Quality Control-Plagued VinFast Now Worth More Than Ford Or GM

People will place value in the strangest of things, or automakers, it turns out, as VinFast has just been declared more valuable the Ford or General Motors. Yup, the maker of the trouble-plagued VinFast VF 8, met with dismal reviews and massive complaints over build quality, range, and service, has somehow found itself valued at $85 billion after its debut on the New York Stock Exchange. Comparatively, Ford and GM are only valued at $48 billion and $46 billion, respectively.

The questions on everyone's lips are likely to be twofold: how and why?

The 'how' is simple, as VinFast went public through a common practice of using a special purpose acquisition company (SPAC), otherwise known as a shell company, which meant it could list and trade very quickly. This is the path favored by a multitude of EV startups.

But the 'why' is most interesting. Why would people invest in a relatively new automaker from Vietnam when its first batch of US products (but not its first-ever cars, it's had time to work out the bugs) has been disappointing, to say the least?

Well, as reported by BBC, investors are trying to get in on the ground floor of an East Asian powerhouse before they explode. "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," Bill Russo, Founder and CEO of Shanghai-based Automobility, told BBC.

The anti-China sentiment in the US is strong, buoyed by the recently introduced Inflation Reduction Act, which aims to reduce automakers' reliance on China for batteries and their components.

VinFast is one of the manufacturers committed to building a US plant to capitalize on this.

While China is the world's largest car market, and now the world's largest producer of cars, spawning new EVs seemingly every second day, US investors seem confident that Vietnam's VinFast could become a genuine global rival in the EV race. It certainly has strong financial backing through parent company Vingroup and chairman Pham Nhat Vuong, Vietnam's richest man.

"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," Russo explains, which is clearly not the case with VinFast. Many EV startups are nothing more than suppliers of vaporware, but VinFast has real products on the road, even if they've made a weak first impression.

What does the future hold? Only time will tell, but with Tesla and China's BYD being the chief rivals VinFast needs to compete with, this initial surge in value bodes well. It's a strong start, but will it continue?