VinFast's Q2 2025: Contradictions Emerge on Cost Discipline, Bus Market Expansion, and E-Scooter Impact

Date of Call: September 4, 2025

Financials Results

• Revenue: $663 million, up 92% year-over-year and up 2% quarter-over-quarter
• Gross Margin: Negative 41% in Q2 2025 vs negative 63% in Q2 2024 and negative 35% in Q1 2025; excluding sales reductions/NRV and certain provisions, gross margin was -20.9% in Q2 2025 vs -19.3% in Q1 2025 and -33.7% in Q2 2024

Guidance:

• On track to at least double 2024 deliveries in 2025 (target ~200,000 units).
• Expect a significant second-half ramp driven by Vietnam demand, new models (VF6, VF7), fleet sales and international rollout.
• Near-term operating cash outflows expected to be $400M–$600M per quarter.
• Liquidity $4.2B as of June 30 includes ~$1.6B expected from the Novatech spin-off; additional support from founder, Vingroup and project financing.

Business Commentary:

* Domestic Market Performance and Growth: - In Vietnam, VinFast recorded a 172% year-over-year increase in EV deliveries, delivering 35,837 units in Q2, and 223% increase year-over-year in the first half of 2025. - The growth was driven by robust demand, supportive government policies, and a strong market position with three top-selling models.

• Expansion into International Markets:
• VinFast's international markets contributed 5% of total EV deliveries in Q2, with Indonesia being a significant contributor.

• Expansion efforts are underway in India, the Philippines, and Southeast Asia, focusing on building a comprehensive green mobility ecosystem.

• Manufacturing and Production Capacity:

• VinFast inaugurated new manufacturing facilities in Vietnam and India, with a combined capacity of up to 350,000 vehicles per year.

• This expansion supports increased production to meet growing demand and enhance operational efficiency.

• Cost Management and Financial Performance:

• Gross margin improved to -41% in Q2 2025, compared to -63% in the same period last year, despite higher warranty provisions.
• The improvement was driven by increased sales volumes and continued efforts in cost reduction through technology innovation and partnerships.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized 'delivery growth of 172% year-over-year and revenue growth of 92% year-over-year' and stated 'we are on track to achieve our 2025 delivery target.' CFO highlighted total liquidity of $4.2 billion and sequential margin/cash-flow improvements versus prior year, while acknowledging near-term losses.

Q&A:

• Question from Andres Sheppard-Slinger (Cantor Fitzgerald & Co., Research Division): Madam Thuy, just curious if you can maybe give us a little more color on the cost discipline efforts that you're putting in place. I noticed that margin came a little bit below the previous quarters for this time. How should we think about that cost discipline for the second half of the year and into next year, particularly, how should we think about gross margins and blended ASPs for the second half and into next year?
  Response: Most near-term BOM savings are already captured; further meaningful cost reduction is expected from new vehicle platforms (VF6/VF7), in-house battery production, supplier partnerships and scale, but quarter-to-quarter mix will drive variability.

• Question from Andres Sheppard-Slinger (Cantor Fitzgerald & Co., Research Division): You've reaffirmed your outlook to more than double sales this year versus last year. Just curious if you can maybe help us understand where is the second half growth going to be coming from primarily? Is it continued penetration in Vietnam? Or is it India, Indonesia, Philippines? How should we think about that growth for the second half?
  Response: Second-half growth will be driven primarily by Vietnam seasonality and robust demand, plus new model rollouts (VF6/VF7), stronger international dealer/aftersales networks, charging infrastructure rollout and expanded fleet sales.

• Question from Webcast (Online): Could you elaborate on the impact of next-generation platforms on margin improvement and help quantify the contribution?
  Response: Too early to quantify, but next-generation platforms are expected to deliver meaningful cost savings, improved OTA/customer experience and material margin upside as new models scale.

• Question from Webcast (Online): Please give more color on the impact on gross margins in Q2, specifically on the higher warranty provision rates and the increase in the cost of vehicles sold for which revenue has been deferred.
  Response: Q2 gross margin was hit by higher warranty provisions, free-charging promotions and deferred-revenue timing; excluding those items gross margin was about -20.9% (vs -19.3% in Q1), and warranty costs should trend down as products mature.

• Question from Webcast (Online): Can you share your plans for the e-bus business? And should we expect the overseas e-bus business to be a meaningful driver for VinFast?
  Response: E-bus international expansion is in early stages—hiring leadership, strong inbound interest, Europe debut (Busworld Brussels Oct 4) this year—starting the business now but no specific targets disclosed.

• Question from Webcast (Online): What percentage did e-scooters contribute to first half 2025 revenue and gross loss? How many units do you target to deliver in FY 2025? And what is the current production capacity and expansion plans for the e-scooter business?
  Response: E-scooters are a small percentage of H1 revenue (detailed breakdown to be filed in the 6‑K); no formal guidance provided but substantial delivery increases are expected for the remainder of the year.

• Question from Webcast (Online): What is the expected timeline to launch the VF6 and VF7 in North America?
  Response: Timing under review as part of a five-year North America plan; management will provide more detail toward year-end.

• Question from Webcast (Online): This quarter, 2-wheeler deliveries far exceeded EV growth. Does the company plan a structural shift in this business model? Or do you still expect 4-wheelers to dominate long-term revenue?
  Response: No structural shift—4-wheelers are expected to remain the long-term revenue drivers; e-scooters will add significant unit volume but have much lower ASPs and are complementary in SEA markets.

• Question from Webcast (Online): The warranty margin drag impacted Q2. Should we expect this to be a headwind in the back half of 2025?
  Response: Warranty costs are typical for early-generation products and are expected to decline over time and not be a sustained H2 headwind.

• Question from Webcast (Online): Of total deliveries in the foreign markets, what proportion was to related parties?
  Response: Management did not provide a foreign-market-specific related-party split; on a global basis B2C deliveries have exceeded 70% of total for four consecutive quarters.

• Question from Webcast (Online): Can you provide an update on our factories in India and Indonesia?
  Response: Ha Tinh (Vietnam) opened with up to 200k capacity; Tamil Nadu (India) opened with initial 50k capacity scalable to 250k and will produce VF6/VF7; Subang (Indonesia) CKD plant on track for technical SOP by end of 2025.

• Question from Webcast (Online): How is the green mobility ecosystem rollout progressing internationally?
  Response: Progressing: GSM Indonesia ~3,000 cars (95% utilization) and V-GREEN targeting ~63,000 charging portals in Indonesia by end-2025; Philippines GSM ~500 taxis with ~100 charging stations live/under development and a 15k charging-point target by 2027.

• Question from Webcast (Online): How has the feedback been from consumers around the company's buyback program on returned vehicles and how do you expect that to change medium term?
  Response: Buyback has built consumer confidence; management expects relevance to diminish over time as vehicle resale values and customer familiarity improve.

• Question from Webcast (Online): Why has VinFast initially launched VF6 and VF7 in India while choosing VF5 and VF e34 for Indonesia? Key differences for these two markets?
  Response: Management deferred details pending an upcoming India announcement; said Indonesia rollout mirrors Vietnam's socioeconomics and thus followed a similar product approach.

• Question from Webcast (Online): Which product lines have reached normalized gross margins and what are BOM cost trends going forward? Will scaling volumes offset pressures from higher-end products?
  Response: On a normalized basis (ex-NRV/exceptionals) VF3 and VF5 are gross-margin positive; VF6/VF7 margins should improve via platform simplification, supplier localization and scale; offshore margins expected to turn positive once scale/localization occur.

• Question from Webcast (Online): VinFast has announced measures to accelerate e-scooter adoption (free charging, financing). How should we think about the financial impact of these initiatives?
  Response: E-scooter business is currently loss-making and will remain so near-term as incentives/financing support adoption; the focus is volume and accessibility, with profitability a long-term objective.

• Question from Webcast (Online): How does reintroducing battery leasing in Indonesia impact pricing?
  Response: Battery leasing lowers upfront cost and monthly payments, accelerates adoption and helps build a broader customer base—similar to Vietnam's prior experience.

• Question from Webcast (Online): How long will promotional campaigns run and are they in response to competition?
  Response: Promotions are deliberate early-market strategies to build awareness and adoption; they will normalize over time as scale, ecosystem and ownership experience strengthen.

• Question from Webcast (Online): How is international sales tracking and what proportion of deliveries came from international markets?
  Response: International deliveries were under 10% of total in H1 2025 (similar to prior year); Indonesia and Philippines are main international contributors today and India sales to start in Q3.

• Question from Webcast (Online): What drove the higher cash balance this quarter and what is the outlook for cash burn through 2026 and 2027?
  Response: Higher cash primarily from ~$1.2B financing inflows which offset operating/investing outflows; near-term operating outflows expected $400M–$600M per quarter, liquidity $4.2B (including ~$1.6B expected Novatech proceeds) and management expects sufficient runway into 2026–27 supported by project financing.

Contradiction Point 1

Cost Discipline and BOM Cost Reductions

It involves differing perspectives on the extent and timeline of cost discipline and BOM cost reductions, which are crucial for the company's financial performance and profitability.

Can you provide details on cost discipline efforts and how to approach cost discipline for the remainder of this year and into next year? - Andres Sheppard-Slinger (Cantor Fitzgerald & Co., Research Division)

2025Q2: Over the past few quarters, meaningful BOM cost savings have been achieved, with a 16% reduction in Q4 2024 and another 11% in Q1 2025. - Thuy Thu Le(Chairwoman of the Board)

What are the key catalysts for the remainder of this year or next year? - Unknown Executive

2025Q1: We believe we can reduce the cost by another 10% to 15% on the BOM of our first models. - Anh Thi Nguyen(CFO & Director)

Contradiction Point 2

Expansion into the Bus Market

It highlights differing timelines and strategies for VinFast's expansion into the bus market, which could impact the company's revenue and growth opportunities.

What are the plans for the e-bus business, and will the overseas business be a significant driver? - Amandae Baey (Vice President of Investor Relations)

2025Q2: We debut two e-bus models at Busworld Brussels in October. - Thuy Thu Le(Chairwoman of the Board)

What is your strategic view on entering the bus market? When might VinFast begin bus deliveries? - Gregory Lewis (BTIG)

2025Q1: VinFast is already delivering buses in Vietnam and expects over 1,000 deliveries this year. - Unknown Executive

Contradiction Point 3

Impact of E-scooters on Financials

It involves differing perspectives on the financial impact of e-scooter adoption, which could impact the company's financial performance and strategic focus.

How should we think about the impact of e-scooter adoption on financials? - Amandae Baey (Vice President of Investor Relations)

2025Q2: E-scooters are still loss-making, but the focus is on making them more accessible. Loss-making is expected in the near term, but the focus is on aligning with Vietnam's green mobility agenda. - Anh Thi Nguyen(CFO & Director)

Can you provide additional details on the new vehicle platform and E/E architecture? - Unknown Executive

2025Q1: So we started [e-scooter] as a loss-making business. And that's perfectly fine. - Anh Thi Nguyen(CFO & Director)