Vietnam’s biggest conglomerate Vingroup has doubled down on its electric vehicle business with an aim to expand globally. Meanwhile, the company faces growing financial risks stemming from loss-making unit VinFast Auto, whose rapid growth has hinged on sales to affiliated companies. This is set to continue this year, according to Reuters’ analysis of a recent securities filing and information provided by the firm, as it struggles to attract retail buyers and faces weakening global EV demand.
The findings also underscore the risks for parent Vingroup, as VinFast lost a combined USD 5.7 billion over the past three years. Vingroup’s share price has plunged 38% since VinFast’s US listing last August, and its borrowing costs have increased.
The carmaker received USD 11.4 billion of capital injections from Vingroup, its affiliates and the group’s billionaire founder Pham Nhat Vuong between its inception in 2017 and December 31, 2023, according to a U.S. Securities and Exchange Commission filing in late March.
Vingroup last month announced a USD 1.6 billion stake and asset sale in its retail unit Vincom Retail, one of its key profit engines alongside real estate subsidiary Vinhomes, which remains profitable but faces a challenging property market. Vingroup told Reuters a portion of the proceeds would go to VinFast, which it said has higher growth potential.
But struggling to penetrate even its home market, VinFast last year generated 82% of its USD 1.1 billion of vehicle sales from companies that are part of Vingroup or owned by Vuong, who is also VinFast’s CEO and effectively controls nearly 98% of the Nasdaq-listed EV maker.
Nearly all of the auto company’s retail sales in Vietnam were also aided by hefty discounts offered through a joint marketing campaign with Vinhomes. The extent of the company’s reliance on Vingroup companies for sales and financing have not been previously reported. Additionally, 70% of its vehicle deliveries last year went to Green SM (GSM), a taxi operator and leasing provider 95% owned by Vuong.
Last year, it sold 35,000 EVs, quite below its 50,000 target, which represented just a tiny fraction of its 300,000 vehicle production capacity at its factory in Haiphong. However, this year the company aims for 100,000 sales as it expands globally.