A loss-making carmaker founded by Vietnam’s richest person has been valued by investors at more than Ford and BMW, despite making only 20,000 electric vehicles since its launch and receiving scathing early reviews.
VinFast, which lost $2.1bn (£1.6bn) in 2022, was valued at $85bn at the close of trading on Tuesday evening after it listed on New York’s Nasdaq stock market via a merger with a cash shell company.
Several companies have managed to achieve huge valuations on the promise of rapid growth in electric car sales, spurred by the success of Tesla, the manufacturer led by Elon Musk.
VinFast has never made a profit, but its share price more than tripled on its opening day of trading on Nasdaq, giving the company a notional valuation larger than some of the world’s biggest and most established carmakers, including BMW at $69bn, Ford at $48bn and General Motors at $46bn.
The Vietnamese-founded carmaker is part of Vingroup, a conglomerate with interests in retail, property and healthcare. It is owned by the billionaire Pham Nhat Vuong, who still holds 99% of the shares in VinFast. Companies with a small number of shares floated on stock exchanges can be vulnerable to big swings in price.
Vuong founded Vingroup in Ukraine in 1993 to sell instant noodles, before using the earnings from the sale of the first business to build homes, resorts under the Vinpearl brand, and shopping malls in Vietnam under Vincom. His net worth was $5.7bn before VinFast’s listing, according to the Bloomberg billionaires index.
Vuong and other investors had poured in $9.3bn in capital up to the end of June, according to a company presentation, as VinFast raced to expand production and build a new factory in the US.
The company was founded in 2017 and started making four internal combustion engine cars. It plans to cease production of those cars next year. It started making electric vehicles (EVs) in 2021.
Shares in VinFast soared by 255% in the first day of trading on Tuesday. They dropped back by about 25% on Wednesday.
The listing was carried out via a merger with Black Spade Acquisition, a special purpose acquisition company (Spac). Several electric car startups such as Lordstown Motors and Lucid have previously achieved huge valuations after Spac mergers during a boom in 2020 and 2021, only to struggle to produce cars profitably.
While VinFast has managed to deliver thousands of electric cars to customers, it appears to have some way to go before it can rival the industry’s established players.
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The company has launched four new electric models at a rate that even the most experienced carmakers would struggle to match, and US reviewers of its $56,000 VF8 model have suggested its products need significant work.
Motor Trend magazine said the car was “nowhere near ready for public consumption”. The reviewer wrote: “As it stands now, though, I’d be embarrassed to look a customer in the eye when handing over the keys to this vehicle.”
Two other reviewers said they became car sick when testing the car, blaming bad handling.
“The car is simply unfinished, wholly uncompetitive, and in all honesty among the worst modern cars I have ever driven,” wrote Road & Track magazine.
In a statement to mark the listing, Le Thi Thu Thuy, the carmaker’s chief executive, said: “VinFast has accelerated the global electric vehicle revolution by making smart, safe, and environmentally friendly EVs accessible to everyone.”
