As the world races to fill streets with electric vehicles (EVs), investors are quickly turning their heads to start-up EV makers to find the next Tesla (NASDAQ: TSLA). Rivian Automotive (NASDAQ: RIVN) and Lucid (NASDAQ: LCID) are ramping up production, while traditional juggernauts such as Ford Motor (NYSE: F) are stepping on the gas to accelerate their transition.

With that said, another EV stock has been hitting the market, and you may have never heard its name: VinFast Auto (VFS -1.55%). Before you jump along for the ride, here are some things to know.

VinFast Who?

VinFast, a member of Vingroup JSC in Vietnam, was founded in 2017. It  manufacturers and exports a number of electric SUVs, scooters, and buses across Vietnam, North America, and, in the near-term, Europe. The EV maker operates a state-of-the-art plant in Hai Phong that boasts up to 90% manufacturing automation and annual production capacity up to 300,000 units.

Through June 2023, VinFast has delivered roughly 105,00 vehicles (mostly internal combustion) and roughly 182,000 electric scooters.

The pros:

While you may not have heard of VinFast, it has an intriguing background that offers some advantages.

One advantage is that VinFast is part of a larger Vingroup, which has its hands in everything from retail to real estate, and the large group has provided substantial financial support to VinFast. In fact, as of March 31, 2023, Vingroup and its affiliates have deployed roughly $9.3 billion to help fund VinFast's operating expenses and capital expenditures since its founding in 2017.

Another advantage is that VinFast already has market leading share in Vietnam, and also boasts competitive labor costs with a major manufacturing plant located there. In 2022, the cost of labor in China was nearly three times higher than in Vietnam, to give one example. That footprint and lower labor costs should help its status grow as a global manufacturing automaker, although that advantage will fade as the company builds plants in other regions, as it plans to do.

Lastly, VinFast plans to target high-growth regions and vehicle segments. It believes the U.S., Canada, and Europe will represent the largest addressable markets for its EVs, and grow to become roughly 33% of the global EV market by 2028, according to VinFast, sourcing a Frost & Sullivan report. It will also focus on SUV EVs, which are expected to grow at a faster rate than their sedan counterparts.

The cons:

Similar to many other EV start-ups in the game right now, profitability is a struggle at VinFast. It recorded net losses of $2.1 billion in 2022. During its most recent quarter, ending March 31, the company recorded a nearly $600 million net loss and had total debt of roughly $2.6 billion.

Another drawback is that while it has plenty of opportunity abroad in places such as the U.S., investors can't be sure how quickly a foreign auto brand will be accepted, and gain traction, in a new region. If this acceptance takes longer than expected, it will drastically hurt the company's ability to provide returns to shareholders in the near term.

While VinFast has received substantial funding from Vingroup already, the truth is that the EV maker admits it will require significantly more capital going forward. This could further dilute shareholders getting in early and further inflate the company's sizable debt.

Risky investment

There are some very real advantages that VinFast has, including the potential to secure funding from a parent group, labor cost advantages, and leading market share in Vietnam. However, it's also worth considering that the founder, Pham Nhat Vuong, Vietnam's richest man, controls 99%, and only 1% of VinFast shares are publicly traded -- meaning investors should expect volatile trading. It's also true that acceptance in global markets could take longer than anticipated, and the company has a history of bleeding cash and posting serious losses.

The next big EV stock may be here, and it could be VinFast, but the company has a lot of work to do before it becomes a household name and a stable investment option in the blossoming EV industry.