VinFast secures USD 3.4 billion in additional funding from Vingroup amid rising losses

Electric vehicle maker VinFast, which went public on Nasdaq last year, plans to break even by 2026, drawing an additional 85 trillion dong (USD 3.35 billion) from its founder Pham Nhat Vuong and parent Vingroup by 2026. VinFast has expanded aggressively since its 2019 launch, but despite its growth it has been baulked by losses due to tougher demand and wider industry headwinds.

VinFast’s founder Vuong is said to be ready to inject 50 trillion dong (around USD 1.97 billion) into the new funding, according to the company’s statement. As part of the program to support the VinFast business to until 2026, the amount of which may exceed USD 1.38 billion from dividends, operations and potential divestments, VinGroup pledged commitments from dividends, operations to provide USD 1.38 billion, noting that in case it is necessary, VinGroup might make asset sales.

To support VinFast’s financial stability, Vingroup also stated that it will convert all its existing loans to VinFast Vietnam into preferred shares, with the right to dividends. At an April shareholder meeting, Vuong, who has a 97.9 percent stake in VinFast through direct and indirect holdings, pledged to devote more to the firm.

The company stated that, with Vingroup and Vuong's support, VinFast is 'determined to secure independent capital to finance its operational needs, as a secondary means if efforts to seek external funding do not meet our expectations.'

Since its debut in 2017, VinFast has attracted more than USD 13.5 billion in funding from Vingroup, its affiliates and Vuong. Total investments in the EV maker will thus reach nearly USD 17 billion, including the new funding commitments. First, VinFast is concentrating on North America as its main market focus but has struggled selling and marketing its EVs beyond Vietnam.

VinFast reported a net loss of USD 773.5 million in the second quarter of 2024, marking a 27% increase from the prior quarter and a 40% rise compared to the same period last year. The company anticipates continued losses in the quarters ahead.

In July, VinFast paused its USD 2 billion manufacturing project in North Carolina, deferring construction until 2028 due to market uncertainties. Automakers, including VinFast, are bracing for potential shifts in U.S. policy under president-elect Donald Trump, which could impact EV tariffs and incentives.