VinFast's Q3 Surge: Narrowing Losses, Boosting Revenue

VinFast, Vietnam's leading electric vehicle (EV) manufacturer, has reported a notable improvement in its financial performance for the third quarter of 2024, with narrowing losses and surging revenues, thanks to robust domestic demand and strategic cost optimization initiatives. The company's Q3 results highlight its potential in the competitive EV market and its ability to adapt to changing market dynamics.

VinFast's Q3 2024 results demonstrate the company's resilience and growth potential. Despite a slight decrease in e-scooter deliveries compared to the previous quarter, the company delivered a total of 34,855 electric vehicles, marking a 374% increase compared to the previous year. This growth was driven by both higher sales volumes and an improved product mix. VinFast's revenues reached $437 million in the fourth quarter of 2023, a 26% increase from the previous quarter and a 133% increase year-over-year. Total revenues reached $1,198 million in FY 2023, representing an increase of 91% from 2022.

The company's gross profit margin showed significant improvement compared to the previous fiscal year. Gross margin was negative (46%) in FY 2023, compared to negative (82%) in FY 2022. In the fourth quarter of 2023, gross margin reached negative (40.1%), compared to negative (82.6%) in the fourth quarter of 2022. VinFast's cost optimization initiatives, such as reducing production and materials costs and strategically optimizing global manufacturing CapEx, have contributed to this improvement.

VinFast's strategy shift towards a hybrid distribution model, leveraging existing dealership infrastructure, has accelerated its expansion and boosted sales. The company opened 13 new stores and service centers in California and 6 new dealers in 5 US states, aiming for 130 points of sales by the end of 2024. This expansion, coupled with strong product launches like the VF 6, contributed to a 26% increase in Q3 revenue and a 133% year-over-year growth, reaching $437 million. Despite a gross loss of $174.9 million in Q3, VinFast's gross profit margin improved significantly, indicating enhanced profitability.

VinFast's expansion into new markets, such as the US and Indonesia, has also contributed to its improved financial performance. In the US, VinFast opened 13 stores and service centers in California and 6 new dealers in other states, reaching approximately 130 points of sales by the end of 2024. This capital-light hybrid model leveraged existing distribution infrastructure, reducing costs and increasing reach. In Indonesia, VinFast is actively exploring opportunities, with plans to commence operations in 2025. This expansion into high-growth markets enables VinFast to build scale, tap into untapped volume-driven markets, and strengthen its global presence.

VinFast's Q3 revenue growth, coupled with a 35% increase in EV deliveries, demonstrates robust demand. This performance is on par with Tesla's 2023 growth rate of around 130% and BYD's 171% growth in the same period, but it surpasses Rivian's 78% growth in Q3 2023. VinFast's ability to narrow losses despite increasing production and R&D costs highlights its cost optimization strategies and sets it apart from other EV makers.

In conclusion, VinFast's Q3 2024 results showcase the company's ability to adapt to market dynamics and optimize costs. Its strategic expansion into new markets, cost optimization initiatives, and strong product launches have contributed to its improved financial performance. VinFast's growth potential and resilience position it as a strong player in the competitive EV market, deserving of investors' attention. As VinFast continues to build scale and strengthen its global presence, it is well-positioned to capitalize on the growing demand for electric vehicles and contribute to a greener future.