The global automotive industry is challenging, competitive and expensive, and the market is full of consumers loyal to brands that have been around for at least a century. It is not easy to enter this industry as a new car manufacturer, and that is why some young companies, such as Fisker, did not make it for the long term and closed their doors.
The good news for those intrigued by the young Vietnamese electric vehicle (EV) manufacturer, VinFast Auto, (VFS 2.82%) is that it has a very massive difference from Fisker – a massively rich backer.
What is up?
First, it is important that we briefly cover why VinFast is unique. While VinFast is a pure-play EV manufacturer with a dominant position in Vietnam and global expansion ambitions, it is a subsidiary of Vingroup JSCone of the largest conglomerates in Vietnam, with its hands in technology, real estate, retail, healthcare, among other industries. Vingroup not only has an interest in its successful subsidiary VinFast, but also sells products such as VinFast vehicles to its sister business that operates fleets of EV taxis.
However, as the young company continues to burn through cash, its rich backer is needed again. VinFast will receive funding valued at approximately $3.35 billion from its founder and also from its parent company, Vingroup, from 2026 – the year it anticipates its balance of operations. About $1.97 billion of the new capital came from VinFast’s founder, Pham Nhat Vuong, who owns nearly 98% of VinFast’s shares either directly or indirectly.
In a press release, the vice chairman of the board of directors and CEO Nguyen Viet Quang said
Vingroup is steadfast in our commitment to a sustainable future. This green vision guides every aspect of our operations. VinFast’s rise to the top of Vietnam’s automotive market is a testament to our capabilities. This milestone pushes us forward, fueling our ambition to accelerate growth.
The next steps
VinFast currently has some momentum thanks to its home market. In Vietnam, the EV manufacturer delivered more than 51,000 EVs during the first 10 months of 2024 and surpassed foreign automakers to become the first EV manufacturer to sell traditional gasoline vehicles in the country.
VinFast has been busy taking baby steps all over the place, but has essentially concluded its investment phase, which included operating a 300,000-vehicle-per-year manufacturing plant. The company has also concluded the research and development of its product line, and has changed its distribution from the right to consumption to a concession model and launching shipments overseas.
The goal of this round of financing is to give VinFast enough financial resources to finance operations, investments and other obligations through its break-even point at the end of 2026. The expansion in Europe and North America will be challenging, competitive and expensive. but the reason VinFast won’t be the next Fisker is because it has a very rich and very dedicated following, and that’s exactly what a young EV maker needs as the world moves away from gasoline-powered vehicles.
Since its creation in 2017 until the last round of financing, Vingroup, affiliates, and its founder Vuong have injected capital valued at about $13.5 billion, a figure that jumps to almost $17 billion when including the last round of funding. VinFast won’t be the next Fisker, but the bigger question is: can the company really break even by the end of 2026? Stay tuned. The next two years will be massive for VinFast’s ability to become a more compelling long-term investment.