What happened
There's no stopping VinFast Auto (VFS +0.94%) stock. After more than doubling in just the first three days of this week, the electric vehicle (EV) stock, which debuted in the U.S. last week, was up another 53% at 10 a.m. ET this morning. Today's jaw-dropping rally means VinFast stock is already up more than 200% so far this week.
So what
As per the latest media reports, South Korea's Star Group Industrial is reportedly planning a factory in Vietnam. So what does that have to do with VinFast Auto, you may ask?
NASDAQ: VFS
Key Data Points
The thing is, VinFast is a Vietnamese EV maker, and Star Group supplies magnets to the automaker. Star Group is reportedly planning to invest $80 million to build a new factory in Vietnam to counter potential trade restrictions from China, according to Reuters. Production is expected to start in 2024.
This tells us two things. First, more companies seem to be turning to Vietnam to diversify their operations, indicating strong potential in the market. Second, suppliers looking for alternative sources of raw materials beyond China, where policies often pose a risk, is good news for automakers. In this case, Star Group is looking to source rare earth metals from Vietnam. Both factors should work in favor of young, growing Vietnamese companies like VinFast.
Now what
VinFast is already producing EVs, has built a strong presence in Vietnam, and is making aggressive plans to expand internationally. For example, earlier this week, VinFast said it expects to start delivering its new all-electric VF 9 SUV in North America later this year. The VF 9 SUV's U.S. Environmental Protection Agency (EPA) range ratings have surpassed VinFast's own initial estimates. In July, VinFast broke ground at its EV facility in North Carolina, which will also be its first EV factory outside of Vietnam.
Yet, none of this justifies the excitement that we're seeing in VinFast stock right now. I'll label the hype as the fear of missing out -- investors who couldn't buy into the first round of EV excitement and watched stocks like Tesla boom over the years perhaps don't want to miss any chance to bet on a new EV kid on the block, especially when it's already producing and selling electric cars globally.
