VinFast, the electric vehicle maker from Vietnam, saw its stock plunge and break a six-day winning streak on Wall Street.
The Vietnamese-owned firm had reached $82.35 a share at the start of the week, with a market value of $188.84 billion.
However, the stock then plunged 44 percent the following day, to $46.10 a share, wiping out about $90 billion in market value, according to Barron’s.
Since its initial debut, the company quickly rose to become the third-most valuable automaker, behind Tesla and Toyota, which are valued at $746.03 billion and $272.01 billion, respectively.
VinFast Stocks Rose and Fell Over Investor Hype
VinFast CEO Le Thi Thu Thuy told CNN at the beginning of the week that the company was “pleasantly surprised by the warm welcome of the market” and that “we think the markets recognize our competency.”Despite all of the hype, the EV startup has yet to be profitable and still faces a major test before it can seriously compete with the legacy automakers, which have poured billions of dollars into the EV market.
The company was founded as a partnership with Chevrolet in exchange for the exclusive rights to sell the brand in Vietnam and the ownership of a GM factory in Hanoi to build an “all-new, global small car,” reported the automotive news site InsideEVs.
The firm’s owners and financial had invested about $7.5 billion by September 2022 to fund its operating expenses and capital expenditures.
According to a December filing with the Securities and Exchange Commission (SEC), VinFast lost $1.3 billion in 2021 and close to $1.5 billion in the first three quarters of 2022 prior to its IPO this summer.
The company’s shaky track record does not seem to be deterring investors for now.
Company Backed by Vietnam’s Richest Man
Vietnam’s richest man, Pham Nhat Vuong, is the owner of the industrial conglomerate Vingroup JSC, VinFast’s parent company and its primary stakeholder.He reportedly has a personal fortune worth $55.9 billion in liquidity, according to an Aug. 29 article in Forbes. Mr. Pham controls an overwhelming 99.7 percent of the shares, partly through his wife and his holdings in the parent company, according to an SEC filing, putting the vast majority of stock out of the hands of investors.
The small amount of publicly available shares had made the stock more prone to volatility before the recent plunge.
When asked whether the company was planning to raise more money or release additional shares, Ms. Le told CNN, “We continue exploring the opportunities for follow-on transactions, and I anticipate that we should be able to do it in the next few months.”
“Most of the shares will come out of lockup in the next six months to a year as well, so there will be more liquidity on the market.”
Ms. Le said that the $2.5 billion already committed by Mr. Pham and Vingroup “should get us to breakeven and to profitability.”New Asian EV Startup Enters the American Market
VinFast held a groundbreaking ceremony in late July for its planned factory in Chatham County, North Carolina, which is expected to produce three vehicle models by 2025, the VF 7, VF 8, and VF 9.The firm has plans to start trial production at its North Carolina facility by 2024, but will export EVs from its factory in Haiphong, Vietnam, to the United States for now.
It hopes to use the North Carolina factory as a base for its North American sales, but the automaker’s reputation in the United States has already suffered from a series of poor reviews over its VF 8 SUV.
A series of multiple delays, partially due to recalls in the first half of 2023, has plagued its first American deliveries.
The VF 8 five-seat SUV is the only model available in the United States, but deliveries of the three-row VF 9 SUV is planned for later this year.
Mr. Thuy blamed the delays on the need for certification from the Environmental Protection Agency regarding the increase of the VF 8’s driving range to 207 miles.
Most of the company’s EV models are currently not available as of June, and only 137 VinFast vehicles are registered in the United States so far, according to S&P Global Mobility.
Vietnamese EV Manufacturer Faces Stiff Global Competition
The company currently maintains 122 showrooms around the world, in countries such as Vietnam, the Unites States, Canada, and a few countries in Europe, according to its website.
VinFast plans to turn to dealers to drive sales instead of adopting Tesla’s direct-to-consumer approach.
The Vietnamese automaker has only sold 24,000 cars globally in 2022, compared to the 8.3 million and 4.2 million deliveries by Volkswagen and Ford, respectively.
VinFast delivered 11,300 vehicles, with 18,700 EV sales in the first six months of the year, according to a company presentation in July, according to CNN.
The firm is also preparing to enter the European market and is planning future launches in Asia and the Middle East, according to Ms. Le.
