Vingroup, Vietnam’s largest private conglomerate, and its Chairman, Pham Nhat Vuong, announced a significant financial commitment to VinFast, the Vietnamese Nasdaq-listed electric vehicle maker.

Vingroup plans to lend VinFast up to 35 trillion Vietnamese dong ($1.4 billion) by the end of 2026, the company said in a statement on Tuesday.

Additionally, Vuong has personally pledged 50 trillion dong ($2.1 billion) in sponsorship.

In a separate move, Vingroup will convert all existing loans, about 80 trillion dong ($3.3 billion), to VinFast Vietnam into dividend-entitled preferred shares.

The support plan is designed to provide VinFast with sufficient financial resources to fund operations, investments, and other obligations.

The goal is to achieve the break-even point and cash flow balance by the end of 2026. However, VinFast remains committed to independently raising capital to meet its financial needs.

The support from Vingroup and Vuong will be utilized only if these independent efforts do not reach the expectation.

VinFast has concluded its initial investment phase, which includes the operation of a 300,000-vehicle-per-year manufacturing plant in Cat Hai, Hai Phong. The company has also completed research and development of its product line, and is shifting its distribution model from direct-to-consumer to dealership model.

VinFast is now in its growth phase, focused on boosting sales across all markets and optimizing its cost structure.

Vingroup’s support agreement is based on a careful assessment of the potential impact on its cash flow and profitability.

The goal is to maintain a balance between supporting VinFast and sustaining Vingroup’s own financial health. Once VinFast achieves profitability and financial independence, Vingroup expects to benefit from its investments.

By converting loans to VinFast totaling about 80 trillion dong into preferred equity shares of VinFast Vietnam, Vingroup aims to alleviate short-term financial pressure on the electric vehicle maker.

This move will allow Vingroup to maintain its stake in VinFast through dividend rights and the option to convert preferred shares into common shares of VinFast Vietnam Manufacturing and Trading Company or interests in VinFast Singapore.

The new loan of up to 35 trillion Vietnamese dong will be funded through the Vingroup’s business activities, dividends from subsidiaries, and, if necessary, the strategic divestment of certain investments and subsidiaries at a fair market value.

Vuong, as VinFast’s CEO and major shareholder, will personally sponsor 50 trillion Vietnamese dong. This personal commitment will not impact the interests of Vingroup or its shareholders.

This support decision was made in light of VinFast recently becoming the top-selling automotive brand in Vietnam and achieving positive results in the global market, affirming its potential for future growth.

In Vietnam market, VinFast has delivered over 51,000 electric vehicles in the first ten months of the year.

Internationally, VinFast continues to expand its business in the US, Canada, and Europe, while rapidly penetrating new markets such as the Middle East, Indonesia, the Philippines, and India.

Nguyen Viet Quang, Vice Chairman of the Board of Directors and CEO of Vingroup, shared, “To realize our vision of smart, eco-friendly electric vehicles, Vingroup will continue to invest significantly in VinFast. Our goal is to solidify VinFast’s market leadership in Vietnam and contribute to the global shift towards electric mobility.”

A representative of Vuong’s Office said: “With the passion to create a world-class Vietnamese electric car brand, Pham Nhat Vuong will allocate significant resources to propel VinFast’s advancement. The newly secured funding source provides VinFast with the necessary financial resources to achieve sustainable growth without relying on external capital.

This strategic move enables VinFast to prioritize research and development, production, and business expansion.

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