What do we know about the VinFast IPO?
Vietnamese electric vehicle (EV) maker VinFast will go public via a SPAC deal with New York Stock Exchange-listed Black Spade Acquisition Co today, August 15 2023.The combined company will have an equity value of over $23 billion.
Upon completion of the reverse merger, VinFast shareholders will own approximately 99% of the combined company, which will operate as VinFast and trade on the NYSE.
The listing is intended to raise capital to fund VinFast’s expansion into the US market with its planned plant in North Carolina. Production at the plant are currently meant to start in 2024, giving the company a deadline for raising funds.
In early trading, which is based on less than 4% of its shares, indications are that VinFast will open higher. However, competitors such as Nikola Corp and Lucid saw valuations plunge immediately following their own SPAC listings, so watch this space.
When is the VinFast IPO?
The date for the VinFast SPAC deal completion is August 15 2023 - having been confirmed that the listing could go ahead on August 11th.
How much is VinFast worth?
VinFast’s chief executive said in early December 2022 that the valuation and size of the company’s IPO will be subject (in part) to market conditions. VinFast was originally hoping to raise $2 billion with a valuation of $60 billion when it started planning its IPO in April 2022, but when the SPAC was announced, this has fallen to $23 billion.
The dramatically different price tag almost a year on is due to the decline in investor enthusiasm for EV start-ups. For example, Rivian listed in late 2021 at a price of $129 per share and is now worth just $13.
The previously high valuations were based on belief in the industry’s potential, rather than performance. Aside from Tesla, none of the EV stocks are profitable despite increased operations. Lucid ramped up production and was on target to produce between 6,000 and 7,000 vehicles for 2022 but lost approximately $670 million for Q3. Meanwhile, Rivian was expected to produce close to 25,000 vehicles for the year but posted a net loss of $1.7 billion for Q3.
The electric vehicle industry in general was also hit particularly badly in 2022, due to rising interest rates and fears of a recession, as well as rising lithium prices, supply issues and high competition from more established automakers.
The S&P US & China Electric Vehicle Index, which measures companies in the EV industry, declined over 36% throughout the year. And even the shine of Tesla faded due to CEO Elon Musk’s antics with Twitter. Tesla shares fell over 65% in 2022.
What does VinFast do?
VinFast is Vietnam’s first domestic automaker. It initially started manufacturing internal combustion vehicles in 2019 but moved on to electric vehicles – as of November 2022, it no longer produces any internal combustion models.
VinFast’s first EV models were motorcycles, and its first car was the VF e34, which reached customers in December 2021. Its first electric SUV vehicles were delivered in September 2022.
How does VinFast make money?
VinFast makes money through the sales of its SUV models VF 8 and VF 9. VinFast the models start from $41,000 and $59,000 respectively, but neither price includes the cost of the battery – consumers will have to lease these separately from VinFast. The batteries are offered on a flexible plan with monthly subscriptions of $35 for the VF 8 and $44 for the VF 9.
We can compare this to Tesla’s SUV, which costs upward of $63,000.
VinFast aims to target global electric vehicle sales of 42,000 units for 2022, while Tesla is aiming for 1.4 million units delivered this year.
Is VinFast profitable?
No, VinFast is not profitable. Despite being well-established in Vietnam, the company is still making annual losses. It reported net loss of $1.3 billion in 2021 and had lost $1.4 billion in the first three quarters of 2022.
What is VinFast's business model?
VinFast’s business model is based on becoming a global brand and disrupting the existing EV market. These goals have been reflected in its production capacity growth so far.
In its first year, VinFast created an assembly plant in the northern port city of Haiphong with an initial annual production capacity of 250,000 vehicles, which expanded to 500,000 units/year later due to the rising domestic and international demand. In fact, VinFast accounted for 13% of domestic passenger vehicle sales in its first full year. The company also began producing a range of electric scooters at the plant in 2019.
VinFast is now investing heavily into succeeding overseas with a preliminary deal to invest $2 billion into its North Carolina factory to make electric buses, sport utility vehicles and batteries for other electric vehicles. Overseas sales are expected to start in 2022.
VinFast also recently announced plans to integrate the Amazon Alex voice experience into vehicles, in another bid to appeal to US consumers.
While it currently only has prototypes for its VF8 and VF9 SUVs, the automaker has also shown three more EVs – the VF 5, VF 6 and VF 7 – at the 2022 Consumer Electronics shows.
Who are VinFast’s competitors?
VinFast will be entering a highly competitive landscape. In 2022, all-electric car registrations were dominated by:
- Tesla – which had 564,873 units, giving it a 19% share with
- BYD – which had 326,236 units, giving it an 11% share
- SAIC – which had 321,289 units, giving it a 10.8% share
- Volkswagen Group – which had 216,004 units, giving it a 7.3% share
- Hyundai Motor Group – which had 167,305 units, giving it a 5.6% share
By comparison, VinFast had 58,000 unit registrations worldwide – meaning it will fall into the ‘other’ 47% of market share alongside the likes of Lucid and Rivian.
Who owns VinFast?
VinFast is owned by Vingroup. Although for US and other global consumers, VinFast may seem like a startup, its parent company is Vietnam’s largest conglomerate – which as interest in real estate, education and technology.
The company was founded in 1993 by Vuong Nhat Pham.