The list of defunct automobile manufacturers in the U.S. is a list longer than Santa's for naughty children. In fact, there are roughly 100 defunct automakers in the U.S. that start with the letter "A." That should have read as a warning to brand-new automakers: Manufacturing and successfully building a business around it is extremely challenging.
VinFast Auto (VFS 1.19%) was jumping into a new overseas market with no consumer base, which was always going to be an uphill battle. Here's what went wrong, and where the stock could be headed from here.
Failed entry
VinFast went public at the right time, a time when the market was highly optimistic about electric vehicle (EV) makers. That was before tariffs complicated things, before the Chinese began sweeping the globe with affordable and advanced EVs, and before EVs failed to gain traction in the U.S. as originally anticipated. All of those developments crippled VinFast's ability to compete as it entered into lucrative U.S. and European markets -- a stark contrast to its home market, Vietnam, which often favors electric bikes and scooters.
That optimism faded quickly with investors, and likely in the company itself. VinFast had grand plans for the U.S. market when it entered around 2022, as it brought over the first VF8 midsize crossover to the country. That was about the last thing that went right.
The three-row VF9 crossover arrived a year late at the end of 2024, and several smaller and more affordable crossovers have yet to arrive in the U.S. as originally hoped. That was a big mistake, because VinFast needed to create a market that didn't exist. It needed to get its foot in the door of the U.S. market, and its pathway to that was through highly affordable vehicles.
Image source: VinFast Auto.
VinFast's website still claims that the compact VF7 will be "available soon," as well as the VF6 crossover, but they're both about a year overdue.
Not only did it not arrive quickly enough with the right products, it also failed to distribute them effectively. In fact, VinFast just recently opened its first franchised dealership in California, a highly valuable EV market. This ends its failed experiment with the direct-sales model that Tesla, Lucid, and Rivian, among few others, have accomplished. VinFast is all in on the reversal, with all 15 of its California direct-sales showrooms shutting down as it seeks more dealer partners.
Further complicating things was the rapid evolution of tariffs on imported vehicles and auto parts, and the U.S. government ending the federal $7,500 tax credit. Both of those developments threw a wrench in VinFast's plans to successfully enter the U.S. market, especially since it's delayed its North Carolina factory launch until 2028. After admitting that its market entry didn't go to plan, the company is now refocusing its expansion efforts back to Southern Asia.
NASDAQ: VFS
Key Data Points
A cash bonfire
It's no secret that the company is burning through cash rapidly, and its loss widened during the second quarter. Expanding into the U.S. and Europe unsuccessfully was expensive, in part leading to a larger second-quarter net loss of $812 million. It's also going to need a strong second half of 2025 to reach its annual sales target of 200,000, since it generated only 72,167 first-half deliveries.
One of the intriguing aspects of VinFast, and one that investors hoped would turn the ambitious automaker into a diamond in the rough, was its support from Vietnam's richest man and founder Pham Nhat Vuong, and his massive conglomerate Vingroup. Vuong is coming through again in a time of need by pouring roughly $1.5 billion into VinFast in exchange for certain research and development assets, in a move that will help shore up its finances as it attempts to expand globally.
What it all means
VinFast is in trouble. The company is bleeding cash, failed to enter the U.S. and European markets, and will face intense and growing competition from extremely affordable and advanced Chinese competitors in Asian markets. If VinFast can't quickly crack the code to expanding in markets outside of Vietnam, not only is there not a growth story, the company might not ever reach the scale needed to turn profits.
It wouldn't shock me if Vingroup eventually acquires VinFast, one way or another, and it fades into obscurity under the conglomerate umbrella. Investors should keep watching this stock from the sidelines. This ride might be over before it really gets started, at least internationally.
