Vietnam's Vinfast Revs Up for US Market With $100 Million IPO

Vietnamese electric vehicle (EV) startup Vinfast is revving up for its debut in US public markets.

Vinfast filed with the Securities and Exchange Commission (SEC) on December 6. It has not announced a date for the launch but plans to list on the Nasdaq under the ticker “VFS.” Though it did not disclose specifics regarding total units or pricing, its filing fee schedule indicated Vinfast aims to raise $100 million through the initial public offering (IPO).

That may be a placeholder sum, though. Earlier reports by Bloomberg estimated the company’s IPO could raise $2 billion after an initial confidential filing with the SEC in April.

Founded in 2017 by Vietnam’s richest man and first billionaire – Pham Nhat Vuon – Vinfast is based in Hai Phong City, a major coastal city in the country’s northeast. It phased out all internal combustion vehicles this year and now exclusively manufactures EVs. It produces battery-powered scooters and buses to complement its lineup of electric cars.

Vingroup is one of the country’s largest conglomerates, owning numerous businesses that cover real estate, education, and consumer tech, including Vsmart – one of Vietnam’s leading smartphone brands. Earlier this year, Vingroup, and two of its publicly-traded subsidiaries, together made up almost 30% of the value of Vietnam’s stock exchange. The group’s revenue alone generates roughly 2% of the country’s GDP.

Until now, Vinfast has predominantly been a domestic brand in its home market. Though Vinfast’s vehicles are currently produced in Haiphong, the company recently broke ground at a $2 billion factory site in North Carolina and will have at least 150,000 cars rolling off the assembly line there from July 2024 onwards. It plans to use the money raised from the IPO to fuel its international expansion further. Although the deal is likely to happen in 2023, Vinfast aims to gain a footing in the American market and start selling its cars in California before the year’s end.

Vinfast’s initial EV product line features A- through E-segment electric Sports Utility Vehicle (SUV) models. It is taking bookings for two electric SUVs, its midsize VF8 and the larger VF9.

The company is currently running at a loss. In the first three quarters of 2022, it generated $439 million in revenue, but with costs totaling $1.5 billion.

As an EV maker, Vinfast is also vulnerable to the ongoing semiconductor crunch. It had to delay shipping its VF8 and VF9 models to Europe this year, and could face similar setbacks again, depending on supply-side constraints.

EV Market Boom

The EV market in the US has seen rapid growth since the pandemic. According to the US Department of Energy, EV sales in the US grew by 85% from 2020 to 2021.

EV brands are multiplying too. Besides industry leader Tesla, automakers such as Ford, General Motors, Volkswagen, Lucid, Rivian, Polestar and Fisker compete fiercely for market share.

Vinfast might threaten Tesla’s position by offering comparable cars at a much lower price. Vinfast is also working with established European auto brands such as BMW and Bosch to develop new models, which could make them more competitive in terms of technology and design.

If Vinfast can pull off a big IPO and establish a secure beachhead in the US market, it could potentially give Tesla a run for its money further down the road.

In weighing up the IPO, investors will likely consider how Vinfast can differentiate its product in an increasingly saturated market and whether the growing demand for EVs can keep up with the company’s ambitious plans for expansion.

This article was produced and syndicated by Wealth of Geeks.

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