Mr. Pham Nhat Vuong announced that he would not let go of VinFast and used his own money to inject another billion USD

Vietnam’s richest billionaire Pham Nhat Vuong said on April 25 that he plans to invest another billion USD from his assets in VinFast, even though this electric car manufacturing company is losing money.

Speaking at the annual shareholders’ meeting of Vingroup, the group of which he is chairman and directly owns 18% of the shares, Mr. Vuong expressed his intention to increase investment in VinFast.

By the end of last year, Mr. Vuong and VinGroup had poured $11.4 billion into VinFast, according to Reuters.

“I confirm that Vingroup has no intention of letting go of VinFast. After sponsoring one billion USD, I will continue to arrange to sponsor at least another billion USD,” the billionaire said but did not mention a specific timeline.

Last month, VinGroup announced the sale of shares and assets worth $1.6 billion in retail unit Vincom Retail, one of the group’s main profit generators. Vingroup said that part of the proceeds from this will be transferred to VinFast, a subsidiary that the company says has higher growth potential.

Previously, at the end of 2023, Mr. Vuong donated 99.8% of the shares of VinES Energy Solutions Company – a company with capital of VND 6,500 billion – to VinFast, along with the one billion USD he gave to the electric car company before. there.

Vingroup also provided VinFast with a non-refundable grant of 500 million USD and a loan of 1 billion USD for a maximum period of 5 years.

In the next three years, Mr. Vuong said he will personally invest 10,000 billion VND to build charging stations in Vietnam.

Mr. Pham Nhat Vuong is the CEO of VinFast, a company in which he owns 97% of the shares directly and through the companies he owns.

VinFast’s share price fell to $2.50 from its initial listing at $10 in August 2023, as the company failed to meet its sales target last year and continued to post heavy losses.

When asked when VinFast will break even and cover accumulated losses, Mr. Vuong stated that from 2026, VinFast will have positive cash flow.

Currently, records show that more than 70% of the 35,000 VinFast cars sold in 2023 belong to the GSM electric taxi company, owned by Mr. Vuong. The remaining 10% belongs to Vingroup and its affiliated units.

Meanwhile, GSM itself is also facing high costs while trying to expand the ride-hailing service market in Vietnam and abroad.

Also on the rare occasion of being able to discuss directly with Mr. Vuong, some shareholders raised the issue of “market doubts about Vingroup’s cash flow”, Mr. Vuong replied that doubts about cash flow and capacity the corporation is “unfounded”.

According to Mr. Vuong, “up to this point, Vingroup has never been behind banks by a penny in interest, let alone principal. All financial plans are balanced and seriously implemented, even though it is very difficult.”

In a recent article, Reuters news agency said that VinFast has lost a total of 5.7 billion USD in the past three years and this situation increases the pressure on Vingroup, making investors in Vingroup worried.

In the first quarter of 2024, VinFast lost more than 600 million USD despite the number of cars sold and revenue increasing, according to the company’s latest unaudited report.

With VinFast losing money, Vingroup’s net profit margin nearly halved last year to 1.2%.

In an investigation by independent intelligence analyst Blake Spendley, an influential person on social network VinFast, both domestically and internationally.

VinFast is facing difficulties even in the domestic market. Up to 82% of VinFast’s total revenue of 1.1 billion USD from car sales comes from companies belonging to Vingroup or owned by Mr. Vuong.

According to satellite images, there are hundreds of VinFast electric cars lying covered in dust and weeds growing in a field in Thai Nguyen and along the Ho Chi Minh – Long Thanh – Dau Giay highway.

However, voices criticizing VinFast seem to be monitored and suppressed in Vietnam. Domestic newspapers had to delete articles when they published news about a VinFast gasoline car catching fire in Hanoi, or a YouTuber who was invited to work by the police for criticizing VinFast, and negative posts about the police. company seems to have completely disappeared online.

Also according to satellite images posted by Hunterbrook Media, the construction of VinFast’s electric vehicle factory in the US has had very little progress, except for the foundation on a land area of ​​more than 300 hectares in Chatham County, North Carolina after the ceremony. Grand groundbreaking in July 2023.

Meanwhile, Hyundai’s factory in Georgia already has a roof and floor, as well as exterior walls. Both companies initially planned to have their facilities operational by 2025 – but Hyundai’s timeline has been accelerated, and VinFast’s has been pushed back.

Despite its ambitions to expand in the US market, VinFast has received it disastrous reviews about electric vehicles from automotive media channels when launched here.

Motortrend titled their review “Test Drive VinFast VF8 2023 for the First Time: Return to Sender” (Return to Sender), Road & Track, “Test Drive VinFast VF8 2023 for the First Time: Impossible Unacceptable” (Unacceptable) and Inside EVs, “Review of test driving VinFast VF8 2023 for the first time: Yikes” (Shocked by horror).

Besides bad reviews, VinFast is facing a series of legal troubles in the US.

ArcelorMittal, one of the largest multinational steel manufacturing corporations in the world, has filed a lawsuit against VinFast in the Central District Court of California on April 16, accusing the company of not purchasing the tempered aluminum-plated steel produced by this group from genuine suppliers.

VinFast on April 23 affirmed that “the company’s top principles are compliance with the law” and “intellectual property rights for goods and services provided” in a statement sent to BBC News Vietnamese.

Previously, on April 12, Pomerantz Law Firm announced that a class action lawsuit against VinFast was filed in the United States District Court in the Eastern District, New York.

At the same time, Robbins Law Firm – full name is Robbins Geller Rudman & Dowd LLP, headquartered in San Diego, California, USA – is also in charge of a class action lawsuit against VinFast.

Responding to BBC News Vietnamese, the Vietnamese electric vehicle company said this accusation against them was “baseless”.

VinFast is also facing difficulties common to the entire electric vehicle industry. Demand in the US has slowed significantly, while globally, China is aggressively exporting electric vehicles at low prices.

Industry leader Tesla has just announced a sharp decrease in profits in the first three months of 2024 to 1.13 billion USD compared to 2.51 billion USD in 2023. Billionaire Elon Musk’s company also laid off more than 10% of its staff. .

But instead of slowing down and re-evaluating its plans like its competitors, VinFast even did the opposite.

The company said it will deliver 100,000 vehicles worldwide by 2024, more than doubling 2023 sales, while expanding to 50 countries. VinFast said it expects to sell 750,000 vehicles a year by 2026, with the help of its North Carolina factory.

Despite the increasing financial risks to parent corporation VinGroup due to the loss of its subsidiary VinFast, billionaire Pham Nhat Vuong said he believes that VinFast is following the right development trend.

“The future of Vingroup is VinFast, and we are on the right track,” Mr. Vuong asserted.

Vietnam’s richest billionaire affirmed that he and Vingroup will put all their efforts into VinFast. “Like 70 years ago when carrying out the historic Dien Bien Phu campaign, we had the slogan “all for the front line, all for victory”, VinFast is the same. We never let go of VinFast, This is not just a business story,” Mr. Vuong emphasized.

The owner of Vingroup also said that he is carrying out procedures to list the Vinpearl hotel unit this year. In addition, taxi and electric car rental company GSM is also planning to list on the international market if conditions allow.

In 2024, Vingroup sets a record net revenue target of 200,000 billion VND, an increase of 24% compared to 2023. Profit after tax is 4,500 billion VND, more than double the previous year.

The group said that this year it will continue to promote business activities to strengthen three main pillars: technology – industry, trade and services, and social charity.