A car manufacturer established by the wealthiest individual in Vietnam has garnered a higher valuation from investors compared to Ford and BMW, despite having produced only 20,000 electric vehicles since its inception and facing harsh initial critiques.
VinFast, which incurred a loss of $2.1 billion in 2022, achieved a valuation of $85 billion at the conclusion of trading on Tuesday after becoming listed on New York's Nasdaq stock exchange through a merger with a cash shell corporation.
Numerous enterprises have achieved substantial valuations by capitalizing on the potential for rapid growth in electric vehicle sales, inspired by the triumphs of Tesla, the company overseen by Elon Musk.
Although VinFast has never turned a profit, its stock price surged by more than threefold on its debut trading day on Nasdaq, endowing the company with a theoretical valuation surpassing that of prominent and well-established automakers such as BMW at $69 billion, Ford at $48 billion, and General Motors at $46 billion.
The Vietnamese-founded automaker forms part of Vingroup, a conglomerate with investments in retail, real estate, and healthcare. It belongs to the billionaire Pham Nhat Vuong, who retains 99% ownership of VinFast shares. Companies with a limited quantity of shares accessible on stock markets can be prone to significant price fluctuations.
Vuong created Vingroup in Ukraine in 1993, initially selling instant noodles. Subsequently, he employed the proceeds from this endeavor to construct residences, Vinpearl-branded resorts, and Vincom shopping centers in Vietnam. Prior to VinFast's public listing, his net worth stood at $5.7 billion according to the Bloomberg billionaires index.
Up until the end of June, Vuong and other investors had injected $9.3 billion in capital, as outlined in a company presentation, to facilitate VinFast's rapid expansion of production and the establishment of a new factory in the United States.
Founded in 2017, the company initially produced four internal combustion engine vehicles and plans to discontinue the production of these cars next year. Electric vehicle (EV) production commenced in 2021.
On its first trading day, shares in VinFast skyrocketed by 255%. However, they experienced a subsequent decline of approximately 25% on the following day.
The public listing was executed through a merger with Black Spade Acquisition, a special purpose acquisition company (SPAC). Several electric car startups, including Lordstown Motors and Lucid, have previously attained substantial valuations after SPAC mergers during the boom of 2020 and 2021, only to encounter challenges in achieving profitable car production.
While VinFast has succeeded in delivering a considerable number of electric cars to customers, it still appears to have a considerable journey ahead before it can rival the established leaders of the automotive industry.
The company has introduced four new electric models at a pace that even seasoned car manufacturers would find difficult to match. However, reviewers in the US have suggested that its $56,000 VF8 model requires substantial improvement. Motor Trend magazine asserted that the car was "far from being ready for public consumption." The reviewer noted, "As it currently stands, I would feel uneasy handing over the keys of this vehicle to a customer."
Two other reviewers reported experiencing motion sickness during their test drives, attributing it to poor handling.
Road & Track magazine stated, "The car is simply incomplete, lacking competitiveness, and, in all honesty, among the poorest modern cars I've ever driven."
In a statement commemorating the public listing, Le Thi Thu Thuy, the CEO of the carmaker, remarked, "VinFast has accelerated the global electric vehicle revolution by making intelligent, secure, and environmentally conscious EVs accessible to all."