per cent of the company controlled by founder Pham Nhat Vuong, the stock is susceptible to more volatility. Some $44 million worth of VinFast’s shares were traded on Thursday, compared to turnover of $27 billion in Tesla, which fell 2.8 per cent.

Dr. Majo George, senior lecturer of Logistics and Supply Chain Management at RMIT University Vietnam, stated that VinFast’s strategy for going public, which involved the use of a special purpose acquisition company, distinguishes it as a rapid method for bringing a private company public.

“This strategy is supported by funding from parent conglomerate Vingroup, a reputable organisation with a history of successful development,” George explained. “This distinguishes VinFast from the majority of other EV ventures, which frequently face difficulties with profitability and capital sustainability. This distinct advantage places the company in a position to potentially surmount obstacles that have led to the demise of some competitors.”

While VinFast’s delivery of 11,300 EVs in the first half of 2023 pales in comparison to Tesla’s delivery of around 890,000 vehicles, George sees the potential for multiple victors in the burgeoning EV market.

“Its voyage is poised to serve as a model for aspiring startups seeking to disrupt and prosper in the rapidly evolving domain of electric mobility as the industry continues to evolve,” he added.

Global CEO of VinFast Le Thi Thu Thuy last week heralded the company’s strategic lucidity, commencing with a focus on the domestic market as a springboard for international expansion. The trajectory begins with the challenging US market, followed by Europe and ASEAN. In addition, its footprint is expanding to encompass the Middle East.

“VinFast has vast opportunities. Nonetheless, the road ahead is unquestionably arduous, demanding heightened perseverance and diligence,” Thuy underlined, shedding light on the EV maker’s trajectory towards equity investment by 2024.

While Thuy voiced her conviction in the soaring global demand for these vehicles, she acknowledged persistent barriers, as many individuals remain unacquainted with EVs, even within nations like the United States.

“Time is requisite for customers to appreciate the distinctions. The emergence of green taxi services offers a means to acquaint consumers with the differentiating factors, thereby reshaping perceptions,” Thuy noted.

Nguyen The Trung, CEO of consultancy firm John & Partners, attributed VinFast’s journey so far to the thorough groundwork laid for the listing, ensuring a seamless and professional initial public offering (IPO) process. He added that VinFast’s strategic emphasis on premium EVs, environmental sustainability, and alignment with global trends has further fortified its standing.

“The potential for substantial initial price escalation in stocks like VinFast with modest floating rates is not unusual,” Trung said. “Emerging IPO stocks such as these often have limited availability and experience a phenomenon known as the IPO effect, which tends to drive appreciable price gains in the early hours of trading. Historically, approximately 75 per cent of IPO stocks witness price hikes on their debut.”

Tuan Nguyen, co-founder of fintech startup 2giay, sees last week’s listing as a testament to the ever-changing landscape of innovation. “VinFast’s rapid ascent bears resemblance to Tesla’s improbable journey. Just as doubts shrouded Tesla’s early days, so too were sceptics uncertain of its success,” Nguyen said. “VinFast’s meteoric rise finds resonance in Tesla’s own history.”

Countering that angle, Rick Meckler, who is a partner at Cherry Lane Investments in New Jersey, said, “VinFast may well represent a new successful competitor in the EV space, but unlike Tesla’s entry years ago, the space is now crowded with offerings from several manufacturers.”

Meanwhile, the company will look to raise more capital over the next 18 months. It faces an ambitious annual goal set by founder Vuong to sell 50,000 EVs, more than twice the sales notched up so far this year.

After VinFast said on Nasdaq opening day that it wants to sell its cars through dealerships, in addition to its direct-to-consumer approach, several US dealers said they were open to the possibility, reported Reuters.

VinFast's Nasdaq debut boosts Pham Nhat Vuong's wealth VinFast, the automotive member of Vingroup, wrote history on August 15, 2023, as it celebrated its official listing on the Nasdaq Stock Market, a momentous achievement marking the culmination of its merger with Black Spade Acquisition Co., a special purpose acquisition company (SPAC). The stock is trading under the ticker, VFS.

VinFast targets break-even point in 2024 Amidst the many players entering the electric vehicle (EV) market to take advantage of the green trend, VinFast confidently competes thanks to its production capacity, competitiveness, and diverse product range.

Chinese battery firm Gotion invests $150 million in VinFast Chinese battery manufacturer Gotion Inc. has agreed to acquire 15 million ordinary shares of VinFast through a private issuance valuing the shares at $10 apiece, with an investment totalling $150 million, representing 0.7 per cent of VinFast's total equity.