Vietnamese electric vehicle (EV) maker VinFast's stock market valuation has soared above Ford and General Motors (GM) on its first day of trading.
Shares in the firm, which has yet to make a profit, closed above $37 each in their debut on New York's Nasdaq.
That gave VinFast a stock market valuation of $85bn (£67bn), much higher than Ford's $48bn and GM's $46bn. It comes as motor industry giants and newer manufacturers fight for a slice of the booming EV market.
The listing added around $39bn to the wealth of VinFast's chairman and founder Pham Nhat Vuong, who was already Vietnam's richest man.
Regulatory filings show he controls 99% of the firm's outstanding shares, mostly through Vietnam's largest conglomerate, Vingroup JSC. That limits the number of shares available for other investors to trade, which can lead to large price swings. Trading in VinFast was relatively thin on Tuesday, with around $185 million worth of its shares changing hands.
“Investors are continuing to believe that the future is in electric and that a low-cost East Asian country will emerge as a competitor in the US,” said Bill Russo, Founder and CEO of Shanghai-based Automobility.
“The markets believe that given geopolitics that Vietnam, not China, will be that country.” Instead of a conventional share sale, VinFast went public using a shell company, or special purpose acquisition company (Spac).
Spacs are often used by start-ups to speed up the often slow and expensive process of taking a private company public. In simple terms, it means merging a company that is not on a stock exchange with one that is. Several EV makers – including Lordstown Motors and Faraday Future – have gone public using Spacs in the last three years.
However, both firms have lost more than 90% of their stock market value since their mergers.
Mr Russo said VinFast could be different because “they are primarily backed by Vingroup, which gives them access to funding from a business that has a proven track record of growth”.
“Most EV start-ups fail because they do not have profitable core and external funding eventually runs out as they burn capital far faster than they generate cash,” he said. But VinFast also faces tough competition as major players fight for market domination.
Market leaders – including Elon Musk's Tesla and BYD, which is backed by veteran investor Warren Buffett – have been cutting prices to boost sales. In the first half of the year VinFast delivered 11,300 EVs, according to a company presentation. By comparison, Tesla delivered more than 889,000 vehicles in the same period.
“Tesla will continue to be the clear leader in EVs but there will be many winners,” said Dan Ives of Wedbush Securities.
“VinFast has built a strong foundation for EV success.”
— CutC by bbc.com
