Vietnamese electric car start-up worth more than Ford after US listing

Howard Mustoe Wed, August 16, 2023 at 9:47 AM EDT In this article:

VinFast electric vehicles are parked before delivery to their first customers at a store in Los Angeles, California, U.S.
Vinfast’s overall value surged past those of established automakers after a sliver of the company’s equity was made available in a New York IPO – REUTERS/Lisa Baertlein

A Vietnamese electric car maker has overtaken the value of Western rivals including Ford in its first day of stock market trading.

Vinfast, the loss-making manufacturer, was valued at $85bn after listing on the New York Stock Exchange, dwarfing the value of each of Detroit’s “big three” carmakers Ford, General Motors, and Stellantis, the owner of Vauxhall.

By comparison, Stellantis has a price tag of $53bn, with Ford and General Motors worth $48bn and $46bn respectively.

Vinfast is controlled by Pham Nhat Vuong, Vietnam’s richest man and the country’s first dollar billionaire, who made his fortune in the 1990s in Ukraine producing and selling instant noodles.

Pham Nhat Vuong, owner of Vinfast.
Hanoi businessman Pham Nhat Vuong owns an empire spanning real estate, resorts, schools and auto businesses

His wealth jumped by $39bn during the company’s first day of trading, according to Bloomberg.

He still controls 99pc of the company, which recorded a $2.1bn loss last year, after listing a sliver of the firm in New York. Limited access to the stock is likely to have boosted its valuation, experts said, as well as hype surrounding electric car technology.

Professor Andrew Graves, a car expert at the University of Bath, said: “People get very excited about certain technologies or certain activities, and they follow each other,” adding that a more sober stock price may follow.

Mr Graves added: “We’ve seen that with Tesla, one time worth more than virtually every other car company in the world put together. Clearly, that’s not the case.”

Vinfast, one of the few Vietnamese companies to list in the US, started building its North Carolina factory last month. The plant is expected to have an initial capacity of 150,000 vehicles a year, and the company plans to begin production in 2025.

VinFast chief Le Thi Thu Thuy and North Carolina Governor Roy Cooper celebrated breaking ground at the site of a new factory Vinfast in the state
VinFast chief Le Thi Thu Thuy and North Carolina Governor Roy Cooper celebrated breaking ground at the site of a new Vinfast factory in the state – Travis Long/The News & Observer via AP

However, the carmaker has been dogged by operational challenges. In May it was forced to recall all its electric sport utility vehicles shipped to the US over a software malfunction. It has also cut some of its US workforce as its losses widened.

After making his money in dried noodles, Mr Vuong sold the business to Nestle 2010, nine years after he had returned to Vietnam.

The Hanoi businessman has grown his empire to encompass real estate, resorts, schools and shopping centres which are owned by the publicly-traded Vingroup.

Vinfast listed after merging with Black Spade Acquisition, a so-called special purpose acquisition company (Spac). Spacs are shell companies which raises money by listing on the stock market for the purpose of acquiring existing businesses.

Investors have piled in on the Spac craze in recent years, excited about the rapid shift to electric cars, believing that incumbent carmakers with large debts, soon-to-be unsaleable petrol models, and slow development cycles could be outpaced by the new businesses.

But some new carmakers have struggled following Spac listings as borrowing costs have risen and car development has cost them more than they anticipated.

US electric truck maker Lordstown Motors lost 99pc of its value since a 2020 Spac deal. It entered bankruptcy last month.

Arrival, based in the UK, also lost more than 90pc of its value from its peak after struggling to bring a truck to market.

Vinfast has access to cheaper labour in Vietnam than UK and US-based competitors, however, which some analysts believe could aid their chances.

But the company faces fierce competition from rivals in China, which controls access to much of the world’s lithium, a key mineral in making the batteries for electric cars.

China’s BYD, backed by Warren Buffett, and Tesla are currently battling it out in a price war as cost-of-living pressures on consumers trigger a slowdown in sales.

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