4 months ago • 1 min
VinFast – Vietnam’s answer to Tesla – made its stock market debut this week by merging with a SPAC. (In simple terms, that’s a listed company that buys unlisted ones to fast-track the latter’s arrival on the stock market.) To say the debut was successful would be an understatement: VinFast’s shares blew up by 270%, bringing the firm’s market value to over $85 billion. As you can see in the chart above, that’s more than legacy carmakers BMW, Ford, and General Motors (GM).
But let’s take a look under the hood. VinFast’s first shipment of cars to the US was met with poor reviews, and a number of operational hiccups and safety worries have made it clear that the newcomer isn’t quite ready to joust with established titans. Plus, it’s on track to make fewer sales this year than GM does in a week.
Cast your mind back to Rivian’s 2021 stock market listing, and you might feel a sense of déjà vu. The carmaker’s listing was the biggest of the year, valuing the firm at over $100 billion before it had sold a single vehicle. And sure, VinFast is a little further down the road on that front and markets in general are far less enthusiastic now, but it’s still a cautionary tale of an EV firm’s valuation speeding past reality. What’s more, a laundry list of EV firms that used SPACs to list have lost more than 90% of their value since their mergers.
So yes, VinFast could well become a giant one day. But challenged with the task of scaling production at a time when there’s an EV price war waging, the loss-making firm – and its market valuation – could be riding a temporary high.
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