Electric Vehicle Maker VinFast Secures $3.35 Billion Funding Commitment
VinFast, a leading electric vehicle manufacturer listed on the Nasdaq, has announced a significant funding boost of 85 trillion dong ($3.35 billion) from its founder, Pham Nhat Vuong, and parent company, Vingroup, by 2026. This injection of capital is expected to help the company break even by 2026, a crucial milestone in its growth journey.
Aggressive Expansion Plans
Since its inception in 2019, VinFast has been rapidly expanding into global markets. However, the company has been grappling with increasing losses due to softer demand and sector challenges. Despite these hurdles, VinFast remains committed to its ambitious plans, with North America being its primary market.
Founder’s Commitment
Pham Nhat Vuong, VinFast’s founder and majority shareholder, has pledged to provide approximately 50 trillion dong ($1.97 billion) of the new funding. Vingroup, one of Vietnam’s largest conglomerates, will lend up to $1.38 billion to VinFast by the end of 2026 through various means, including dividends and possible divestment.
Capital Injection History
VinFast has received significant capital injections in the past, with a total of $13.5 billion invested by Vingroup, its affiliates, and founder Vuong since its inception in 2017. The new commitments will boost total funding to nearly $17 billion.
Challenges Ahead
The electric vehicle maker is facing challenges in marketing and selling its EVs in international markets outside of Vietnam. The company recorded a net loss of $773.5 million in the April-June period, a 27% increase from the first quarter and 40% bigger than the same period last year. VinFast anticipates further losses in the upcoming quarters.
Manufacturing Complex Project Suspended
In July, VinFast suspended its $2 billion manufacturing complex project in North Carolina until 2028 due to challenging market conditions. The company is also bracing for potential new U.S. tariffs on vehicles from other countries and a possible reversal of existing pro-electric vehicle policies.
Looking Ahead
With the new funding commitment, VinFast is poised to overcome its current challenges and achieve its goal of breaking even by 2026. The company remains committed to raising independent capital to meet its financial needs, with the support from Vingroup and Vuong serving as a safety net.
Leave a Reply