EV stocks offer significant growth potential, but investors should steer clear of this profit trap

Exploring Opportunities in the Global EV Market

Identifying and capitalizing on worldwide trends early can be a powerful strategy for investors seeking long-term gains. However, this approach is often challenging in practice. The electric vehicle (EV) sector, in particular, presents significant potential for growth but is also fraught with considerable risk. Many pure-play EV manufacturers are relatively new to the market, frequently operating at a loss as they strive to establish their brands and scale production. These companies must also navigate unpredictable market changes, such as shifts in government incentives and the introduction of new tariffs.

Rivian Automotive (NASDAQ: RIVN) and Lucid Motors (NASDAQ: LCID) have both demonstrated some encouraging progress despite inherent risks. In contrast, VinFast Auto (NASDAQ: VFS) raises more concerns for potential investors.

EV Industry: Promise and Progress

As electric vehicles become increasingly common on roads worldwide, the sector offers investors growth prospects that surpass those of traditional automotive markets. Global EV sales are on the rise and are projected to expand at an average annual rate of 25% through 2030.

Both Rivian and Lucid remain unprofitable but have made notable advancements. Rivian, for example, has made significant efforts to improve its financial performance, turning around a $1.2 billion gross profit loss from the previous year to achieve its first full-year gross profit in 2025. The launch of its R2 model is expected to attract a wider, more cost-conscious customer base.

Lucid, while trailing Rivian, has overcome various production challenges and successfully ramped up manufacturing of its Gravity SUV, albeit at a slower pace than initially planned. This progress has enabled Lucid to achieve record delivery numbers for eight consecutive quarters.

VinFast presents a more complex case. The Vietnamese automaker is a dominant force in its domestic market, supported by a wealthy founder and parent company, and boasts advanced manufacturing capabilities. Despite aggressive and costly efforts to expand internationally—including entry into the U.S. market—VinFast continues to report substantial losses, with little indication of a turnaround in sight.

Relentless Expansion Despite Mounting Losses

Even as VinFast’s losses and expenses grow, the company is moving forward with plans to resume construction of its North Carolina plant in 2026, after a pause in 2024. The facility, now expected to open in 2028, will likely be smaller than originally planned. Additionally, some state incentives may be at risk, depending on VinFast’s fulfillment of job creation and other commitments.

Financial Performance and Risks

VinFast’s aggressive global expansion has come at a steep cost. The company’s net loss for the fourth quarter increased by 15% year-over-year to $1.3 billion. In 2024 alone, VinFast reported losses exceeding $3 billion, and since 2021, its cumulative losses are estimated at around $11 billion.

There are some positive signs: VinFast’s unit economics are gradually improving. In the fourth quarter of 2025, research and development expenses accounted for 7% of revenue—the company’s best performance to date. Selling, general, and administrative costs dropped to 25% of revenue, down from 40% a year earlier, and the net loss margin improved by 96% year-over-year.

Despite these improvements, VinFast’s commitment to rapid international growth continues to weigh heavily on its financials. Until the company can further enhance its unit economics, reduce losses, and better control its expansion costs, the risks remain high. Investors seeking exposure to emerging EV companies may find Rivian, Lucid, or Tesla to be more attractive options at this stage.

Is Now the Time to Invest in VinFast Auto Ltd.?

Before purchasing shares of VinFast Auto Ltd., it’s important to consider the following:

• The Motley Fool Stock Advisor team has recently identified what they believe are the 10 best stocks to buy right now—and VinFast Auto Ltd. is not among them. The selected stocks have the potential to deliver substantial returns in the years ahead.
• For example, when Netflix was recommended on December 17, 2004, a $1,000 investment would now be worth $495,179. Similarly, a $1,000 investment in Nvidia following its April 15, 2005 recommendation would have grown to $1,058,743.*
• Currently, the Stock Advisor’s average return stands at 898%, far surpassing the S&P 500’s 183% over the same period. Don’t miss out on the latest top 10 stock picks, available through Stock Advisor, and join a community of investors focused on individual success.

*Stock Advisor returns as of March 21, 2026.