HANOI: A 65% slide in VinFast Auto Ltd’s stock this year underlines the challenge faced by the electric vehicle (EV) maker backed by Vietnam’s richest man.

It plans to almost triple vehicle delivery this year to 100,000, but barely hit a 10th of that goal in the first quarter.

Meanwhile, VinFast will need to raise capital for global expansion, given plans for factories in North Carolina, Indonesia and India.

“VinFast is too ambitious and could continue to face challenges as it expands rapidly overseas,” said Bloomberg Intelligence analyst Ken Foong.

“They could do well in Vietnam, as there isn’t too much competition there, but in the United States and other regions, there might be more competition.”

The EV maker, controlled by Pham Nhat Vuong, is trying to break into the global market at a time when Chinese competitors are increasing exports and Tesla Inc slashed prices last month.

The unprofitable company has lost more than 90% of its market value since a spectacular US market debut last August, when the stock soared 700% in two weeks.

Vuong, who owns almost 98% of the company, has pledged to invest at least another US$1bil of his wealth into VinFast.

He forecast that the carmaker would breakeven or have positive gross profit in 2025, having posted a US$618.3mil loss in the first quarter.

So far, it has delivered just 9,689 cars in the first three months of the year, after dispatching a total of 34,855 vehicles in 2023. The bulk of its sales have been to related parties of the company.

The firm is targeting sales in as many as 50 markets by the end of 2024, given Vietnam’s limited scope. Annual sales of EVs in the South-East Asian country are estimated at less than one million this year, according to HSBC Global Research.

“VinFast may achieve its production target, but won’t achieve sales as they are too weak in their home market,” said Jochen Siebert, managing director of JSC Automotive Consulting.

“Their home vehicle market isn’t that big, and the cars they sell are quite expensive and small for a luxury market.”

In a sign of global investor scepticism, the stock dropped from US$8.37 a share at the end of last year to US$2.89 last Friday.

The carmaker is betting on a US$2bil manufacturing complex in North Carolina, which it expects to complete by the end of 2025, and planned facilities in Indonesia and India to establish its presence in key markets.

That may further burden its balance sheet after the company posted a net debt of about US$2.9bil as at the end of March. Cash and cash equivalents were only US$123.3mil.

Some analysts remain bullish on the stock, citing progress in the company’s expanding dealerships and pace of deliveries.

 - Bloomberg