Vietnam’s local EV maker VinFast receives additional funding from its CEO, Pham Nhat Vuong. Its parent company, Vingroup, also pledged to loan the carmaker 2.87 billion AUD by 2026.
VINFAST’S RISE AND FALL
Touting itself as “Vietnam’s first global automotive manufacturer,” VinFast made a splash with its global debut back in 2023. The automaker immediately launched with a 7-car line-up and charging network in Vietnam. To add to its speedy debut, the company broke ground with its first factory in Haiphong within 2 years of its domestic launch in 2019. Since then, VinFast has employed an aggressive globalised approach.
VinFast found initial success within its homeland. Just this October, the EV start-up announced sales of 11,000 units sold, beating Toyota’s 8,736 units sold. Within 2024 so far, VinFast claims over 51,000 units sold overall.
While it dominates local EV sales in Vietnam, the company did not find the same success with its ventures abroad, particularly in the USA. The VF8 model, for example, has incurred a reputation for being “The Worst Reviewed Car in America.” Due to malfunctions with its basic features, US critics and customers alike gave the VF8 scathing reviews. A writer for Motortrend wrote, “[…] I’d be embarrassed to look a customer in the eye when handing over the keys to this vehicle.”
Despite this, VinFast’s global ambitions continued. Due to the pandemic, however, the company halted ongoing operations in Melbourne and exited Australia entirely in 2021. Interestingly, several of its models were designed and engineered in the country. Though they have abandoned shop in Australia, VinFast has already expanded its line-up into right-hand drives to accommodate its upcoming debut UK market. The fast-growing company has also reached shores in other continents such as Europe and Southeast Asia. With an assembly plant in Indonesia and a newly-launched presence in the Philippines, VinFast is an improvement for Southeast Asia’s race towards EV adoption.
Though its initial performance was strong, the company saw huge losses last 2023. They reported financial losses of AUD 3.1 billion and the closing of its manufacturing plant in North Carolina, USA. Since its debut, VinFast has not yet reached its break-even point.
In its missteps, VinFast’s debut stock price on NASDAQ of USD 10 just recently fell to an astonishing price of USD 3.89.
FINANCIAL SUPPORT
VinFast’s parent company, Vingroup, is set to inject a loan of AUD 21.71 billion into the auto maker’s funds. To add to this, the group is set to convert Vingroup’s pending loans into dividend-entitled preferred shares. “Vingroup aims to alleviate short-term financial pressure on the electric vehicle maker,” said the company in a released statement. However, the parent company noted that this loan will only be accessed if VinFast fails to achieve their financial goals.
Vingroup’s vice chairman and CEO Nguyen Viet Quang is adamant on the group’s involvement in its EV subsidiary. “Vingroup will continue to invest significantly in VinFast. […] Our goal is to solidify VinFast’s market leadership in Vietnam and contribute to the global shift towards electric mobility,” he said in a press release.
Vingroup founder and chairman Pham Nhat Vuong is also set to provide VinFast additional funding, separate from the company group’s investment. One of Vietnam’s top billionaires, Vuong himself plans to add AUD 3 billion towards VinFast. Vuong’s representative claims that “The newly secured funding source provides VinFast with the necessary financial resources to achieve sustainable growth without relying on external capital.”
While VinFast receives additional funding from multiple sources, the company’s year-end looks promising. The company will continue to work towards its goal of producing 100,000 EV units by the end of 2024.
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