VinFast Stock Begs the Question: Haven’t We Learned Our Lesson?

How many absurd EV listings are investors going to allow?

VinFast CEO Le Thi Thu Thuy speaking in North Carolina in 2022 about plans to build their first U.S. factory.
VinFast CEO Le Thi Thu Thuy speaking in North Carolina in 2022 about plans to build their first U.S. factory.

VinFast sounds like the name of an energy drink founded by Vin Diesel to capitalize on his Fast and Furious saga. In reality, it’s the name of a Vietnamese electric vehicle startup that this week — surprising just about everyone — became more valuable than legacy automakers Ford and General Motors. In fact, for a moment its market value was about twice that of those companies. That’s despite you likely never having heard the name before. 

VinFast’s meteoric rise came as a result of its debut on the Nasdaq on Tuesday. Instead of going the IPO route, the EV company opted to go in the back door by merging with a special purpose acquisition company, as we previewed in May. Under the ticker symbol VFS, VinFast hit the stock market with a market value of $23 billion, but a frenzy sent the company skyrocketing to a valuation around $86 billion, per The Wall Street Journal

If you’re getting an eerie sense of déjà vu, that’s completely understandable. We’ve seen this many times before in the electric car space in the last few years, and apparently we didn’t learn our lesson from those stock market delusions. 

Nikola and Fisker both went the SPAC route, initially achieving huge financial windfalls off their proposed game-changing vehicles, but then crash landed back in reality when it became clear neither would be upending the market anytime soon. Meanwhile, Rivian and Lucid, both companies with lauded EVs that were on track to ramp up production, also had blockbuster debuts on the stock market, but both an into trouble trying to scale up into legitimate automotive contenders, and their current stock prices reflect that with downright anemic numbers compared to their high points. 

VinFast: The Next Blockbuster EV Company? Or Dead on Arrival?
The Vietnamese automaker announced a SPAC merger at the same time dismal reviews came in for its VF 8 SUV

If Rivian — a company that started its life with huge private investment from companies like Amazon and BlackRock, and which received effusive praise from major automotive outlets, including one who called their R1T “the most remarkable pickup [they’ve] ever driven” — can’t satisfy Wall Street, why are investors rushing to buy VinFast, a company whose first reviews in the U.S. included the words “embarrassing” and “nowhere near ready”? Not only that, but shortly after the company’s electric VF8 SUV began deliveries stateside, the company issued a recall for all of the U.S.-bound models because of a major software issue.

There are a couple reasons this oddly-named newcomer is enticing to investors. As Bloomberg reports, VinFast broke ground on a factory in North Carolina in July, and has plans to begin churning out American-made EVs in 2025, with an initial capacity of 150,000 a year. Until then, its facilities in Vietnam can currently produce around 300,000 vehicles a year, so deliveries can keep rolling out to the U.S. (and elsewhere) until that time. 

The problems, beyond the initial software glitches, are numerous: Currently, the VF8 is only available to California residents; they’re banking on convincing American buyers to take a chance on not only a brand new brand (notoriously difficult in the automotive space) but on an EV (a category where sales have not exactly met expectations); and they’re leaning on the assumption that 150,000 Americans a year will want a VinFast vehicle when their plant is up and running, even though Rivian only produced 24,337 vehicles and sold 20,332 models in 2022, their first full year of production. There’s also the interesting note that, as The Wall Street Journal pointed out, VinFast founder Pham Nhat Vuong controls “more than 99% of the shares, leaving a very limited free float,” which means the stock is likely to be volatile. 

Stock market valuations are different than the literal value of a company at any point in time, as they are future-looking. Tesla is still overvalued in the minds of some, but investors believe Elon Musk’s EV leader still has exponential growth potential, and maybe the ability to expand into new sectors. So maybe all the investors who are backing VinFast see the same for this Vietnamese outfit.

More likely than another Tesla, though, is another Nikola, Fisker, Lucid or Rivian. Two days after hitting the stock market, VinFast’s value is already experiencing a reality check, with its stock price falling from Tuesday’s high.

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