VinFast, Vietnam’s struggling EV startup, secures additional $3.4B in funding from founder and parent company

Just a year after going public via a SPAC merger, Vietnam’s ambitious EV startup VinFast finds itself in turbulent waters, grappling with mounting losses and operational setbacks that are complicating its global expansion. Now, the Nasdaq-listed EV maker is looking to its founder and parent firm, Vingroup, to inject much-needed capital to keep its growth trajectory alive.

On Wednesday, VinFast announced it will receive 85 trillion dong ($3.35 billion) in new funding from Vingroup and its founder, Pham Nhat Vuong, by 2026—the year it hopes to reach profitability. According to the company’s statement, around 50 trillion dong ($1.97 billion) will be provided directly by Vuong.

Since launching in 2019, VinFast has rapidly expanded into global markets but continues to report rising losses amid softer demand and sector challenges. A subsidiary of Vingroup, Vietnam’s largest conglomerate, VinFast has partnered with top industry players like LG Chem, Gotion, Pininfarina, and ZF. The company’s team includes alumni from BMW, GM, Toyota, Hyundai, Porsche, Jaguar-Land Rover, and Volkswagen.

Pham Nhat Vuong, known as Vietnam’s first billionaire and wealthiest person, originally built his fortune with instant noodles before founding Vingroup. With operations spanning technology, real estate, healthcare, and more, Vingroup plans to lend up to $1.38 billion to VinFast by 2026 through its business activities, dividends, and potential divestments. The conglomerate also stated it will convert all current loans to VinFast into preferred shares with dividend rights.

Vuong, who owns 97.9% of VinFast through direct and indirect holdings, reaffirmed his commitment to the company’s future at an April meeting.

“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,” the company stated, as reported by Reuters.

Since 2017, VinFast has received $13.5 billion from Vingroup, its affiliates, and Vuong, bringing total funding to nearly $17 billion with the latest commitments.

VinFast’s main market is North America, where it faces challenges in selling and marketing its EVs outside of Vietnam. The company reported a $773.5 million net loss in Q2 2023, a 27% increase from Q1, and 40% higher than the same period last year. VinFast expects more losses in upcoming quarters.

In July, the startup postponed its $2 billion North Carolina manufacturing project to 2028, citing tough market conditions. Automakers are preparing for potential new U.S. tariffs and possible shifts in EV policy under President-elect Donald Trump.

We covered VinFast in August 2022 when the EV maker announced plans to hire 8,000 new employees to boost production capacity in response to growing demand.

Founded on August 8, 1993, Vingroup spans industries from tech to real estate and healthcare. In 2017, Vuong expanded into the automotive market, launching VinFast as a new venture to build and sell cars.