VinFast, a Vietnamese electric vehicle (EV) maker listed on the Nasdaq, is set to receive a capital boost of VND85tn ($3.35bn) from its founder and parent company, Vingroup, by 2026, reported Reuters.
This move comes as the company faces growing losses amidst an aggressive global market expansion.
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Approximately VND50tn ($1.97bn) of the new funding will come from VinFast’s founder, tycoon Pham Nhat Vuong, Reuter’s reported citing a company statement.
Vingroup, a major conglomerate in Vietnam, plans to provide up to $1.38bn to VinFast by the end of 2026 through various means, including activities, dividends, and potential divestments at acceptable prices if necessary.
In addition, Vingroup will convert all existing loans to VinFast Vietnam into preferred shares, entitling them to dividends.
Vuong, who directly and indirectly owns 97.9% of VinFast shares, reaffirmed his commitment to bolster investment in the automotive unit during a general meeting in April.
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By GlobalDataSince its establishment in 2017, VinFast has received capital injections totalling $13.5bn from Vingroup, its affiliates, and founder Vuong.
The new commitments are set to increase the total funding to nearly $17bn.
Despite targeting North America as its primary market, VinFast is facing hurdles in marketing and selling its EVs internationally.
However, its strategy of offering a diverse range of vehicles has proven successful in its domestic market. In September, VinFast delivered over 9,300 cars to Vietnamese customers, surpassing the second-largest automaker by 50%.
This achievement made VinFast the top-selling car brand in Vietnam for the month, the company said in its press statement.
“For the first time, a Vietnamese electric car brand has surpassed both domestic and international competitors to claim the top spot. This remarkable achievement comes just two years after VinFast’s full transition to electric vehicles.
“This strategy is expected to continue to help VinFast promote electrification globally, aligning with the company’s expanding global strategy,” the statement read.
The EV maker reported a net loss of $773.5m in the April-June period, marking a 27% increase from the first quarter and a 40% larger loss than the same period the previous year.
The company expects further losses in the forthcoming quarters.
