Up To $2.5 Billion Now Available To Fund VinFast’s Expansion Plans
VinFast will have access to $2.5 billion to fund its growth in the global market, now that it has successfully launched several cars in the global and domestic markets. The money will come from the personal funds and assets of Vietnamese billionaire and Vingroup chaiman Pham Nhat Vuong, who is reported to have a net worth of $4.1 billion.
In a press statement directly from the office of the Vingroup chairman, Vuong “intends to contribute $1 billion and $500 million USD respectively by way of non-refundable grants, and Vingroup may loan up to a further 1 billion USD to VinFast with a maximum tenor of five years. The 1 billion from Mr. Pham Nhat Vuong will be donated within the next year.”
The statement was jointly released by the Vingroup Joint Stock Company, which further stated that the purpose of the funding was to “energize VinFast during the pivotal acceleration period to create a mark of Vietnam in the world’s electric vehicle market.”
The “donations” will be used for the further development of current and future models, setting up to sales and service facilities worldwide, add to the resources which can be allocated to projects in North America — most notably, the VinFast plant in North Carolina — as well as manufacturing facilities intended in Europe.
VinFast said Vingroup had issued support letters to the effect that “Vingroup has the ability and will continue to provide financial support sufficient to meet our needs for continued operation.” The document also said that VinFast will “require significant additional capital,” expected to come via debt and equity financing and related-party financing.”
“The grant and loan of $1.5 billion is Vingroup’s additional capital contribution for the breakthrough development of VinFast in the future. This is also once-in-a-lifetime opportunity for the development of Vietnam’s industry. We call on everyone to support and build a world-class Vietnamese brand,” Nguyen Viet Quang, CEO of Vingroup said.
Interestingly, a few months ago, a Bloomberg report directly quoting VinFast CEO Le Thi Thu Thuy said that Vingroup Chairman Pham Nhat Vuong had no intentions of investing his personal money into Vinfast. That quotation is said to have been misinterpreted in the light of the company’s financial reports to the US Securities and Exchange Commission as the company was preparing for a planned initial public offering.
According to another report, the Vietnamese car maker lost $1.3 billion in 2021 and close to $1.5 billion in by the end of September 2022, prompting lay-offs in the US. VinFast officials didn’t deny the reported losses, but clarified that figures reported in December to the SEC meant investments were made and money was being used, thus the company expects to continue to incur operating and net losses as it progresses.
Thuy, who is also the Vingroup vice-chairwoman, told CleanTechnica in an earlier interview that the report that the company fired employees in the US was misconstrued, and it was merely a reconfiguration of the businesses as dealerships and offices were realigned.
The decision to further fund VinFast operations was reached due to its “remarkable progress in the global market, as it continues to achieve its production and business development targets.”
“The growth potential of VinFast has been demonstrated in the past five years. This is a pivotal period for VinFast to accelerate towards a solid competitive position in the world’s electric vehicle market. As the parent corporation of VinFast, Vingroup is providing support to enable VinFast to continue its development and secure its future,” Quang added.
In Vietnam, VinFast has established itself as a popular car brand, but it has not considered labeling itself as a national car brand, like Malaysia did with Proton. This is because VinFast, as a privately owned company within the political structure of Socialist Republic of Vietnam, does not receive direct government subsidies, but is fully supported by the central government by way of tax perks and incentives to increase its presence domestically and internationally.
Internationally, VinFast is steadily making progress into new markets, receiving positive feedback, and gaining popularity. Following the export of its second batch of cars to the US and Canada in April 2023, VinFast’s electric vehicles are anticipated to be launched on the streets of France, Germany, and the Netherlands later this year.
“To build a national brand that can compete in the international market is particularly difficult, challenging, and even requires sacrificing immediate benefits…The success of VinFast will promote the development of Vietnam’s industry and technology while actively contributing to the global green transformation,” a representative of Vingroup Chairman Pham Nhat Vuong shared.
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