- VinFast will receive a total of $3.4 billion in funding from founder Pham Nhat Vuong and parent company Vingroup.
- This money will be used to cover losses and support the company’s global expansion plans.
What happened
The Nasdaq-listed electric vehicle manufacturer VinFast announced on Wednesday, November 13, that it will secure a new round of funding from its founder and parent company Vingroup by 2026. The funding is worth 85 trillion Vietnamese dong (approximately $3.35 billion). VinFast expects to reach breakeven by that time.
According to the company’s statement, approximately 50 trillion Vietnamese dong (around $1.97 billion) of the new funding will come from VinFast’s founder, businessman Pham Nhat Vuong. Meanwhile, Vingroup, one of Vietnam’s largest conglomerates, plans to provide up to $1.38 billion in loans to VinFast by the end of 2026, through its operations, dividends, and possible liquidation. The company stated that it can convert this into preferred shares with dividend rights if necessary, at an acceptable price.
VinFast stated, “VinFast remains committed to raising independent funding to meet its financial needs. Support from Vingroup and Vuong will only be used if these independent efforts fall short of meeting the demand”.
Also read: Vietnam EV Maker VinFast To Get $3.5 Bn In New Funding
Also read: Rivian Jumps On Expanded Volkswagen Joint Venture; VW EVs As Early As 2027
What it’s important
This event also highlights the complexities and immense challenges faced by Asian electric vehicle companies in expanding into global markets. Many startups continue to struggle with high production costs and uncertain market demand in their operations.
VinFast has strong financial backing, though. But it is still dealing with issues such as slowing demand in the US market and rising production costs. In comparison, Chinese electric vehicle companies like NIO and Xpeng face similar difficulties. Despite receiving substantial financial support, these companies often encounter regulatory challenges and brand recognition barriers when expanding into international markets.
People can also see this in the experiences of other smaller electric vehicle companies like Rivian. While Rivian attracted significant investment and attention during its IPO, it has yet to achieve profitability and continues to adjust its strategy in response to production bottlenecks and cost pressures.
For readers, this event serves as a reminder that even well-funded companies in the rapidly growing electric vehicle industry may face significant risks and uncertainties.
