It all started with VinFast’s landing on the US stock market. On Tuesday, VinFast, the first Vietnamese car manufacturer, successfully listed on Nasdaq with an opening price of $22. It then skyrocketed, rising by 254.64% on the first day, reaching a high of $38.78.
On the day of its listing, it closed at a high price of $37.06 per share, with a market value of $86 billion.
This market value surpassed the sum of NIO and Li Auto, and even surpassed European and American traditional car companies such as Mercedes-Benz, Ford, and General Motors, becoming the world’s fifth-largest car company by market value. This caused Pham Nhat Vuong’s net worth to increase by $40 billion overnight.
On the second day after listing, VinFast’s market value fell slightly but still reached $70 billion.
VinFast was established in 2017 as a member of the Vingroup, owned by Pham Nhat Vuong, and is not only the first independent car brand in Vietnam but also the first electric car manufacturer in the country.
After merging with the special purpose acquisition company (SPAC) Black Spade Acquisition Co. (Black Spade Capital) and going public, VinFast became the first Vietnamese car company to be listed in the United States and the first Vietnamese company to be listed in the country.
However, the success of VinFast’s IPO is not guaranteed, as many new car companies in the United States have recently gone bankrupt despite their previous successes, such as skyrocketing market values and founder net worth.
As the only automaker in Vietnam, can VinFast escape the curse of peaking at the time of its IPO?
01, The Son of the King of Gambling Joins the Game
VinFast’s IPO journey has not been smooth. As early as April last year, they announced plans to go public in the United States, with a planned financing of $2 billion and a valuation of $60 billion.
However, due to supply chain issues affecting VinFast’s factory production, Pham Nhat Vuong changed his mind, stating that due to market uncertainties, “if necessary, the IPO will be postponed until next year (2023).”
Moreover, with the U.S. Securities and Exchange Commission’s increasingly strict scrutiny on overseas companies listing on the U.S. stock market, VinFast’s path to listing has become more difficult.
At the same time, the valuation and stock prices of the electric vehicle sector experienced a significant drop in the past year, with many new players’ stock prices, including Tesla, experiencing huge fluctuations, and some new automakers even receiving delisting warnings.
It wasn’t until the end of last year that VinFast started its initial public offering in the United States and planned to list its common stock on NASDAQ under the stock trading code “VFS.”
Later, VinFast decided to go public through a shell merger, and the shell VinFast borrowed was a SPAC company named Black Spade Acquisition based in Hong Kong.
Although the company of this SPAC is relatively unknown, it has a strong background as it is under the Black Spade Capital, a subsidiary of Melco International Development. The chairman of Melco International Development is Lawrence Ho, who is also the second son of the gambling tycoon Stanley Ho.
In July 2021, BSAQU was listed on the New York Stock Exchange and raised approximately $150 million. According to public information, BSAQU is targeting entertainment industry companies, with a focus on supporting technology, lifestyle brands, products or services, and entertainment media. In addition, it is responsible for managing Lawrence Ho’s private assets and wealth.
Their previous plan was to merge with an ideal company within two years, and now that “ideal company” is VinFast. The name of the merged public company will be VinFast Auto, and the newly listed VinFast stock opened at $22, higher than the originally agreed upon $10 per share. Black Spade Capital values VinFast at $23 billion.
Source: Yahoo Finance
After the merger, Vietnam’s richest man, Pham Nhat Vuong, holds 99% of the common shares of VinFast, totaling 2.3 billion shares, through Vingroup and its affiliated companies.
Although the stock price soared on the first day of listing, industry insiders believe that the main reason for the surge is the extremely small number of floating shares, which account for less than 1% of the total shares, and it is destined to fall back in the future. This is also the process that most companies have to go through after merging and going public with SPAC companies.
Madame Thy, CEO of VinFast, said: “For VinFast, listing in the United States is an important milestone, and it will also open the door to the capital market for our future.”
In addition, VinFast revealed that the company is changing its sales model. Unlike Tesla, which only uses direct sales, it will also cooperate with overseas dealers. “We are moving towards a mixed sales model, which means that we have our own sales stores and also cooperate with dealers to open dealer stores.”
02, Vietnamese car manufacturer VinFast
VinFast was born from the dream of creating a car by Pham Nhat Vuong who believed that “Vietnam needs at least one globally recognized brand.”
In 2017, VinFast was officially established with the goal of producing the first car made by Vietnamese people within two years.
Before VinFast, Vietnam did not have its own car brand, and all the cars on the roads were foreign. It is well known that Vietnam also does not have a car industry foundation, so VinFast had to take a “shortcut” to make cars.
VinFast’s shortcut is “financial capability“.
For VinFast’s investment, Pham Nhat Vuong spared no expense, first investing 1.5 billion USD to build factories and research and development buildings. With money, there must also be people. VinFast also spent heavily to attract many automotive experts from well-known companies. Six of VinFast’s nine directors came from General Motors, and many employees were also recruited from other car companies.
Source: VinFast
Although there are many foreign executives leading the company, which greatly promotes product development, it also brings hidden dangers to VinFast’s development.
In its second year of establishment, VinFast launched two models, LUX A2.0 and SA3.0, and appeared at the Paris Motor Show that year. However, these two models are actually based on the previous generation BMW 5 Series and BMW X5, and the engine is also the N20 engine that BMW has phased out.
After investing a large amount of cost, the price of the mass-produced cars is not cheap, and the new cars have not become popular in the market.
Source: VinFast
Later, VinFast partnered with Chevrolet and acquired ownership of General Motors’ factory in Hanoi, which means VinFast has the right to badge and sell General Motors’ vehicles produced at the factory.
VinFast’s fourth model, the Fadil, is actually a Chevrolet Spark.
This car is also the key model for VinFast to enter the mass market. In 2021, the Fadil became the best-selling car in Vietnam with 24,000 units sold.
As electrification becomes a global consensus, VinFast gradually realized this and began a comprehensive transformation to new energy in 2021, while also announcing its entry into the US market.
Source: VinFast
VinFast is a legitimate “new force in car making” according to current standards, with a short establishment time, a focus on new energy, and listed on the US stock market. However, compared to the new forces in China who are struggling with money, VinFast is a rich second generation, who has never lacked money from the beginning of car making to being listed in the US.
They spend money to buy technology, engines, brands, and talents, and these funds basically come from one source – Vietnam’s richest man, Pham Nhat Vuong, and his Vingroup, which is VinFast’s real “ATM.”
03, The first richest man’s passion for car making
Let’s talk about Pham Nhat Vuong, who has been Vietnam’s richest man for 10 years. However, before becoming Vietnam’s richest man, he had an equally legendary experience.
Pham Nhat Vuong was born into an ordinary family in Vietnam, and later enrolled in the Vietnam Mining and Geology University. Due to his outstanding academic performance, he was awarded a scholarship to study in the former Soviet Union.
In 1992, Pham Nhat Vuong graduated from university. At that time, the Soviet Union had disintegrated, and Pham Nhat Vuong did not return to Vietnam, but went to Ukraine and founded the instant noodle brand Mivina.
Mivina imported raw materials from Vietnam and other places, and mass-produced and sold fast food products mainly consisting of instant noodles in Ukraine. Later, Pham Nhat Vuong became bigger and bigger in this field, and even dominated the half of the Ukrainian instant noodle market. 97% of the Ukrainian market share came from Pham Nhat Vuong.
Source: VinFast
With just a pack of instant noodles, Pham Nhat Vuong became the “Noodle King” of Ukraine.
Entering the new century, Vuong saw the potential in Vietnam’s development and used his earnings from selling instant noodles to make his first fortune. He gradually shifted his business to Vietnam, and after returning to his hometown, he entered the real estate market in Vietnam.
In 2002, he founded the luxury Vinpearl resort and real estate business Vincom in his hometown, and in 2012, he officially merged the two businesses into Vingroup.
Source: VinFast
From Vinpearl resorts to the first commercial center complex Vincom in Hanoi city center, Pham Nhat Vuong has become Vietnam’s most popular businessman.
Vingroup has also gradually become the largest private company in Vietnam. As of the end of last year, the total market value of Vingroup and all its listed subsidiaries was about $24 billion. Based on Vietnam’s comprehensive income calculation for that year, $24 billion is equivalent to 1.5% of Vietnam’s GDP for the whole year of 2021.
Pham Nhat Vuong himself also ranked 411th on the Forbes Global Billionaires list in 2022 with a net worth of $6.2 billion, and remained Vietnam’s richest person.
Source: VinFast
Vingroup is currently the largest private enterprise in Vietnam, with businesses covering various fields such as real estate, pharmaceuticals, education, mobile communications, and agriculture. It can be said that Vietnamese people cannot do without Vingroup no matter what they do.
Perhaps even the richest man has a dream of owning a car, and Pham Nhat Vuong is no exception, which led to the creation of VinFast later on.
During the process of seeking wealth overseas, Pham Nhat Vuong became aware that “the Vietnamese people have not received the respect of the world, and this is still very evident.” He was very emotional: “Many Vietnamese people abroad often say that they are Japanese or Korean. I want to contribute to changing this.”
In an interview with Vietnam Express, Pham Nhat Vuong talked about the reason for founding VinFast, saying that “Vietnam needs to have at least one globally recognized brand.”
After trying fields such as mobile phones, Pham Nhat Vuong eventually chose the automotive industry. “Although it won’t be easy, my determination is firm.”
Source: VinFast
From the beginning, Pham Nhat Vuong firmly chose the automotive industry and believed that the future belonged to electric cars. In his opinion, “making early choices is not about half oil and half electric.” The future is the era of electric cars, and it is imperative to transform into pure electric cars.
To build cars, Pham Nhat Vuong shouted out the slogan of “building the first car of Vietnamese people within two years.” In this way, the Vietnamese car brand that was to become globally recognized was born, mass-produced, went overseas, and eventually went public in six years.
With VinFast’s successful listing, Pham Nhat Vuong’s net worth began to soar. If VinFast’s development in the capital market goes smoothly, Pham Nhat Vuong will undoubtedly continue to hold the position of Vietnam’s richest person.
04, Going Public is Not the End
Pham Nhat Vuong wants VinFast to leave its mark in the international market, but can it stand out?
Although Pham Nhat Vuong claimed that he had already prepared for five years of losses, the car-making industry is different from other industries. It can be seen from the degree of burning money by various domestic new forces.
To support VinFast’s development, since its establishment in 2017, Pham Nhat Vuong, Vingroup, its affiliated companies, and external lenders have continuously injected capital into VinFast, with a total investment amount of up to $9.3 billion.
Source: VinFast
In 2021 and 2022, VinFast’s revenue was USD 670 million and USD 630 million respectively, with corresponding net losses of USD 1.348 billion and USD 2.07 billion.
In total, VinFast has lost over USD 3 billion in the past two years, and its net loss for the first quarter of this year has already reached USD 599 million.
Currently, VinFast has delivered four electric vehicle models in Vietnam: VF e34, VF 5, VF 8, and VF 9. VF 8 and VF 9 are SUV models launched for the global market.
VinFast has focused on the European and American markets since its inception, and has shipped about 2,100 new cars from Vietnam to the United States and nearly 800 electric cars to Canada.
In March of this year, it also announced a $4 billion investment in North Carolina to establish an electric vehicle factory, which is expected to be completed and put into production before July 2025, delayed from the initial target of July 2024.
It is reported that the annual production capacity during the first phase of full production will reach 150,000 vehicles. The factory held a groundbreaking ceremony at the end of last month.
The factory is the first electric vehicle production project in North Carolina and the state’s largest economic development project. The total investment for the first phase is $2 billion, covering five major production areas: body welding, assembly, stamping, painting, and energy centers, and occupying 733 hectares.
Last year, Biden personally endorsed the project, announcing that the overall investment would reach $4 billion and create more than 7,000 jobs. Once the factory is put into operation, the electric vehicles it produces will be eligible for subsidies under the local government’s “Inflation Reduction Act.”
However, the US market is dominated by Tesla, as well as competitors such as Lucid and Rivian, and VinFast does not have an advantage in terms of product strength or price.
Source: VinFast
VinFast officially began selling its vehicles in California, USA in March this year. However, two months later, the National Highway Traffic Safety Administration (NHTSA) issued a safety warning and recalled the vehicles due to a software error that caused critical safety information to not be displayed on the car’s screen, potentially increasing the risk of accidents.
Currently, VinFast’s mid-size all-electric SUV, the VF 8, has a starting price of $46,000 in the United States, which is lower than the starting price of the Tesla Model Y at $47,740, but Tesla is eligible for a federal tax credit of $7,500.
This is why VinFast is eager to build a factory in North America. CEO Madame Thy said that the North Carolina factory is expected to significantly reduce costs and offer affordable products to American customers.
The future may be a bright moment for VinFast, but its future success will depend on many factors.
This article is from WeChat official account: SuperEV-Lab (ID: SuperEV-Lab), author: Chu Men.
