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Loss-Making VinFast Needs Revamp to Live Up to $85bn Valuation

The automaker remains far behind its sales targets and faces tough competition in an industry where an increasing number of players are burning cash and facing an intense price war

VinFast VF9
VinFast's VF9 model was initially scheduled to debut at the beginning of this year, but was rolled out in March. Photo: VinFast


Vietnam electric vehicle (EV) giant VinFast, which has ratcheted up an $85 billion listing on Nasdaq, despite being loss-making startup, will need to rev up its sales and cost strategy to live up to a valuation that’s twice as much as Ford or General Motors.

Shares of VinFast, which merged with special purpose acquisition company (SPAC) Black Spade Acquisition, surged on their Nasdaq debut on Tuesday. The stock opened at $22, more than double the $10 per share agreed with Black Spade that had valued carmaker at $23 billion.

But the automaker remains far behind its sales targets and faces tough competition in an industry where an increasing number of players are burning cash and facing an intense price war initiated by EV mammoth Tesla.


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VinFast needs to deliver more than twice the sales notched up so far this year in the remaining five months to hit a stretch annual target set by its founder Pham Nhat Vuong Vuong of selling 50,000 EVs.

Since it announced its overseas expansion plans, VinFast had been counting on just using its own showrooms, an approach it borrowed from Tesla. But now it needs a complete revamp of its sales strategy to bring in distributors and dealers.

VinFast CEO Le Thi Thu Thuy said on Tuesday the EV maker would be shifting to a new “hybrid model” for sales, bringing in distributors and dealers for overseas markets.

“Opening our own stores is great but it takes a lot of time,” she said. “Joining forces with other partners to go faster has always been our nature.”

VinFast opened 122 showrooms globally as of June, the company said, concentrated on the US West Coast.


Price war bite

VinFast will also require bringing costs down to compete on price with the likes of Tesla, which has been using its scale and industry-leading margins to cut prices and pile pressure on rivals since the start of the year.

Tesla has kept the pressure on, introducing a cheaper version of its Model S and Model X on Tuesday. The Tesla Model Y is almost $7,000 cheaper than VinFast’s VF8 after including federal subsidies.

Founder Vuong had said in May that VinFast could sell 50,000 EVs this year. Through the first seven months, it has sold over 16,000, including its sales in Vietnam. That includes sales of just 137 of its VF8 model in the United States, the only model it currently sells there.

“The ballpark numbers that our chairman indicated for this year are still on track,” CFO David Mansfield said.

Even at that target, VinFast will be only selling at roughly a sixth of the production capacity it has at its Haiphong, Vietnam plant. A new plant is under construction in North Carolina and scheduled to begin operations in 2025.

Consultancy AlixPartners has said it estimates EV makers need annual sales of 400,000 vehicles to break even, including in China, where most are losing money in a deepening price war for market share.

CEO Thuy said VinFast believed its products were priced competitively but was working to bring prices down.

“There is no other (automaker) in the world that has as low a cost base as in Vietnam,” she said. “All of that is leading to cost reduction in the future.”


More capital raising ahead

The EV maker’s intent to raise additional capital is also a potential threat to its lofty valuation. CFO Mansfield said on Tuesday the company was talking to a range of investors, including sovereign wealth funds, and was on track to raise additional funding in the next 18 months.

“Like any transaction, pricing is set by the market,” CEO Thuy said when asked about the terms of a future investment. “So it’s not like we can say that you use our equity or stock (price) today.”

Referring to the surge in VinFast shares on Nasdaq on Tuesday, Thuy said the stock’s tiny float makes it subject to more volatility, since 99% of the company is controlled by founder Vuong.

The VinFast listing creates a way for the automaker, which has struggled to retain senior executives, to offer share-based compensation, a prospect spelled out in its filings.

But other EV SPAC deals, including Lucid, which Black Spade used as the basis of its initial $23 billion valuation of VinFast, have seen their shares tumble after listing.

Lucid is valued now at under $15 billion, nearly 40% less than its $24 billion SPAC valuation in 2021.


  • Reuters, with additional editing by Vishakha Saxena


Also read:

VinFast Recalls First Batch of EVs in US Over Dashboard Risk

VinFast Expecting 7-Fold Bump in EV Sales With US Expansion

Vietnam’s VinFast Finally Rolls Out VF9 Electric SUV

Vietnam’s VinFast Taps Banks for $4 Billion for US EV Plant

Hyundai, Honda Partner EV Rivals to Take on Tesla Supercharger


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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