When we think of electric automobiles, Tesla invariably comes to mind, dominant in North America and reigning as the world’s most valuable automaker. However, amidst the electric vehicle revolution, smaller manufacturers are striving to establish a presence in this challenging market. Enter Vinfast, the Vietnamese company that recently made headlines by becoming the third-most valuable automaker globally, trailing only Tesla and Toyota.
The Story of Vinfast:
Vinfast, previously an unfamiliar name to many of us, swiftly garnered attention on August 28th when its stock surged by an astonishing 21%. This phenomenal rise catapulted Vinfast into the exclusive league of the world’s most valuable car companies. Yet, in a twist of fate, within a day, its stock price plummeted, leading to a drastic loss of market value. This rollercoaster ride of price volatility is not unprecedented for Vinfast, characterized by wild swings.
Pham Nhat Vuong and Ownership Dynamics:
Vinfast is predominantly controlled by Vietnam’s richest individual, Pham Nhat Vuong, who holds an impressive 99.7% stake in the company. This leaves only a limited number of shares available for public trading, contributing significantly to the excessive volatility in Vinfast’s share price. Consequently, the company’s valuation has become subject to speculation and anticipation, akin to Tesla.
Market Perception and Potential Profitability:
Vinfast’s current production numbers are far from justifying its valuation. While Tesla is poised to deliver 1.8 million vehicles this year, Vinfast anticipates sales of a relatively meager 50,000 cars. Nonetheless, the market seems to firmly believe in the future profitability of EV manufacturers. This perception has generated considerable enthusiasm among retail traders, further fueling share price volatility.
Competing with Tesla and Legacy Automakers:
Tesla’s dominance in the EV market remains unwavering, making it challenging for other manufacturers, including legacy automakers such as General Motors and Ford, to make significant headway. Despite substantial investments in developing their own EV product lines, these automakers have struggled to dislodge Tesla’s stronghold. Ford, for instance, incurred a $2.1 billion loss on EVs last year, a figure expected to more than double in 2023.
Vinfast’s Potential Entry into North America:
Against this backdrop, Vinfast has emerged as a potential player in the EV marketplace. With plans to construct a $4 billion factory in North Carolina, the company is positioning itself for a meaningful entry into the North American market. While it may be a while before we see Vinfast cars on American roads, investors remain optimistic about the company’s prospects.
Market Capital Research 