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VinFast facing challenges penetrating overseas markets

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VinFast committed to raising independent capital

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Parent firm, founder have so far provided $13.5 bln to

VinFast

Nov 12 (Reuters) - Nasdaq-listed electric vehicle maker

VinFast said on Wednesday it will get a fresh round of

funding worth 85 trillion dong ($3.35 billion) from its founder

and its parent firm, Vingroup by 2026, when it expects

to break even.

VinFast began operations in 2019 and has been expanding

aggressively into global markets, but the firm continues to

report increasing losses as it grapples with softer demand and

challenges in the sector.

Approximately 50 trillion dong ($1.97 billion) of the new

funding is expected to come from VinFast's founder, tycoon Pham

Nhat Vuong, according to a company statement.

Vingroup, one of Vietnam's largest conglomerates, intends to

lend up to $1.38 billion to VinFast by the end of 2026 through

its activities, dividends, and possible divestment, which it

said may be conducted at an acceptable price if necessary.

Additionally, Vingroup will convert all existing loans to

VinFast Vietnam into preferred shares with dividend

entitlements, it said.

Vuong, who owns 97.9% of VinFast shares both directly and

indirectly, gave assurances of his commitment to increase

investment in the automotive unit during a general meeting in

April.

"VinFast remains committed to raising independent capital to

meet its financial needs. The support from Vingroup and Vuong

will be utilised only if these independent efforts fall short,"

VinFast said in the statement.

Since its inception in 2017 up until June this year, VinFast

has received capital injections totalling $13.5 billion from

Vingroup, its affiliates, and founder Vuong, according to a

company filing in late October.

The new commitments would boost total funding to nearly $17

billion.

VinFast, with North America as its primary market, has said

it is facing challenges in marketing and selling its EVs in

international markets outside of Vietnam.

The EV maker recorded a net loss of $773.5 million in the

April-June period, a 27% increase from the first quarter and

loss 40% bigger than that of the same period last year. It

anticipates further losses 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 preparing 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)