VinFast, the Vietnamese car maker, has released its unaudited financial report for the third quarter of 2023, revealing impressive growth in revenue. The company’s revenue has surged by 159% year-over-year, reaching $343 million. This increase in revenue can be attributed to the strong sales of VinFast’s electric vehicles (EVs) in Vietnam.
The positive financial performance has given VinFast the confidence to expect additional grants from its parent company Vingroup, amounting to VND29,000 billion (US$1.2 billion). Moreover, capital infusions from VinFast Chairman Phạm Nhật Vượng and two key shareholders are also anticipated in the next six months.
According to a trusted source at VinFast, the company delivered 10,027 EVs in the third quarter of 2023, representing a 5.2% increase from the previous quarter. Encouraged by these strong results, VinFast is now considering the establishment of manufacturing facilities in Asia.
Expanding Global Manufacturing and Establishing CKD Facilities
With its optimized capital expenditure plan, VinFast is projected to save approximately $400 million in global manufacturing costs for 2024 and 2025. This presents an opportunity to allocate these savings towards constructing completely-knocked-down (CKD) car assembly factories in Indonesia and India. These countries, respectively the most populous in Southeast Asia and the third largest auto market globally, offer attractive government incentives, relief from certain tariffs and taxes, and access to raw materials at favorable rates.
The selected CKD facilities in Indonesia and India have a targeted total capacity of up to 50,000 cars per year for the first phase, with an estimated total capital expenditure ranging from $150 million to $200 million. Production is expected to commence by 2026.
Establishing Broad Distribution Channels
VinFast aims to establish broad distribution channels by leveraging local networks and cooperating with third-party dealerships and distributors. This strategy is intended to expand the company’s market coverage in a growing list of target markets.
For the United States, VinFast’s approach involves partnering with dealerships to increase consumer access to a wider range of states. As of September 30, 2023, the company has received Applications/Letters of Intent (LOIs) from 27 dealers, encompassing over 100 open points across 12 states, including Florida, Texas, North Carolina, Virginia, and more.
Strong Financial Performance, Increased Expenses, and Net Loss
According to the financial information submitted to the US Security and Exchange Commission (SEC), VinFast’s expenses in the third quarter of 2023 soared to $623 million, marking a 175% increase compared to the previous year. This rise in expenses can be attributed to higher costs of goods sold, research and development (R&D) expenditures, and selling, general, and administrative (SG&A) expenses. Costs of goods sold increased by 190% due to the growth in EV sales. R&D expenses increased by 180% as VinFast continued investing in new EV technologies. SG&A expenses rose by 160% due to the expansion of the company’s sales and marketing operations.
Consequently, VinFast recorded a net loss of $280 million in the third quarter of 2023, marking a 33.7% increase from the previous year. The increase in expenses offset the growth in revenue. As of September 30, 2023, VinFast had $2.5 billion in cash and cash equivalents, $5.3 billion in total assets, $2.8 billion in total liabilities, and net equity of $2.5 billion.
Healthy Cash Flow Performance
Although VinFast experienced a net loss, its cash flow statement for the third quarter of 2023 showcased robust performance. The company generated $100 million from operating activities, $200 million from investing activities, and $500 million from financing activities. Consequently, VinFast’s net cash flow for the third quarter of 2023 reached $800 million.
