VinFast to receive significant financial aid from Vingroup

VinFast has secured significant financial support from Vingroup.

The electric vehicle maker is expected to get around $1.4 billion (approximately P82.167 billion) by the end of 2026 from its mother company.

Aside from that, Vingroup Chairman Pham Nhat Vuong directly pledged $2.1 billion (around P123.256 billion) in sponsorship to the car brand.

Per VinFast, Vietnam’s largest private conglomerate will convert all $3.3 billion (P193.689 billion) worth of existing loans to VinFast Vietnam into dividend-entitled preferred shares.

The Vietnamese automaker said that the conglomerate’s financial support plan will give “sufficient financial resources to fund operations, investments, and other obligations” and reach the break-even point and cash flow balance by the end of 2026. 

However, despite the guaranteed assistance, VinFast said that the aid from Vingroup and Vuong will only be used “if these independent efforts do not reach the expectation.”

According to the car manufacturer, its initial investment phase — which includes the operation of a 300,000-vehicle-per-year manufacturing plant in Cat Hai, Hai Phong — is already complete.

Additionally, research and development of its product line has already been finalized as well and is shifting its distribution model from direct-to-consumer to dealership model. “VinFast is now in its growth phase, focused on boosting sales across all markets and optimizing its cost structure,” the company shared in a statement.

VinFast noted that by turning the loans amounting to around P185.175 billion into preferred equity shares, Vingroup aims to relieve short-term financial pressure on the electric vehicle marque.

The new loan of up to P81.012 billion will be funded through the Vingroup’s business activities, dividends from subsidiaries, and, if necessary, the strategic divestment of certain investments and subsidiaries at a fair market value.

VinFast’s chief executive officer (CEO) and a major shareholder, Vuong will personally sponsor P115.732 billion, which is a commitment that will not impact the interests of Vingroup or its shareholders.

In its home country, VinFast was able to sell more than 51,000 electric vehicles in the first 10 months of 2024.

“Vingroup is unwavering in our commitment to a sustainable future. This green vision guides every aspect of our operations. VinFast’s ascent to the top of Vietnam’s automotive market is a testament to our capabilities. This milestone propels us forward, fueling our ambition to accelerate growth. To realize our vision of smart, eco-friendly electric vehicles, 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,” Vingroup Vice Chairman of the Board of Directors and CEO Nguyen Viet Quang was quoted as saying.

Last June, Vingroup already gave the assurance that VinFast will receive steady backing from Vuong and will continue until he “runs out of money.”

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