Vietnam’s VinFast Makes Striking Debut on Nasdaq
VinFast Auto Ltd. has ignited a remarkable surge on its first day of trading on Nasdaq, signalling its ambitious entry into the electric vehicle (EV) landscape as it takes on well-established automakers.
With an astounding 255 percent leap in New York on Tuesday, the Vietnamese EV manufacturer’s market valuation has catapulted to over $85 billion, surpassing heavyweight US auto giants like Ford Motor Co. and General Motors Co.
VFS Backed by Vietnam’s Wealthiest
VinFast’s successful debut on the Nasdaq Global Select Market, under the ticker symbol VFS, follows its merger with blank-check company Black Spade Acquisition Co., culminating in a valuation of $23 billion. Notably backed by Vietnam’s wealthiest individual, the company’s market gains have substantially bolstered his net worth.
This listing marks the culmination of VinFast’s protracted journey towards becoming a publicly traded entity, placing it in the echelons of Tesla Inc., Lucid Group Inc., and Rivian Automotive Inc. Beyond its symbolic significance, this listing could potentially pave the way for increased capital infusion, critical for VinFast’s expansion efforts in the US.
Le Thuy, VinFast’s Chief Executive Officer, emphasized that the listing’s intention transcends mere publicity; it’s an imperative stride towards global expansion.
As one of the rare Vietnamese firms to list in the US, VinFast recently initiated construction on its North Carolina facility, set to commence production in 2025 with an initial capacity of 150,000 vehicles annually.
Yet, VinFast’s US foray has encountered some turbulence. In May, the company recalled its electric sport utility vehicles due to a software defect. Anticipating further operating and net losses as it scales vehicle production, VinFast remains cautiously optimistic about its equity appraisal for the SPAC listing.
VinFast’s Nasdaq Debut Shines Bright Amidst Challenges
The Nasdaq debut of VinFast, the electric vehicle manufacturer, has astounded the market with its soaring valuation of over $85 billion. This valuation places it well ahead of established American car giants Ford and General Motors, both valued at nearly half of VinFast’s impressive figure.
Nevertheless, maintaining such an elevated valuation is no small task. To uphold its newfound status, VinFast must substantially ramp up sales over the next five months, aiming to reach an annual sales target of 50,000 vehicles, as set by its founder.
Despite selling over 16,000 vehicles, including those in Vietnam, during the initial seven months of the year, VinFast’s US sales remain modest, with only 137 units of its VF8 model sold.
VinFast’s Chief Financial Officer, David Mansfield, reassures that the company remains on track to achieve the sales target projected by its chairman. However, even at that level, VinFast would merely be utilizing around a sixth of its production capacity in Haiphong, Vietnam. Expansion plans involve a new production site in North Carolina, US, scheduled to commence operations in 2025.
Consultancy firm AlixPartners suggests that electric vehicle manufacturers need to achieve annual sales of 400,000 vehicles to achieve profitability, highlighting the challenges within the EV sector.
Competing in pricing is another hurdle for VinFast, as it contends with the aggressive price-cutting tactics of industry leader Tesla. VinFast’s aspiration to reduce costs and be more price-competitive is apparent, but it faces an uphill battle against Tesla’s substantial market influence.
VinFast’s Nasdaq debut, facilitated through a merger with special purpose acquisition company Black Spade, has seen its shares surge. However, this surge stands in contrast to other EV SPAC deals, including Lucid, which have experienced share price declines post-listing.
Strategic Shifts and Showroom Expansion Define VinFast’s Path
VinFast’s journey into the global EV market is characterized by strategic shifts and expansion efforts.Presently, VinFast operates 122 showrooms worldwide, with a notable concentration on the West Coast of the US. Amidst fierce competition from Tesla, which continues to exert pressure on pricing, VinFast acknowledges the need to enhance its cost structure to stay competitive. The recent introduction of a more affordable version of Tesla’s Model S and Model X has heightened the pricing challenge.
VinFast is undeterred, believing its competitive edge lies in Vietnam’s uniquely low cost base. This, coupled with ongoing efforts to streamline operations, positions the company for future cost reductions.
VinFast’s Nasdaq triumph is a testament to its aspirations of global prominence. However, as the company works through the intricacies of pricing, sales targets, and strategic alliances, its journey is a reminder that even the boldest of beginnings demand steady maneuvering and adaptation.
