Vietnamese automaker VinFast's founder pours billions into an EV startup – will it be worth it?
VinFast has hit a few bumps in the road.
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The backstory: In case you didn't know, Pham Nhat Vuong is the richest guy in Vietnam, with a net worth of roughly US$3.9 billion. He started out with a company that sold noodles and mashed potatoes in Ukraine, and then he sold that business to Nestle in 2010. But that wasn't the end of his entrepreneurial journey.
In 2017, Vuong founded VinFast, the first domestic automaker in Vietnam. The company wants to make a big splash in the electric vehicle (EV) market and is planning to expand into the US. In fact, its main goal is to tap into the US market. So last year, it officially said goodbye to gas-powered cars and went all-in on EVs.
More recently: VinFast has hit a few bumps in the road. For example, three top execs all jumped ship earlier this year, and it had to push back last year’s initial public offering (IPO) debut in the US to 2023 because of supply chain issues and a shaky market. It also reported a US$2.1 billion loss in 2022, according to its IPO filing. It's a bummer, especially since Vingroup (Vuong’s conglomerate and VinFast’s parent company), lenders and other investors have pumped about US$8.2 billion into the startup so far.
The development: But Vuong is a true believer in VinFast’s future. He put a massive US$2 billion of his own money into the company in 2019. And just this year, Vuong and Vingroup put in another US$2.5 billion, with US$1 billion of that coming straight from Vuong's pocket. It's not totally clear what Vuong has planned for VinFast's future, but according to Vingroup, he's got his sights set on keeping the company going strong.
Key comments:
“The additional $2.5 billion in funding and loans will create more resources to promote and facilitate VinFast to accelerate development so that it can quickly achieve its growth goals on a global scale,” said the car company’s parent Vingroup in a statement.
“Our ultimate goal is to create an international brand,” said the billionaire Pham Nhat Vuong in an interview at the Hanoi headquarters of Vingroup. “It will be a very difficult road and we will have to put in a lot of effort. But there’s only one road ahead.”
“We have been watching the intensity of the market and I think this year, the market has been a little bit better. We are ready but we need the market to be more cooperative for us to make the IPO happen,” said Le Thi Thu Thuy, VinFast CEO, to CNBC in February.
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