Vietnam’s VinFast, a rising star in the electric vehicle (EV) arena, has experienced a roller coaster of valuation highs and challenges in scaling up its global operations. Despite the company’s ambitious goal to sell 50,000 EVs this year, only 16,000 cars have been sold so far.
The newcomer has successfully wooed Wall Street, achieving a surprising valuation of over $85 billion in a Nasdaq listing. To put this into perspective, that’s nearly double the valuation of established automakers like Ford or General Motors. This valuation came to fruition even as the company hasn’t turned a profit yet.
VinFast’s robust debut on Nasdaq followed a merger with special purpose acquisition company (SPAC) Black Spade, causing its shares to soar. Notably, almost 99% of the company is controlled by its founder, Pham Nhat Vuong, which exposes the stock to significant volatility due to its limited float. This is reminiscent of other EV SPAC ventures, such as Lucid, whose share values plummeted post-listing.
The company’s plans to seek additional capital could further complicate its valuation status. CFO David Mansfield revealed ongoing discussions with a diverse group of investors, hinting at potential fundraising in the forthcoming months.
CEO Le Thi Thu Thuy commented on the unpredictable nature of equity values, stating that market dynamics would determine any future investments.
A significant concern for VinFast has been its ability to retain high-level executives. The Nasdaq listing might alleviate this issue, enabling the company to provide share-based incentives, as mentioned in its official documents.
The company is pivoting its sales strategy. Instead of purely using its own platform, akin to Tesla’s model, VinFast is set to embrace a “hybrid model,” collaborating with distributors and dealers, especially in overseas markets.
Thuy emphasized the time-consuming nature of establishing their own outlets. Despite having 122 showrooms globally, mainly concentrated on the U.S. West Coast, their sales, especially in the U.S., haven’t matched expectations.
VinFast remains confident. Even with the current sales numbers, Mansfield affirms they are on track to meet their targets.
Nevertheless, achieving these targets would still utilize only a fraction of the production capacity at their Haiphong plant in Vietnam. Moreover, with a new plant coming up in North Carolina, set to commence operations in 2025, the stakes are even higher.
Industry consultants at AlixPartners have noted the break-even sales threshold for EV makers is around 400,000 vehicles annually. Considering the fierce pricing competition in the market, notably from Tesla, VinFast has its work cut out.
VinFast remains optimistic about its future, banking on Vietnam’s low-cost base as a unique advantage. As CEO Thuy remarked, this could be the ticket to future cost reductions and global competitive advantage.
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