On its first day of trade, VinFast, a Vietnamese Electric Vehicle manufacturer, saw its stock market valuation leap over that of Ford and General Motors (GM).

In their New York debut, the company’s shares, which have yet to turn a profit, finished above $37 (£29) per share.

Thus, VinFast’s stock market valuation increased to $85 billion, much above Ford’s $48 billion and GM’s $46 billion.

It happens when established automakers compete with more recent ones for a piece of the expanding EV market.

The IPO increased Pham Nhat Vuong’s wealth, who was previously the richest person in Vietnam, by around $39 billion. Vuong is the chairman and creator of VinFast.

According to regulatory documents, he holds 99% of the company’s outstanding shares, mostly through Vingroup JSC, the biggest conglomerate in Vietnam.

As a result, there are fewer shares available for other investors to trade, which can cause significant price fluctuations.

Tuesday’s trading volume for VinFast was just about $185 million worth of its shares.

Investors are continuing to believe that the future is in electric and that a low-cost East Asian country will emerge as a competitor in the US,” said Bill Russo, Founder and CEO of Shanghai-based Automobility.

The markets believe that given geopolitics that Vietnam, not China, will be that country.”

VinFast went public through a shell company, sometimes known as a special purpose acquisition company (Spac), as opposed to a traditional share sale.

Start-ups sometimes employ spacs to expedite the frequently lengthy and expensive process of going public with a private corporation. In layman’s terms, it refers to the combination of two publicly traded companies.

In the past three years, a number of EV manufacturers have used Spacs to go public, including Lordstown Motors and Faraday Future.

However, since their mergers, both companies have seen a greater than 90% decline in stock market value.

Mr Russo said VinFast could be different because “they are primarily backed by Vingroup, which gives them access to funding from a business that has a proven track record of growth“.

Most EV start-ups fail because they do not have profitable core and external funding eventually runs out as they burn capital far faster than they generate cash,” he said.

But as large businesses compete for market dominance, VinFast also confronts fierce competition.

Market leaders have been lowering their pricing to increase sales, notably Elon Musk’s Tesla and BYD, which is backed by seasoned investor Warren Buffett.

According to a business presentation, VinFast delivered 11,300 EVs in the first half of the year. In contrast, Tesla shipped more than 889,000 cars within the same time frame.

Tesla will continue to be the clear leader in EVs but there will be many winners,” said Dan Ives of Wedbush Securities.

VinFast has built a strong foundation for EV success.”