Vietnamese electric vehicle maker VinFast has caused a stir with its debut on the Nasdaq and seen its share price rise to unprecedented levels. This catapulted the company’s market cap from $23 billion to a whopping $85 billion, putting it on par with industry giants like Ford and General Motors. However, the share price fell slightly to $69 billion the next day.
Although still relatively small in the electric vehicle business, VinFast has ambitious plans. Pham Nhat Vuong, Vietnam’s founder and richest man, aims to sell 50,000 cars this year, up sharply from 7,400 last year. Although its primary focus is the domestic market, VinFast has its sights set on the US market. The company recently began selling imported vehicles in California and broke ground on a factory in North Carolina.
Despite these plans, initial reviews raised concerns. Industry journalists such as Kevin Williams have criticized VinFast’s VF8 model, stating that it is not yet ready for the US market due to issues such as a poor steering experience. Also, at $46,000, the VF8 is in a similar range to entry-level models from competitors like Tesla.
VinFast faces major challenges in its quest for growth. The company posted a net loss of $2.1 billion last year and expects to break even by the end of next year at the earliest. The consulting firm AlixPartners assumes that manufacturers of electric vehicles have to produce around 400,000 cars a year before they can turn a profit. In comparison, Tesla sold 1.3 million electric vehicles last year, while Chinese automaker BYD sold 1.9 million.
With only 1% of shares available for trading, VinFast’s high market valuation is prone to rapid fluctuations. Investors could face a difficult journey with the company.