VinFast electric vehicles are parked before delivery to their first customers at a store in Los Angeles, March 1, 2023.
Lisa Baertlein | Reuters
Nasdaq-listed electric vehicle maker VinFast said on Wednesday it will get a fresh round of funding worth $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 $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 utilized 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 totaling $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.