VinFast Secures Fresh Funding

(Reuters) – Nasdaq-listed electric vehicle maker VinFast (NASDAQ:VFS) announced on Wednesday it will receive a new round of funding amounting to 85 trillion dong ($3.35 billion) from its founder and parent company, Vingroup, by 2026, when it aims to break even.

VinFast, operational since 2019, has been aggressively expanding into global markets but continues to face increasing losses due to softer demand and sector challenges.

Approximately 50 trillion dong ($1.97 billion) of the new funding is expected to come from VinFast's founder, Pham Nhat Vuong, according to a company statement. Vingroup, one of Vietnam's largest conglomerates, plans to lend up to $1.38 billion to VinFast by the end of 2026 through its activities, dividends, and potential divestments, which may occur at an acceptable price if necessary.

Additionally, Vingroup will convert all existing loans to VinFast Vietnam into preferred shares with dividend entitlements.

Vuong, who owns 97.9% of VinFast shares both directly and indirectly, reaffirmed his commitment to increasing investment in the automotive unit during a general meeting in April. "VinFast remains committed to raising independent capital to meet its financial needs. Support from Vingroup and Vuong will be utilized only if these independent efforts fall short," stated VinFast in the announcement.

Since its inception in 2017 through June this year, VinFast has attracted capital injections totaling $13.5 billion from Vingroup, its affiliates, and Vuong, according to a company filing from late October. The new commitments would increase total funding to nearly $17 billion.

VinFast, targeting North America as its primary market, faces challenges in marketing and selling its EVs outside 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% larger than the same period last year. Further losses are anticipated in the upcoming quarters.

In July, VinFast suspended its $2 billion manufacturing complex project in North Carolina until 2028 due to challenging market conditions.

Automakers are bracing for potential new U.S. tariffs on vehicles from other countries and a possible reversal of existing pro-electric vehicle policies under president-elect Donald Trump, as reported by Reuters.

($1 = 25,340.0000 dong)