Heavy Upfront EV Ecosystem Risks Will Eventually Support A Stronger Long Term Position

Catalysts

About VinFast Auto

VinFast Auto is a Vietnam based electric vehicle manufacturer producing passenger EVs, commercial EVs and electric two wheelers, supported by an affiliated charging and battery ecosystem.

What are the underlying business or industry changes driving this perspective?

• Although policies in Vietnam are accelerating a shift from gasoline to electric two wheelers, including planned restrictions on internal combustion motorbikes in major city centers from mid 2026, VinFast still needs to convert this demand into sustainably profitable pricing rather than relying on volume growth alone. This will be key for improving gross margin and earnings.
• Although the company is expanding into large population markets such as India, Indonesia and the Philippines with local CKD production and early dealer networks, ramping new factories and supply chains can keep unit costs high for longer than planned. This would weigh on net margins and delay any path toward positive earnings.
• While VinFast is rolling out a broad EV ecosystem that includes V Green charging and battery swapping partnerships with large retailers and logistics firms, the upfront capex and operating costs for this infrastructure could outpace monetization in the early years. This may pressure free cash flow and extend the period of heavy net losses.
• Although the new vehicle platform and zonal EE architecture are designed to reduce component complexity and lower bill of materials, execution risks around software ownership, supplier standardization and OTA reliability could limit the expected cost savings. This would constrain future gross margin improvement.
• While the product and R&D road map targets multi brand coverage across mass market, commercial fleets and ultra luxury segments, the high R&D and capitalized development spend for these lines may remain elevated if volumes fall short of internal expectations. This would keep operating expenses high relative to revenue and limit progress on EBITDA and net loss reduction.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more pessimistic perspective on VinFast Auto compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming VinFast Auto's revenue will grow by 37.2% annually over the next 3 years.
• The bearish analysts are not forecasting that VinFast Auto will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate VinFast Auto's profit margin will increase from -113.2% to the average US Auto industry of 3.1% in 3 years.
• If VinFast Auto's profit margin were to converge on the industry average, you could expect earnings to reach ₫7709.0 billion (and earnings per share of ₫3292.05) by about July 2029, up from -₫109772.8 billion today.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 68.7x on those 2029 earnings, up from -1.7x today. This future PE is greater than the current PE for the US Auto industry at 15.9x.
• The bearish analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 19.8%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• VinFast is heavily investing ahead of demand in multiple regions, including new factories in India, Indonesia, Vietnam and a planned plant in North Carolina. If volumes in these markets do not scale as planned, high fixed costs could weigh on gross margin and keep adjusted EBITDA and net loss margins at currently weak levels.
• Management is prioritizing top line growth over cost rationalization. With gross margin at a 56.2% loss in Q3 2025 on a reported basis and adjusted EBITDA margin at an 80.2% loss, an extended period of volume-led growth without pricing power or cost efficiency gains could delay any improvement in earnings and free cash flow.
• The business model depends on large, long term R&D, capex and ecosystem investments, including a multi brand EV lineup, autonomy projects and V Green charging and battery swapping infrastructure. If secular EV adoption or policy support in key markets such as Vietnam, India and Indonesia slows or becomes less favorable, revenue growth and eventual margin recovery could fall short of expectations.
• VinFast is currently highly concentrated in Vietnam, which is expected to remain 70% to 80% of deliveries in the near term. Any adverse policy change affecting EV subsidies, two wheeler electrification or restrictions on internal combustion engines could weaken domestic demand and limit both revenue growth and operating leverage.
• The company relies on significant external funding and related party support, including US$3.7b of available liquidity and borrowing and grant commitments from Vingroup and the founder. If capital markets or sponsor appetite become less supportive before operations move closer to break even, liquidity pressure could constrain capex, R&D and international expansion, with knock on effects for future revenue and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for VinFast Auto is $5.0, which represents up to two standard deviations below the consensus price target of $6.05. This valuation is based on what can be assumed as the expectations of VinFast Auto's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.7, and the most bearish reporting a price target of just $5.0.
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2029, revenues will be ₫250291.8 billion, earnings will come to ₫7709.0 billion, and it would be trading on a PE ratio of 68.7x, assuming you use a discount rate of 19.8%.
• Given the current share price of $3.07, the analyst price target of $5.0 is 38.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.