Worsening Losses, Poor Reviews Present Problems as VinFast Prepares U.S. Stock Offering - The Detroit Bureau

Worsening Losses, Poor Reviews Present Problems as VinFast Prepares U.S. Stock Offering – The Detroit Bureau

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Vietnamese EV startup VinFast saw its losses widen to $599 million for the first quarter of this year, up from $411 million during the same period a year ago.

VinFast VF 7 LA Show debut 2022
VinFast, the Vietnamese EV maker, filed the paperwork necessary to begin its initial public offering in the U.S.

The losses come at a time when the automaker is already struggling to overcome the slow start of its U.S. sales efforts — further complicated by the harsh reviews many reviewers have given to its first all-electric model sold in the States, the VinFast VF 8.

It remains to be seen how those challenges will impact the SPAC deal VinFast has been planning for more than a year. It currently is hoping to complete the reverse merger with Black Spade Acquisition Co. by July 20. By going public, VinFast hopes to generate as much as $2 billion in new capital.

Back to the beginning

Founded in 2017 and backed by Vietnam’s richest man, Pham Nhat Vuong, the Haiphong-based company debuted with a customized version of the BMW X5 sport-utility vehicle. At the 2021 LA Auto Show it announced plans to go all-electric, initially with a pair of battery-powered SUVs, the VF 8 and more luxurious VF 9.

The first VF 8 models arrived in the U.S. last December, though initial customer deliveries were delayed several months due to a variety of factors, including the need to get EPA certification and then update the original software control systems used by the EV, North American CEO Van Anh Nguyen last month told TheDetroitBureau.com.

VinFast NA CEO Nguyen v1
VinFast’s North American CEO Van Anh Nguyen said the learning curve in the U.S. has been steep at times.

But the challenges have continued, among them a series of senior management shakeups during the past six months. Making matters worse, the VF 8 was generally given a thumbs down when reviewers had the chance to first test the electric SUV out last month.

The latest setback comes with the widening quarterly losses. The automaker went $2.1 billion into the red in 2022, and the first-quarter deficit raises concerns that the situation could get even worse this year.

VinFast blamed the additional $84 million shortfall for the January-March quarter on both the cost of abandoning its internal combustion products, and the lower selling prices it is getting for its new EVs.

It is facing challenges entering the U.S. market at a time when EV giant Tesla has touched off a price war in the segment.

Turnaround coming

Nonetheless, Vuong — who also owns Vietnam’s largest conglomerate, the VinGroup — remains confident. He last month told reporters in Vietnam the automaker could break even by the end of 2023, and be profitable by 2025, at least if its operations are “smooth.”

2023 VinFast VF8 - front 3-4 by lake
VinFast is rolling out its first entry in the U.S. market, VF 8 City Edition.

Vuong expects the automaker to sell around 50,000 vehicles worldwide this year, which would mark a seven-fold year-over-year increase. In her May interview with TheDetroitBureau, North American CEO Nguyen said the carmaker already received 12,000 orders for its first two product lines in the U.S., and another 5,000 in Canada. The VF 9 is scheduled to go on sale by the end of 2023, with two more electric SUVs to follow in 2024.

The company’s ambitious plans include adding a new plant in Carolina that eventually would add capacity to produce up to 250,000 vehicles annually.

The planned SPAC merger and listing of U.S. stock would help fund that project — which is waiting for final regulatory approval to begin moving dirt and laying concrete.

The deal would value VinFast at $23 billion, Black Spade said, with that figured based on a comparison to nascent U.S. EV maker Lucid, and “given their similarity in revenue scale and shared global target market with a near-term emphasis on U.S. sales.”

But a comparison to Lucid might not be a particularly positive one. The California-based automaker has been struggling to reverse worsening losses. Lucid Group got a $3 billion bailout earlier this month which is expected to keep it running until at least 2025, when it plans to have new, higher-volume models available. The new round of funding was largely backed by Saudi Arabia’s Public Investment Fund, or PIF, which now has about $9 billion invested in the company.

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