As the global electric vehicle industry faces increasing demand side challenges, VinFast, an electric vehicle manufacturer once known as the "Vietnamese version of Tesla," seems to be living a relatively miserable life now.
Market data shows that although the stock price of this new Vietnamese automaker, which is listed in the United States, has rebounded by about 6% from its low point on Monday, it has still plummeted by 65% this year
VinFast had previously planned to nearly double its vehicle delivery volume this year to 100000 vehicles, but the company only achieved one tenth of that goal in the first quarter. Meanwhile, considering plans to build factories in North Carolina, Indonesia, and India, the company also needs to raise funds for global expansion.
Industry analyst Ken Foong said, "VinFast was previously too ambitious and may continue to face challenges as it rapidly expands overseas. They can do well in Vietnam because there is not much competition there, but in the United States and other regions, competition may be even more intense."
The electric vehicle manufacturer, controlled by Vietnam's richest man Pham Nhat Vuong, is attempting to penetrate the global market. But currently, Chinese electric vehicle companies are increasing their exports, and Tesla also announced price cuts last month, which is intensifying competition in the industry.
Since its stunning IPO in the US market in August last year (with a stock price soaring by 700% within two weeks), this company that has yet to achieve profitability has lost over 90% of its market value.
Pan Riwang owns nearly 98% of the company's shares. In 2017, Pan Riwang's Vingroup officially announced its entry into the new car industry and established VinFast Automobile Company, which was also Vietnam's first independent car company. He promised to invest at least another $1 billion in personal wealth in VinFast.
Pan Riwang had previously predicted that the automaker would achieve breakeven or gross profit reversal in 2025 after losing $618.3 million in the first quarter.
However, so far, VinFast has only delivered 9689 cars in the first three months of this year, and has not achieved growth compared to last year - it delivered a total of 34855 cars in 2023. At the same time, most of the buyers of the company are related parties of the company.
Given the limited market in Vietnam, the company's goal is to sell in up to 50 markets worldwide by the end of 2024. According to estimates from HSBC Global Research, the annual sales of electric vehicles in Vietnam may not reach 1 million units this year.
Jochen Siebert, General Manager of JSC Automotive Consulting, said, "VinFast may achieve production targets, but cannot achieve sales targets because they are too weak in the local market. Their local automotive market is not large, and the cars they sell are quite expensive and compact for the luxury market."
The company's stock price has dropped from $8.37 per share at the end of last year to about $3 currently, indicating investor skepticism towards it.
VinFast is currently betting on a $2 billion integrated production base in North Carolina - expected to be completed by the end of 2025, and plans to build factories in Indonesia and India. But this may further increase the burden on its balance sheet, as at the end of March, the company's net debt was approximately $2.9 billion, and cash and cash equivalents were only $123.3 million.
Foong stated that VinFast's expansion plan may require more funding. Considering the current operating speed and industry competition, achieving a breakeven gross profit target by 2025 may be challenging for the company.
However, some analysts are still optimistic about the stock, citing the company's progress in expanding distributors and accelerating delivery speed.
Chardan Capital Markets LLC senior research analyst Brian Dobson wrote in a report on April 18th that the company's facilities in Vietnam are sufficient to achieve this year's goals. The securities firm maintains a buy rating for the stock, with a target price of $13.