Wed. May 18th, 2022

VinFast is hardly a household name in the US. But that is not stopping the Vietnamese carmaker from stepping on the accelerator towards a US initial public offering.

The start-up, a unit of Vietnam’s largest private conglomerate Vingroup JSC, has submitted a confidential IPO filing with the US Securities and Exchange Commission. The move comes just days after VinFast announced plans to build an electric vehicle and battery factory in North Carolina.

The $ 2bn factory, which is expected to be up and running by mid-2024, has been praised by President Joe Biden. Interest in electric cars is surging amid high gas prices. EV start-ups like Rivian and Lucid Motors raised plenty of money from investors last year despite almost no revenue. Even so, the $ 2bn that VinFast is reportedly hoping to raise could be a stretch.

Founded in 2017, VinFast started out making conventional cars for Vietnamese consumers using BMW-licensed engines. It only pivoted into EVs last year. As a fledging brand with scant name recognition outside Vietnam, it will face an uphill battle to sell electric cars to Americans.

A crowded market is just the start. Tesla dominates the US EV market. Traditional US carmakers like General Motors and Ford with established production facilities in place have all been investing heavily in EVs. Their size has helped them to better navigate supply chain issues and the surge in nickel prices, a key material used to make lithium batteries.

A moribund market for new issues is another hurdle. After one of the best years on record, the US IPO market has ground to a halt. Only $ 2bn was raised via 18 deals during the first quarter, according to Renaissance Capital. That compares to the $ 39bn raised during the same period in 2021. Investor sentiment is likely to be particularly downbeat following recent drops in the share prices of some of the biggest IPOs last year involving EVs.

VinFast hopes to capture some of the frenzy created by Tesla. It’s likely in for a much bumpier ride.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to sign up.

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