VinFast has recently become a well-known name in the electric vehicle (EV) industry. In 2022, news came that the Vietnamese EV company is building a vehicle assembly plant in North Carolina and is filing for its first IPO in the US.
This announcement has sparked some speculation about what this move could mean for the Vietnamese company and the global EV market. So, read on to learn more about VinFast, its financial performance, and its IPO plans.
VinFast is a Vietnamese-founded, Singaporean-based private automotive company that produces all-electric vehicles, from e-scooters to small electric vehicles to electric buses.
Many US and other global consumers regard VinFast as a startup. The EV maker, however, is a subsidiary of Vingroup, one of Vietnam’s largest private companies. The conglomerate is owned by Vietnam’s wealthiest billionaire, Pham Nhat Vuong.
The Vietnamese conglomerate Vingroup is well established in its home country with ties to the technology, consumer retail, agriculture, industrial, and real estate development sectors. It’s also involved in services ranging from hospitality to healthcare to education.
Vingroup’s involvement in a plethora of industries stems from its desire to provide “a better life for the Vietnamese people.” That’s why the conglomerate decided to enter the automotive industry.
Established in 2017, VinFast has earned many of Vietnam’s firsts in the automotive industry. The automaker is Vietnam’s first domestic automotive manufacturer. It’s also Vietnam’s first car brand to:
- Expand into global markets
- Produce EVs
- Participate in a major international auto show.
From the start, VinFast’s vision was to produce vehicles that combined sophisticated design, leading-edge technology, and innovative manufacturing. Additionally, the automaker wanted to make a sustainable future more accessible to all.
This vision eventually led to VinFast’s decision to transition to all-electric vehicle production in 2022.
VinFast Executive Team
VinFast’s executive team includes:
- Le Thi Thu Thuy: Vingroup Vice Chairwoman and VinFast Global Chief Executive Officer
- Nguyen Thi Van Anh: Chief Executive Officer, USA
- Pham Linh: Deputy CEO, Strategic Partnership & Technology Investment
- David Mansfield: Chief Financial Officer
- Kieu Doan: Global Chief Marketing Officer
VinFast Business Model
VinFast’s business model is to become a global brand and one of the world’s leading EV manufacturers. So, it has been steadily increasing its production capacity to realize these goals.
The EV maker’s initial annual production capacity was 250,000 vehicles during its first year. However, due to growing domestic and international demand, VinFast had to increase its capacity to 500,000 vehicles per year.
In April 2019, VinFast registered the Lux SA2.0 and Sedan Lux A2.0 as the first two models to sell in Russia. Later that year, the company announced its plans to sell its electric vehicles in the US.
VinFast had three finalized designs for their EV SUV models for the US, Canadian, German, French, and Dutch export markets by 2021. It also opened its first six overseas showrooms in California.
Additionally, the EV maker plans to build a $4 billion plant in North Carolina and is currently scouting for a European factory.
In another effort to appeal to US consumers, VinFast plans to integrate Amazon Alexa into its vehicles.
VinFast’s desire to become a leading EV brand continues to fuel its growth, which exceeds expectations for a company that’s only a few years old.
During VinFast’s second year, Autobest awarded the Lux model “A Star is Born” at the 2018 Paris Motor Show.
What’s more, in the first quarter of 2020, VinFast was the fifth best-selling car brand in Vietnam.
VinFast Financial Outlook
As a subsidiary of Vingroup, VinFast is financially supported by one of Vietnam’s largest conglomerates.
In addition, while the EV maker hasn’t had multiple funding rounds and doesn’t have a long list of investors, it was still able to secure a $135 million round from the Asian Development Bank.
Having said that, with plans to go public, VinFast should draw more investors and more opportunities to raise capital.
VinFast Funding Round
VinFast has only had one funding round. In 2022, VinFast received a $135 million debt financing package led by the Asian Development Bank (ADB).
ADB also mobilized parallel loans from Export Finance Australia, Oesterreichische Entwicklungsbank, responsibility, and the Finnish Fund for Industrial Cooperation.
According to VinFast and ADB, this fund is a seven-year tenor climate financing made up of the following:
- A $20 million ADB-funded loan
- $87 million parallel loans facilitated by ADB
- Up to $28 million in concessional financing
The funding is intended to help VinFast build Vietnam's first fully-electric public transportation bus fleet as well as a national EV charging network. It’s part of ADB’s push to support climate-friendly investments in the region.
In addition, the funding will support Vietnam’s efforts to achieve net-zero emissions by 2050, as well as advance the country’s high-tech manufacturing industries.
In 2018, VinFast acquired GM Vietnam (VIDAMCO), which includes its Hanoi factory, employee base, and, most importantly, sales agent network. GM Vietnam’s network included 11 agents in the south, eight in the north, and three in the central region.
As a result of this acquisition, VinFast gained access to a large distribution network, which is essential to increasing sales.
VinFast also purchased the Holden Lang Lang Proving Ground and Testing Facilities for $36 million. However, a year after the purchase, the Vietnamese EV maker shut down operations and re-listed the Australian proving ground.
The EV maker isn’t yet profitable and continues to incur annual losses. From 2021 to September 30, 2022, the company lost around $3 billion. So far, Vingroup, the parent company, has spent around $780 billion per year to compensate for VinFast’s losses.
VinFast began planning its IPO in April 2022 to raise $2 billion at a valuation of $60 billion. However, in early December 2022, VinFast CEO Le Thi Thu Thuy stated that the market condition would likely determine the valuation of the company’s IPO.
The reason the valuation is likely to change by the time the company goes public is due to a decline in investor enthusiasm for EV companies.
Nevertheless, the IPO isn’t VinFast’s only option for raising capital. The company also signed agreements with banks to raise at least $4 billion to fund its US expansion and its planned EV factory in North Carolina.
Is VinFast Filing for an IPO?
VinFast filed for an IPO in the United States on the Nasdaq under the ticker ‘VFS’ on December 6, 2022. As part of a nine-bank syndicate, Citigroup Global Markets, Credit Suisse, J.P. Morgan Securities, and Morgan Stanley are leading the offering.
In addition, the EV maker announced that it would relocate its headquarters to Singapore under VinFast Auto Ltd to boost investor confidence. However, it hasn’t disclosed the number of shares that will be offered or the price range for the IPO.
Nevertheless, if VinFast is successful, it’ll become the first Vietnamese company to list on a US exchange.
What’s more, VinFast’s decision to go public is to fund its expansion into the US market, which includes a planned plant in North Carolina. Production at the plant begins in 2024, so VinFast has a deadline for raising enough capital.
VinFast IPO Date
The date of the VinFast IPO isn’t determined yet. Usually, the exact date of the IPO is announced just a few days before the start of the public trading of the stock exchange.
The VinFast IPO was initially scheduled for the second half of 2022. However, due to market uncertainty, it was delayed to as early as January 2023.
Still, the state of the market continues to be unpredictable, bringing about unfavourable conditions. So, many investors estimate that the Vietnamese company will go public within the first half of 2023.
VinFast IPO Potential Market
VinFast is one of the most promising and anticipated upcoming IPOs. As the global EV market grows, many studies estimate that the share of fossil fuel vehicles will decline significantly by 2030. The hybrid vehicle share will also likely meet the same fate.
The number of all-electric vehicles, on the other hand, is expected to reach about 27 million by 2030. What’s more, the current efforts to incorporate electric buses into public transportation bus fleets are expected to boost the electric vehicle industry even further.
Once VinFast goes public, it’ll enter a highly dynamic scene, with some big names in the North American region competing for market share.
In 2022, five well-established EV companies dominated the EV industry, accounting for 53% of the market share:
- Tesla registered 564,873 units, which was 19% of the market share
- BYD registered 326,236 units, which was 11% of the market share
- SAIC registered 321,289 units, which was 10.8% of the market share
- Volkswagen Group registered 216,004, which was 7.3% of the market share
- Hyundai Motor Group registered 167,305 units, which was 5.6% of the market share
VinFast, on the other hand, registered 58,000 units, putting it in the “other” 47% of the market share.
VinFast’s Competitive Advantage
There’s an abundance of EV makers in North America. Not to mention that VinFast is competing against the EV leader Tesla and other big names in the industry.
That said, VinFast has competitive advantages that its rivals have yet to offer. To begin with, the prices of most VinFast’s EVs are lower than those of Tesla and other brands by a considerable margin.
Even with Tesla’s massive price cuts, VinFast implemented a new pricing promotion program to maintain its competitiveness.
What’s more, because EV batteries are expensive, VinFast offers its customers the choice to lease the battery with a mileage-based monthly fee rather than buy it. On the other hand, no company in North America has yet to offer a battery renting or exchanging option.
What the Outcomes of VinFast IPO Could Look Like
In terms of challenges, VinFast expects to incur financial losses for at least the next five years. The costs of operating the company and meeting the Nasdaq criteria may increase, extending the time it takes VinFast to recover enough capital to offset its losses.
That said, Bloomberg reported in November that VinFast’s IPO could raise at least $1 billion. Depending on interest rates, the EV maker may raise even more. What’s more, the share price will be much higher than in Vietnam.
As a result, an IPO is likely to allow VinFast to tap into capital sources that can help improve its debt finance terms. Incurring additional funds also opens opportunities to expand product development strategies, develop new products, increase advertising, and attract top talent.
The increased liquidity that comes with IPO status should also reassure current shareholders about the company’s efforts to achieve the highest possible valuation.
Not to mention that VinFast would have to disclose its financial, legal, and corporate records. This transparency increases credibility and builds trust among partners, contractors, and investors.
Going public is also highly likely to expose VinFast to a flood of media coverage. VinFast is already one of the most anticipated IPOs, but the media coverage from obtaining IPO status can solidify the company’s position among other top EV makers.
By going public, VinFast hopes to make electric vehicles more accessible globally by capitalising on its competitive edge over other EV makers.
As of yet, the precise date of the VinFast IPO has yet to be determined. However, according to the company, the offering is expected to take place within the first few months of 2023.
In the meantime, the company continues to raise funds so that its North Carolina plant is fully operational by 2024.
If you are in the US, you can register for the IPO here, and you will be informed once it is available.
For the rest of the World apart from India and Canada, register for the IPO here
For India and Canada, register with Switchmarkets here for the best chance of picking up this stock early.
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