EV deliveries were 10,027 in the third quarter of 2023, representing an increase of approximately 5.2% from the second quarter of 2023. We started to see a sales increase in September in North America, particularly in Canada.
E-scooters deliveries were 28,220 in the third quarter of 2023, representing an increase of approximately 177.2% from the second quarter of 2023 and an increase of approximately 112.9% from the third quarter of 2022.
As of September 30, 2023, the Company had 126 showrooms globally for EVs and 247 showrooms and service workshops for e-scooters, including VinFast showrooms and dealer showrooms.
Financial Highlights for the Third Quarter of 2023
Vehicle sales were VND7,697,601 million (US$319.5 million), representing an increase of 185.2% from the third quarter of 2022 and an increase of 2.8% from the second quarter of 2023.
Total revenues were VND8,254,306 million (US$342.7 million), representing an increase of 159.3% from the third quarter of 2022 and an increase of 3.8% from the second quarter of 2023. Total revenues are primarily comprised of revenue from EV sales.
Gross loss was VND2,467,661 million (US$102.4 million), representing a decrease of 28.4% from the third quarter of 2022 and a decrease of 9.1% from the second quarter of 2023.
Gross margin was negative (29.9%), compared to negative (108.2%) in the third quarter of 2022 and negative (34.1%) in the second quarter of 2023.
Loss from operations was VND8,922,454 million (US$370.4 million), representing a decrease of 9.2% from the third quarter of 2022 and a decrease of 3.3% from the second quarter of 2023.
Net loss was VND15,003,845 million (US$622.9 million), representing an increase of 33.7% from the third quarter of 2022 and an increase of 19.7% from the second quarter of 2023.
Cash and cash equivalents were VND3,154,673 million (US$131.0 million) as of September 30, 2023.
1
Includes VF e34, VF 5, VF 8, VF 9 and e-bus
Key Financial Results for the Third Quarter of 2023
(in VND millions, except for percentages and basis points ("bp"))
2023 Q3
2023 Q2
2022 Q3
QoQ
YoY
Vehicle Sales
7,697,601
7,487,874
2,699,158
2.8 %
185.2 %
Total Revenues
8,254,306
7,952,531
3,182,774
3.8 %
159.3 %
Gross Loss
(2,467,661)
(2,714,622)
(3,444,637)
(9.1 %)
(28.4 %)
Gross Margin
(29.9 %)
(34.1 %)
(108.2 %)
424bp
7833bp
Loss from Operations
(8,922,454)
(9,230,423)
(9,825,614)
(3.3 %)
(9.2 %)
Net Loss
(15,003,845)
(12,535,202)
(11,223,262)
19.7 %
(33.7 %)
Recent Business Updates
Launch of the VF 6 in Vietnam
On September 29, 2023, VinFast officially introduced its B-segment EV model in Vietnam. The VF 6 is designed by Torino Design and equipped with a wide range of smart features and ADAS Level 2 capabilities. With a reasonable price point, the VF 6 is targeted towards young families.
The VF 6 is offered in two trims (Base and Plus) at a starting price of VND675 million (approximately US$28,000) for the Base trim and VND765 million (approximately US$31,800) for the Plus trim, excluding the battery. The expected WLTP driving range is 248 miles and 237 miles for the Base and Plus trims, respectively.
VinFast will start taking orders for the VF 6 in Vietnam on October 20, 2023.
Concrete steps to execute on VinFast's new business model
As unveiled last quarter, VinFast is establishing broad distribution channels, leveraging local networks and the expertise of third-party dealerships and distribution to increase coverage in our expanding list of target markets. We aim for our vehicles to be present in up to 50 global markets and countries by the end of 2024.
In the U.S., this approach is intended to provide increased consumer access to substantially more states, as compared to a direct-to-customer model. Through the end of September 30, 2023, VinFast has received Applications/Letters of Intent (LOIs) from 27 dealers with more than 100 open points across 12 states in the U.S, including Florida, Texas, North Carolina, Virginia, Louisiana, New Jersey and Arkansas, among others.
To support our dealership partners in growing their store network in the early stage of partnership, VinFast might consider transferring some of our existing showrooms to our dealers.
VinFast continues to maintain and promote its best-in-class after-sales policy in the market. VinFast's local partners in new distribution markets are expected to support the policy and continue to provide a high standard of service for customers and buyers.
Leveraging local distributors in many of these key markets can offer a capital-light model for expansion that can allow VinFast to be more efficient about capital usage and costs.
Use of discretionary capital expenditures for optimal market expansion
VinFast has optimized its capital expenditure plan for global manufacturing in 2024 and 2025, which is expected to save approximately US$400 million, compared to earlier guidance. These savings are expected to be used towards building CKD factories in Indonesia, the most populous country in Southeast Asia, and India, the third largest auto market in the world, according to Nikkei Asia.
VinFast aims to access the tremendous potential for increased EV adoption in India and Indonesia where EV penetration is currently only 1%, according to Business Standard and Reuters. The establishment of VinFast facilities in these local markets can provide access to government incentives for local manufacturing, relief from certain tariffs and taxes and access to raw materials at attractive rates.
Each CKD facility in Indonesia and India has a planned total capacity of up to 50,000 cars per year and an estimated total capital expenditure of US$150 million to US$200 million in phase 1. Production is expected to commence by 2026.
Chairman and Vingroup support commitment
In April 2023, VinFast entered into a capital funding agreement (as amended from time to time, the "Capital Funding Agreement") that provides a framework for VinFast to receive up to VND60,000 billion (US$2.5 billion), consisting of VND24,000 billion (US$1 billion) in grants from its Chairman, Mr. Pham Nhat Vuong, and VND24,000 billion (US$1 billion) in loans and VND12,000 billion (US$0.5 billion) in grants from Vingroup to facilitate VinFast's ongoing growth. The Chairman's commitment could be provided as a grant from two of VinFast's key shareholders that are controlled by the Chairman. Disbursements were and are subject to the parties agreeing to enter into a definitive loan agreement, the financial resources of the Chairman, the relevant VinFast shareholders and Vingroup and necessary approvals from the relevant governing bodies of Vingroup.
As of September 30, 2023, Vingroup had disbursed approximately VND23,000 billion (US$955 million) in loans to VinFast in accordance with the Capital Funding Agreement. VinFast expects to receive up to VND12,000 billion (US$0.5 billion) in grants from Vingroup in the next six months.
In September 2023, Chairman Pham Nhat Vuong disbursed a total amount of VND7,000 billion (US$291 million) to VinFast as a free grant in accordance with the Capital Funding Agreement.
The Company will receive all of the proceeds from the sale from time to time of up to approximately 46 million ordinary shares by two of VinFast's key shareholders that are controlled by the Chairman, net of any sales commissions, fees and expenses, brokerages, taxes and legal costs. If the sum of such proceeds and the aforementioned VND7,000 billion (US$291 million) contribution by the Chairman is more than VND24,000 billion (US$1 billion), VinFast will receive the surplus amount from the two key shareholders as a further grant on behalf of the Chairman.
Overall, VinFast expects to receive up to VND29,000 billion (US$1.2 billion) or more in grants from Vingroup, the Chairman and two key shareholders in the next six months.
New equity funding
In the third quarter of 2023, the Company received approximately US$240 million from its deSPAC transaction and a private strategic investment by Gotion Inc.
Expansion of North America charging network
VinFast currently has over 107,000 charging points enabled on our platform in North America, an increase of 10,000 compared to the previous quarter. This number is expected to grow as the company partners with new charging operators, and as VinFast's current partners invest in their own network growth.
VinFast customers currently have access to 90% of DC fast chargers available in the public network (excluding Tesla's). VinFast customers can benefit from a broad charging network with a promise of convenience and reliability.
VinFast plans to add new charging operators in California and Washington to its network and is in discussions on potential NACS adoption.
Management Commentary
Madam Thuy Le, Global Chief Executive Officer of VinFast, said: "This is the first quarter that VinFast was listed on the Nasdaq and complies with reporting and disclosure standards required for foreign companies listed in the U.S. We have inspirational and ambitious plans to build a greener future for everyone. The successes achieved in the past two quarters are just the first stepping stone. We have come up with a concrete action plan to deliver on each growth milestone and to accelerate our global expansion."
Mr. David Mansfield, Chief Financial Officer, added, "We see strong momentum in our business, supported by growing delivery volumes, increased revenues, and an improved path to profitability. We are focused on our cost cutting initiatives, optimizing return on capital invested, and switching towards a capital-light distribution model. VinFast is on track to meet its deliveries guidance and is well-positioned to expand in strategic markets such as Indonesia and India. We received significant funding in the third quarter from Vingroup and Chairman Pham Nhat Vuong and will continue to look for opportunities to strengthen our strong balance sheet to support growth and achieve further success."
Financial Results for the Third Quarter of 2023
Revenues
Total revenues were VND8,254,306 million (US$342.7 million), representing an increase of 159.3% from the third quarter of 2022 and an increase of 3.8% from the second quarter of 2023.
Vehicle sales were VND7,697,601 million (US$319.5 million), representing an increase of 185.2% from the third quarter of 2022 and an increase of 2.8% from the second quarter of 2023. The increase in vehicle sales over the third quarter of 2022 was mainly due to a significant increase in EV and e-scooter sales volume in Vietnam in the third quarter of 2023, including the VF e34, VF 8, VF 5, VF 9, and the Feliz and Evo. This increase over the third quarter of 2022 was partially offset by phasing out production of ICE vehicles in furtherance of our plan to fully transform into a pure EV player, which resulted in minimal revenue from sales of ICE vehicles in the third quarter of 2023.
Cost of Sales and Gross Margin
Cost of sales was VND10,721,967 million (US$445.1 million), representing an increase of 61.8% from the third quarter of 2022 and flat versus the second quarter of 2023. The increase over the third quarter of 2022 was primarily attributable to increases in the cost of vehicles sold as the Company delivered more EVs and e-scooters to customers in the third quarter of 2023. This increase was partially offset by a decrease in the total cost of ICE vehicles sold, due to the decrease in ICE vehicle sales volume in furtherance of our plan to fully transform into a pure EV player and a decrease in accelerated amortization and depreciation expenses due to the ICE production phase out.
Gross loss was VND2,467,661 million (US$102.4 million), representing a decrease of 28.4% from the third quarter of 2022 and a decrease of 9.1% from the second quarter of 2023.
Gross margin was negative (29.9%), as compared to negative (108.2%) in the third quarter of 2022 and negative (34.1%) in the second quarter of 2023. The improvement of gross margin over the third quarter of 2022 was mainly attributed to a strong increase in sales volume and a decrease in charges to write down the carrying value of inventories. The improvement of gross margin over the second quarter of 2023 was due to lower sales volume to VinFirst customers, who were entitled to more incentives, and better economies of scale resulting from a strong increase in sales volume of e-scooters.
Operating Expenses
Research and development (R&D) costs were VND3,167,066 million (US$131.5 million), representing a decrease of 11.9% from the third quarter of 2022 and a decrease of 12.3% from the second quarter of 2023. The decrease over the third quarter of 2022 and the second quarter of 2023 was mainly attributed to the decrease in R&D costs paid to external suppliers (including taxes on expenses paid out to suppliers) and other costs related to our R&D activities for EVs as we brought three EV models into commercial production in the last four quarters.
Selling, general and administrative expenses were VND2,763,436 million (US$114.7 million), representing an increase of 43.4% from the third quarter of 2022 and flat versus the second quarter of 2023. The increase over the third quarter of 2022 was primarily attributable to an increase in labor costs and rental costs, which are primarily attributable to our efforts to scale up our sales and administrative operations in North America and Europe.
Loss from Operations
Loss from operations was VND8,922,454 million (US$370.4 million), representing a decrease of 9.2% from the third quarter of 2022 and a decrease of 3.3% from the second quarter of 2023.
Net Loss and Earnings Per Share
Net loss on financial instruments at fair value through profit or loss was VND2,561,432 million (US$106.3 million), representing a decrease of 515.1% from net gain of the third quarter of 2022 and an increase of 321.6% from net loss of the second quarter of 2023. The decrease over net gain of the third quarter of 2022 and increase over net loss of the second quarter of 2023 was mainly attributable to changes in the fair value of currency interest rate swaps contracts, financial liabilities in respect of Dividend Preferred Shares, and warrants.
Net loss was VND15,003,845 million (US$622.9 million), representing an increase of 33.7% from the third quarter of 2022 and an increase of 19.7% from the second quarter of 2023.
Net loss attributable to controlling interest was VND14,986,693 million (US$622.1 million), representing an increase of 33.7% from the third quarter of 2022 and an increase of 19.8% from the second quarter of 2023.
Basic and diluted net loss per ordinary share were both VND6,491 (US$0.27), compared with VND4,876 (US$0.20) in the third quarter of 2022 and VND5,431 (US$ 0.23) in the second quarter of 2023.
Balance Sheet
Cash and cash equivalents were VND3,154,673 million (US$ 131.0 million) as of September 30, 2023.
Business Outlook
FY2023 Delivery Target: VinFast affirms its FY2023 delivery target of between 40,000 and 50,000 vehicles.
FY2024 and FY2025 Capital Expenditure Plan: VinFast expects a saving of US$400 million in capital expenditures planned for global manufacturing between 2024 and 2025, which is expected to be used for CKD factories in Indonesia and India. Overall, VinFast expects a net decrease in total capital expenditures for global manufacturing between 2024 and 2025.
EV Models: VinFast is on track to commence delivery of the VF 6 in Vietnam in the fourth quarter, and deliveries of the VF 7 and VF 3 in 2024.
The Company believes that it has sufficient runway to grow in the coming years and will continue to look for opportunities to strengthen its balance sheet.
This outlook reflects the Company's current and preliminary view on the business and existing market conditions, which is subject to change.
Conference Call
The Company's management will host its third quarter 2023 earnings conference call at 8:00 AM U.S. Eastern Time on October 5, 2023.
Live Webcast: https://edge.media-server.com/mmc/p/46isto5b
Q&A Participation: https://register.vevent.com/register/...9f3e3614f4ce9a98ae10ca4bea162 -----------
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