It has been a mixed week for stocks in the electric vehicle (EV) sector. Many EV stocks are extending year-to-date losses. One of those is Vietnamese EV maker VinFast Auto (VFS +10.73%).
Just as VinFast is working to expand globally, growing EV competition is leading to price wars. That's especially bad news for EV start-ups like VinFast. Investors have knocked its stock down by more than 35% so far in 2024, including a drop of 8% this week, according to data provided by S&P Global Market Intelligence. That comes as price cuts from more established EV companies expanded in recent days.
NASDAQ: VFS
Key Data Points
Increased spending and larger losses
VinFast has expansion plans across the globe. Its first North American plant is under construction in North Carolina. It is also adding dealer partners in North America as well as Indonesia. Most recently the company broke ground for another new factory in India.
VinFast is also ramping up production as these projects are underway. The company delivered nearly 35,000 EVs in 2023, but expects to ship 100,000 in 2024.
But slowing EV sales growth is causing larger EV makers to cut prices, notably in VinFast's local Asian market. BYD and Tesla have both been working to increase sales in China. This week BYD slashed the price of its cheapest car, the Seagull, by 5%. That brought the cost for consumers to the equivalent of less than $10,000.
There's plenty of other competition in China as well. So while VinFast expects 2024 capital expenditure to remain on pace with last year, it has to plan for lower selling prices. VinFast has already reported a 15% increase in net loss from 2022 to 2023. Investors are likely expecting that pattern to continue in 2024 and are driving the stock lower as a result.
