Viet carmaker VinFast's planned US IPO more than just a lofty aspiration
Hanoi
VINFAST Trading & Investment - the Singapore-based subsidiary of Vietnamese carmarker Vinfast - recently submitted a confidential draft registration statement to the US Securities and Exchange Commission (SEC).
The relatively nascent start-up has been eyeing a share of the US electric car market ever since its inception in 2017, and this is another step toward realising that dream.
The revelation follows an earlier announcement that VinFast intends to establish a US$2 billion factory in North Carolina in the US, with the new facility set to create some 7,000 jobs.
This is on top of a US$200 million investment in Vinfast's California headquarters that was announced last year.
VinFast has come a long way in a relatively short amount of time. When it was founded in 2017, its parent company, Vingroup, had no experience or expertise in the auto industry to speak of.
Fitch Solutions went so far as to downgrade Vingroup's credit rating from 'B+' to 'negative' in 2018, and Vingroup eventually opted out of the ratings process soon after.
But where it lacked expertise, VinFast looked abroad including outsourcing its design work to Italian firm Pininfarina and using BMW motors in its vehicles.
It also imported talent including Shaun Calvert, an executive with 20 years of experience under his belt at General Motors who took on the role as deputy CEO of Manufacturing.
VinFast also brought in Kevin Fisher, fresh from spending 6 years as an automotive consultant in Detroit and is now vice president of product engineering. Also on board is John Harris, who worked for the Ford Motorcompany in various roles over 30 years, and is now VinFast's general counsel.
Michael Lohscheller, a former Volkswagen and Opel executive, also briefly joined the team in 2021 as VinFast's CEO. Less than a year later, however, he stepped down citing "personal reasons".
He was succeeded by homegrown executive Le Thi Thu Thuy, who is also the vice chairman of Vingroup and will lead the company's charge into the US market.
It's a bold move, however, that may be at the expense of its domestic operations.
In February this year, VinFast saw a decline of car sales in Vietnam of 32.8 per cent year-on-year. In contrast, the new vehicle market, by the same measure, surged 63 per cent.
Vingroup also registered an overall loss of over US$1 billion in 2021 on the back of low car sales.
Its rapid rise to prominence has not been without its fair share of controversy too.
In May 2021, the carmaker referred a customer to the police after they gave one of its vehicles a poor review and posted it on YouTube.
Leaked documents also revealed in 2019 that bonuses were threatened to be cut if managers failed to get more of their staff to purchase Vinfast vehicles.
Moving forward, VinFast definitely has its work cut out for it. The US car market is already very saturated. It is also dominated by Tesla which was responsible for almost 80 per cent of the electric vehicles registered in the US in 2020.
On that note, competing with a behemoth of Tesla's stature will take a hefty investment and as such, an initial public offering might be more than just an aspiration, but also a necessity in order to thrive.
