Vietnamese electric vehicle (EV) manufacturer VinFast has achieved an impressive feat on its inaugural day of trading, surpassing the market valuations of both Ford and General Motors (GM).
During its debut on the New York Stock Exchange, VinFast’s shares closed at an impressive $37 (£29) each, even though the company is yet to turn a profit. This achievement led to VinFast’s market valuation reaching $85 billion, significantly higher than Ford’s $48 billion and GM’s $46 billion.
This development occurs amid intense competition within the automotive industry, with established giants and emerging players vying for a share of the burgeoning EV market.
VinFast’s Chairman and Founder, Pham Nhat Vuong, who was already Vietnam’s wealthiest individual, saw his wealth grow by approximately $39 billion due to the listing. Regulatory filings reveal that he maintains control over 99% of the company’s outstanding shares, primarily through Vietnam’s largest conglomerate, Vingroup JSC. However, this high degree of control has limited the number of shares available for trading, potentially leading to significant price fluctuations.
Although trading activity for VinFast was relatively subdued on Tuesday, with around $185 million worth of shares changing hands, market observers emphasize that investors continue to express confidence in the electric future and foresee a competitive presence emerging from an economically efficient East Asian country, specifically Vietnam rather than China.
VinFast’s unique path to going public involved a merger with a shell company, commonly known as a special purpose acquisition company (Spac). This approach expedites the process of taking a private company public, bypassing the traditional route. While other EV manufacturers like Lordstown Motors and Faraday Future have also chosen this method over the past three years, they have faced significant declines in their stock market value post-merger.
Experts suggest that VinFast might differentiate itself due to its strong backing from Vingroup, an enterprise with a proven track record of growth, which provides the company with access to substantial funding. This is noteworthy, as many EV startups often falter due to a lack of profitable core operations, leading to eventual depletion of external funding as their capital outflows surpass revenue generation.
Nonetheless, VinFast is up against formidable competition, as industry leaders like Tesla, led by Elon Musk, and BYD, supported by renowned investor Warren Buffett, engage in price reductions to stimulate sales. In the first half of the year, VinFast managed to deliver 11,300 EVs, as indicated by a company presentation. This figure, while impressive, pales in comparison to Tesla’s delivery of over 889,000 vehicles in the same timeframe.
Dan Ives from Wedbush Securities anticipates that Tesla will retain its prominent position in the EV market, although he acknowledges that other successful contenders will emerge. He also acknowledges VinFast’s establishment of a solid foundation for EV achievement.
Reporter
