F-1 1 d274483df1.htm FORM F-1 Form F-1
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As filed with the Securities and Exchange Commission on December 6, 2022.

Registration No. 333-                

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

VinFast Auto Ltd.*

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s name into English)

 

 

 

Singapore   3711   Not Applicable
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

Dinh Vu – Cat Hai Economic Zone

Cat Hai Islands, Cat Hai Town, Cat Hai District

Hai Phong City, Vietnam

+84 225 3969999

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Sharon Lau and Stacey Wong

Latham & Watkins LLP

9 Raffles Place

#42-02 Republic Plaza

Singapore 048619

+65 6536 1161

 

Jonathan B. Stone and Rajeev P. Duggal

Skadden, Arps, Slate, Meagher & Flom LLP

c/o Suite #23-02

6 Battery Road

Singapore 049909

+65 6434 2900

 

 

Approximate date of commencement of proposed sale to the public:

as soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

*

The registrant is currently a Singapore private limited company operating under the name “VinFast Trading & Investment Pte. Ltd.” Prior to the effective date of this Registration Statement, the registrant will convert to a Singapore public limited company. Upon such conversion, the registrant will be known as VinFast Auto Ltd.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to Completion, Dated      , 2022.

VinFast Auto Ltd.

Ordinary Shares

$                per ordinary share

 

 

This is an initial public offering of                  shares of VinFast Auto Ltd.

We are offering                  of our ordinary shares to be sold in the offering.

Prior to this offering, there has been no public market for our ordinary shares. It is currently estimated that the initial public offering price will be between $                 and $                 per ordinary share. We intend to apply to list our ordinary shares on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “VFS.”

Investing in our ordinary shares involves risks. See “Risk Factors” beginning on page 24.

 

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

 

     Per ordinary share      Total  

Initial public offering price

   $                    $                    

Underwriting discount(1)

   $        $    

Proceeds, before expenses, to us

   $        $    

 

(1) 

See “Underwriting” for additional information regarding underwriting compensation.

To the extent that the underwriters sell more than                  of our ordinary shares, the underwriters have the option to purchase up to an additional                  of our ordinary shares from us at the initial public offering price less the underwriting discount.

We are both an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. See “Prospectus Summary — Implication of Being a Foreign Private Issuer” and “Prospectus Summary — Implication of Being an Emerging Growth Company.”

Deutsche Bank AG, Singapore Branch is acting as our financial advisor in connection with this offering.

The underwriters expect to deliver the ordinary shares to purchasers against payment thereof on or about                 , 2023 through the book entry facilities of The Depositary Trust Company.

 

 

 

Citigroup    Morgan Stanley    Credit Suisse    J.P. Morgan
BNP PARIBAS    HSBC    RBC Capital Markets    Wolfe | Nomura Alliance
Baird

 

 

Prospectus dated                 ,             .


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     Page  

PROSPECTUS SUMMARY

     1  

THE OFFERING

     19  

SUMMARY CONSOLIDATED FINANCIAL DATA

     21  

RISK FACTORS

     24  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     57  

USE OF PROCEEDS

     59  

DIVIDEND POLICY

     60  

CAPITALIZATION

     61  

DILUTION

     64  

ENFORCEABILITY OF CIVIL LIABILITIES

     66  

CORPORATE HISTORY AND STRUCTURE

     68  

SELECTED CONSOLIDATED FINANCIAL DATA

     72  

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

     75  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     85  

INDUSTRY

     112  

BUSINESS

     124  

REGULATION

     159  

MANAGEMENT

     174  

PRINCIPAL SHAREHOLDERS

     182  

RELATED PARTY TRANSACTIONS

     184  

DESCRIPTION OF SHARE CAPITAL

     192  

DESCRIPTION OF CERTAIN INDEBTEDNESS

     215  

SHARES ELIGIBLE FOR FUTURE SALE

     220  

TAXATION

     222  

UNDERWRITING

     229  

EXPENSES RELATED TO THIS OFFERING

     238  

LEGAL MATTERS

     239  

EXPERTS

     240  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     241  

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

     F-1  

 

 

You should rely only on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy the ordinary shares, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares.

Neither we nor any of the underwriters has taken any action to permit a public offering of the ordinary shares outside the U.S. or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the U.S. Persons outside the U.S. who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the prospectus or any filed free writing prospectus outside the U.S.

Until                 , 2023 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

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ABOUT THIS PROSPECTUS

Except where the context otherwise requires or where otherwise indicated, the terms “VinFast,” the “Company,” the “Group,” “we,” “us,” “our,” “our company,” and “our business” refer to VinFast Trading & Investment Pte. Ltd. and, where appropriate, its consolidated subsidiaries. Prior to the consummation of this offering, VinFast Trading & Investment Pte. Ltd. will convert from a Singapore private limited company to a Singapore public limited company and will then be known as VinFast Auto Ltd.

References to “Vingroup” are to Vingroup Joint Stock Company, a public company listed on the Ho Chi Minh Stock Exchange, Vietnam.

References to “VND” are to Vietnamese dong, the legal currency of Vietnam. References to “$,” “U.S. dollars” and “USD” are to United States dollars, the legal currency of the United States. References to “CAD $” are to Canadian dollars, the legal currency of Canada. References to “€” are to euro, the legal currency of the European Union. Unless otherwise noted, all translations from VND to U.S. dollars in this prospectus are made at a rate of VND23,900 to $1.00, which represents the selling exchange rate published by The State Bank of Vietnam as of September 30, 2022. We make no representation that any VND or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or VND, as the case may be, at any particular rate, or at all.

MARKET AND INDUSTRY DATA

We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties. Certain industry, market and competitive position data in this prospectus, including as described under “Industry,” is based on third-party data provided by Frost & Sullivan International Limited (“Frost & Sullivan”) and IHS Global Inc. (“IHS Markit”), which we commissioned Frost & Sullivan and IHS Markit to prepare for use in this prospectus. This prospectus also includes information from a 2022 satisfaction survey of VinFast prospective U.S. customers who have reserved a VinFast EV for purchase that we commissioned Frost & Sullivan to conduct (the “F&S Customer Survey”).

This prospectus also contains information developed by Sustainalytics. Such information and data are proprietary of Sustainalytics and/or its third-party suppliers and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers. Information contained on, or that can be accessible through, Sustainalytics’ website is not a part of this prospectus and the inclusion of their website address in this prospectus is an inactive textual reference only.

Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Although we have no reason to believe any such information is incorrect, we are in any case responsible for the contents of this prospectus. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The financial information in this prospectus as of December 31, 2020 and for the year then ended has been derived from the consolidated financial statements of VinFast Trading and Production Joint Stock Company, which are included elsewhere in this prospectus. The financial information in this prospectus as of December 31,

 

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2021 and for the year then ended and as of September 30, 2022 and for the nine months ended September 30, 2021 and 2022 has been derived from the consolidated financial statements of VinFast Trading & Investment Pte. Ltd., which are included elsewhere in this prospectus. The consolidated financial statements of VinFast Trading and Production Joint Stock Company and VinFast Trading & Investment Pte. Ltd. are prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) in the U.S.

In January 2022, we announced our strategic decision to cease internal combustion engine (“ICE”) vehicle production to transform into a pure-play manufacturer of electric vehicles (“EVs”). In early November 2022, we ceased all production of ICE vehicles and completed the ICE Assets Disposal (as defined herein) to our affiliate, Vietnam Investment Group Joint Stock Company (“VIG”). Notwithstanding our cessation of ICE vehicle production in early November 2022, our results of operations presented in this prospectus primarily reflect the historical results of our ICE vehicle manufacturing business and our gradual cessation of our ICE vehicle manufacturing for the nine months ended September 30, 2022. Accordingly, our results of operations and comparative financial information presented in this prospectus may not be indicative of our results of operations expected for any future period.

The unaudited pro forma consolidated financial information in this prospectus as of September 30, 2022 and for the year ended December 31, 2021 and the nine months ended September 30, 2022 give pro forma effect to the phase-out of our ICE vehicle production, as further described in “Unaudited Pro Forma Financial Information.” The unaudited pro forma consolidated financial information in this prospectus is qualified in its entirety by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Corporate History and Structure,” the unaudited historical interim condensed consolidated financial statements and the audited consolidated financial statements as of and for the year ended December 31, 2021 and related notes included elsewhere in this prospectus. The unaudited pro forma consolidated financial information includes various estimates that are subject to material change and may not be indicative of what our results of operations or financial position would have been had such events taken place on the dates indicated, or of our results of operations expected for any future period.

Certain amounts shown in the Registration Statement or derived from the U.S. GAAP financial statements have been rounded or truncated as deemed appropriate by the management of our company. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

 

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ordinary shares discussed under “Risk Factors.”

Who We Are

We are VinFast, and our goal is to be a leader in the future of Smart Mobility through our intelligent, thoughtful and inclusive EV platform. We aim to foster a cleaner and more sustainable approach to 21st century mobility that is evolutionary and revolutionary.

We are bold, decisive and eager to advance our product and platform.

We aim to constantly push boundaries in our approach to technology, service innovation, customer engagement and manufacturing excellence, all for the sake of delivering an exceptional customer experience.

Our mission is to help create a more sustainable future for all. We aim to help sustain our planet by accelerating the switch to electric vehicles with an inclusive, premium product line and unique service platform. We envision a world where a top-tier electric vehicle-driving experience is accessible to all. We have already begun delivering on that vision today with our line of all-electric sports utility vehicles (“SUVs”), readying us for the new era of VinFast, one focused on global expansion and creating a sustainable future.

At VinFast, our motto is “boundless together.” It is representative of the adventurous and inspired feeling we want our drivers to experience every time they take the wheel, a precept of our approach to manufacturing, an affirmation of our limitless desire to reach new heights with the products we create, our effort to build a sustainable future and our enthusiastic re-shaping of the electric vehicle driver experience. In that spirit, we are breaking boundaries by focusing on the future, setting out on new journeys as one team (maker, driver, partners) and sharing the VinFast vision along the way. We are constantly innovating from a technology and driver experience perspective and are ready to push forward towards a sustainable future. With that said, we recognize that we cannot do this alone, and we urge those who share this desire to unite with us on our journey to a brighter and greener future.

Come join the charge with us.

Our Business

We are an innovative, full-scale mobility platform focused primarily on designing and manufacturing premium EVs, electric scooters (“e-scooters”) and electric buses (“e-buses”). Our initial EV product line is an all-new range of fully-electric A- through E-segment SUVs, the first of which began production in December 2021. We focus strategically and exclusively on EVs and have phased out all remaining ICE vehicle products over the course of 2022, in order to execute on our vision of creating an e-mobility ecosystem built around customers, community and connectivity alongside our new vehicle roll-out. We plan to deliver on this strategy by leveraging our manufacturing expertise and strong track record of producing ICE vehicles and e-scooters. We started producing e-scooters in 2018, passenger cars in 2019 and e-buses in 2020. We have delivered nearly 88,000 vehicles (primarily ICE vehicles) and over 145,000 e-scooters through the end of September 2022. Innovation is at the heart of everything we do. We focus on achieving operational efficiency and technological integration, and we seek to continuously improve our processes to deliver world-class products.

We plan to sell our line of electric SUVs in key global markets, specifically targeting North America (primarily the U.S. and Canada) and Europe, in addition to our existing market in Vietnam. Our target markets

 

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are expected to offer an expected total addressable market (“TAM”) of $1.3 trillion by 2027, which would represent an annual shipment of approximately 35 million vehicles, according to Frost & Sullivan. We see these geographies as vital to our strategy, with significant momentum and positive forces driving the switch to EVs across vehicle segments. Specifically, we believe the A- through E- electric SUV segments will lead the EV revolution and drive profitable growth in the near and long term across the automotive market. While we are currently focused on these segments, we continue to evaluate the full spectrum of vehicle types for future product development. We believe our vehicles are differentiated, especially across the emerging EV space, through our low cost structure relative to our peers, as well as our premium-quality product offering, including advanced technology and new-mobility features for our drivers, a fashionable and luxurious design, and our comprehensive Smart Services solution. We expect to remain competitive by focusing on SUVs, the most popular consumer vehicle segment, and including in our products top tier technology and luxurious outfitting that is not standard for similar vehicles at our price points. We strongly believe in the future of smart mobility and strive to provide the VinFast platform as an access point to that future.

Our VF 8 and VF 9 models are fully-electric D-segment and E-segment SUVs, respectively, designed for the global consumer market. We had reservations for approximately 58,000 VF 8 and VF 9 EVs globally as of September 30, 2022, of which approximately 20% were reservations with non-refundable reservation fees and the remainder are cancellable reservations with small refundable reservation fees. We shipped the first batch of the VF 8 to the U.S. in November 2022. We expect first deliveries of the VF 8 to be made in the U.S. in December 2022 and in Europe in early 2023 and first deliveries of the VF 9 to be made in the U.S. and Europe in early 2023. We currently offer two trims of the VF 8 and VF 9: Eco and Plus. We plan to introduce new trims for the VF 8 and VF 9 in the next two years to provide a comprehensive and higher-end product offering, focusing on sustainable materials and adding more premium features such as higher-end interior materials, elevated smart features and enhanced advanced driver-assistance systems (“ADAS”). In addition, we expect to launch the VF 5, VF 6 and VF 7, our A- through C-segment vehicles in 2023. The VF 5 is an A-segment EV SUV for the Vietnam market that offers dynamic youthful styling, targeting first time, budget conscious buyers. The VF 6 is a B-segment EV SUV for the family-oriented driver. The VF 7 is characterized as a driver centric C-segment EV SUV, accentuated by its futuristic styling. For the VF 6 and VF 7, we plan to offer Eco and Plus trims in both Left Hand Drive and Right Hand Drive versions to target international markets. See “Risk Factors — Risks Relating to Our Business and Industry — Our long-term results depend upon our ability to successfully introduce and market new products and services, which may expose us to new and increased challenges and risks.”

We have achieved a great deal in our short history. Following the founding of our company in 2017, we achieved start of production of our first ICE vehicle in only 21 months. As a new entrant and the first Vietnamese automotive original equipment manufacturer (“OEM”), we have partnered with top-tier global companies, including Magna Steyr Fahrzeugtechnik AG & Co KG (“Magna”), Tata Technologies, ZF Friedrichshafen AG (“ZF”) and Pininfarina S.p.A. (“Pininfarina”) to accelerate the integration of industry best practices into our processes. Deliveries of our first fully-electric SUV, the VF e34, began in Vietnam in December 2021. We began delivering the VF 8 in September 2022 in Vietnam. The VF 8 and VF 9, which are now available for reservation in North America and Europe and will be the first fully-electric VinFast SUVs available for purchase in the North American and European markets, were introduced globally at the Los Angeles Auto Show in November 2021, displayed along with our full suite of vehicles at Consumer Electronics Show (“CES”) in January 2022, the New York Auto Show in April 2022 and the Paris Motor Show in October 2022. Additionally, we have and are planning to continue to showcase our products in other auto conventions, including the International Electric Vehicle Symposium 2022 (“EVS35”), Mobile World Congress, EV Experience and the Internationale Funkausstellung (“IFA”).

We quickly established significant brand recognition in Vietnam and within 18 months from product launch, we gained the leading market share in Vietnam for each of our product segments, based on management’s analysis of publicly available data. This share was acquired from the incumbent global vehicle brands from Asia, Europe and

 

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North America that have historically dominated the Vietnamese market prior to our arrival. Since our establishment, we have gained significant experience in manufacturing at scale, which has helped us swiftly incorporate EVs into our existing assembly lines. Like other entities within the Vingroup family of companies, turning early-stage businesses into market leaders through top-tier execution and leadership is a hallmark of our approach to business.

We are a majority-owned affiliate of Vingroup, one of the largest companies listed on the Ho Chi Minh Stock Exchange with a combined market capitalization of approximately $24.0 billion as of November 30, 2022 across Vingroup and all of its listed subsidiaries, which together contributed 1.5% to Vietnam’s GDP in 2021 based on their 2021 consolidated revenue. Led by Chairman Pham Nhat Vuong, Vingroup is the largest conglomerate in Vietnam with market-leading, fast-growing businesses that span the industrials, technology, real estate and social services sectors in Vietnam. Vingroup has a nearly 30-year operating history and strong track record of improving the daily lives of consumers through applied technology. As of September 30, 2022, approximately $7.5 billion has been deployed to fund operating expenses and capital expenditures of VinFast since 2017 by Vingroup, its affiliates and external lenders. Vingroup remains a committed sponsor of our growth and success. We believe our ongoing relationship with Vingroup is a significant competitive advantage, most notably through shared expertise and software co-development among more than 1,000 engineers in the Vingroup ecosystem who collectively help produce differentiated technology for VinFast vehicles.

Technology is at the core of our platform, and we have invested significantly in our group technology platform to provide the safest, most driver-friendly experience possible for our drivers – what we refer to as “technology for life.” We believe vehicle technology should be convenient and fully integrated into our drivers’ day-to-day lives. “Connecting intelligence globally” is a cornerstone of our growth plan: our research and development (“R&D”) and product innovations differentiate the VinFast EV experience on the world stage with premium features, including infotainment, driver assist, ADAS and other enhancements expected in a top-end EV ownership experience, that are available in all of our vehicles. The VinFast R&D team includes more than 800 in-house professionals (including 140 software engineers) and leverages the expertise of engineers and developers across the related technology companies within the Vingroup ecosystem. We also encourage our technical teams and R&D leads to partner with leading global experts to undertake product development projects when doing so is more time and cost efficient than in-house R&D. Central to our partnership model is our ability to maintain control and/or ownership over intellectual property. Notwithstanding multiple partners participating throughout the value chain, the product rollout and intellectual property underlying each individual system is created, managed and/or mastered by our internal team of engineers and technology professionals. Under this model, outside of Vingroup, we have collaborated with cutting-edge technology companies to leverage our existing core competencies, including collaborations with NVIDIA, ZF, and Mobileye on our ADAS and Amazon Alexa for our Virtual Assistant. In October 2022, we also entered into a memorandum of understanding (“MOU”) with Contemporary Amperex Technology Co., Limited (“CATL”) to collaborate in the development and production of CATL integrated intelligent chassis (“CIIC”) skateboard chassis products that integrate battery packs, electric motors and other core systems and components of an EV into a single layer at the bottom of the vehicle, with the goal of reducing manufacturing costs, vehicle weight and energy consumption and maximizing cabin space. Similarly, we source our battery components from a variety of suppliers including Samsung SDI, CATL, and Gotion Inc. (“Gotion”). We have a strategic partnership with VinES Energy Solutions Joint Stock Company (“VinES”), a subsidiary of Vingroup, spanning the full spectrum of battery R&D, manufacturing, testing, performance and cost optimization and battery recycling. VinES plans to be a fully integrated battery cell and pack manufacturer and is developing its own battery cell technology and battery cell production capabilities in Vietnam. As affiliates in the Vingroup ecosystem, VinES is expected to grow in lockstep with us to remain a tier 1 supplier of batteries to us as we expand. To that end, another of our Vingroup affiliates has made an investment in ProLogium, a manufacturer of next-generation solid-state batteries, which we believe will lead to future opportunities for us and VinES to collaborate in applying next-generation solid-state battery technology to VinFast vehicles. We believe our partnership with VinES reduces uncertainties associated with reliance on unrelated third parties outside of the Vingroup ecosystem for batteries. VinES is in the process of constructing a gigafactory in Central Vietnam to expand its battery pack production capabilities. In addition, VinES

 

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is developing a second lithium cell facility in Ha Tinh, Vietnam, in collaboration with Gotion. In October 2022, VinES and Li-Cycle APAC Pte. Ltd. (“Li-Cycle”) entered into a global recycling partnership, which includes exploring global recycling solutions for VinES and VinFast that support the companies’ ESG strategy and shared vision to advance a sustainable, closed-loop battery supply chain. As part of the partnership, VinES and Li-Cycle entered into a letter of intent (“LOI”) regarding potential opportunities to establish recycling facilities.

We seek to build a strong connection between our drivers, our brand and our service ecosystem to create the “VinFast Lifestyle,” facilitated by the technology framework we have created. As part of this lifestyle, we want to ensure that every driver experiences a true sense of community and is a swipe-of-an-app away from reliably connecting with our service network. Our technology framework aims to remove the anxieties associated with owning an electric vehicle, which is paramount to the VinFast Lifestyle. Our VinFast Services program, called “Invisible Service,” evokes a seamless and ever-ready suite of service products and offerings conveniently available at the driver’s fingertips through our companion app. Our unique 10-year /125,000-mile warranty offering demonstrates our commitment to quality and reliability in our vehicles and underpins the trust we seek to establish between our brand and community.

With the VinFast Lifestyle in mind, we aim to deliver greater flexibility to our drivers when choosing to own a VinFast EV. To that end, we offer our customers the option to purchase our vehicles with the battery as well as the flexibility to participate in our Battery Subscription Program, which allows a customer to lease the battery in their EV from VinFast, rather than own it. According to Frost & Sullivan, battery subscription programs, such as ours, could reduce the upfront cost of an EV by 15% to 35%. Our Battery Subscription Program is intended to supplement our primary model of outright sale of the full chassis and battery and to provide an alternative that makes our EVs accessible at a lower, more inclusive up-front price point. We believe that our Battery Subscription Program provides customers with a worry-free battery experience: customers pay a fixed monthly battery subscription that allows for unlimited driving mileage each month. We expect that the fixed payment monthly subscription fee in the U.S. will initially start at $110 per month for the VF 8 and $160 per month for the VF 9 (prices may vary by country). In Vietnam, customers that placed reservations before September 2022 may select between fixed and variable monthly subscription fees under our prior sales policy. Under the program, we plan to offer customers a replacement battery once charging capacity falls below 70% as part of a warranty that we offer for the duration of the battery lease with our Battery Subscription Program. We plan to monitor market demand and peers’ product offerings on an ongoing basis and adjust our go-to-market strategy dynamically with an aim of ensuring that VinFast EVs and the VinFast Lifestyle remain accessible.

Our service experience will utilize both a remote diagnostic and mobile in-person approach, allowing for ease of digital access and the reliability of a physical service presence. We expect that the majority of our service interventions will take place directly where our drivers are located, either through mobile service or remote, over-the-air (“OTA”) updates. We expect our mobile service to be supported by our fleet of EV vans and our technicians are expected to carry out most of their work where the customer is located. We believe our customers will also benefit from the technical capabilities of our directly owned and operated centers. We have also partnered with Urgent.ly to provide roadside assistance during the 10-year / 125,000-mile warranty period to our customers in the U.S. and Canada.

Our companion app is expected to be at the center of our service offering, leveraging our cloud-based digital ecosystem to create a simple and comprehensive interface for drivers with support for service requests, charging station locations and access to remote safety or control features of their vehicles, such as starting the engine remotely. The companion app is designed to provide end-to-end digital features, defined by seven key feature categories, including sales, vehicle controls, charging, navigation, invisible service (e.g. booking service appointments, roadside assistance and firmware for OTA updates), smart vehicle functions (e.g. remote valet and smartphone mirroring) and smart ownership functions (e.g. managing driver profiles, facilitating monthly subscription payments, payments for charging services and paid-OTA updates). Our companion app and in-vehicle navigation system are also expected to be integrated with Electrify America’s application

 

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programming interface (“API”) data feed. This enables our customers in the U.S. to locate the nearest charging stations, authenticate charging transactions, set charge levels, make payments, check the charging status of their vehicles and obtain transaction history. We pay Electrify America a recurring annual fee for these non-exclusive API services. See “Business — Integrated Service Offering.”

Meanwhile, our VinFast Power Solutions program is expected to enable stress-free at-home smart charging and seamless connectivity to an extensive charging network through our companion app when away from home. Our U.S. customers will have access to the Electrify America network of EV charging stations. Our non-exclusive charging network program agreement with Electrify America also entitles our customers to discounts and other promotional benefits such as complimentary charging sessions when using Electrify America’s charging station network.

Our vehicles are manufactured at our highly automated manufacturing facility in Hai Phong, Vietnam, which is the third-largest city in the country and situated just over 60 miles outside of Hanoi. Opened in 2019, our automobile manufacturing facility currently has a maximum production capacity rate (i.e. maximum number of vehicles that can be constantly manufactured in a year with additional shifts per day throughout the year) of up to 300,000 EVs per year, is situated in a land area of 348 hectares, and is a beneficiary of multiple tax incentives being located in the Dinh Vu-Cat Hai Economic Zone. This facility, which we believe is one of the most highly automated and modern manufacturing facilities in Southeast Asia, is equipped with over 1,400 robots and has the capacity for highly automated production lines that reach automation levels of 90% and 95% for press and paint shop, respectively. The press shop is capable of producing up to 38 frames per hour. We believe this automation is a hallmark of our integrated capabilities across VinFast. This facility was used in the past to produce our legacy ICE vehicle lineup and now exclusively produces our VinFast EVs (currently the VF e34, VF 8 and VF 9), e-scooters and e-buses. When our factory was built, we designed our manufacturing facility to incorporate a high degree of operational flexibility to accommodate the parallel production of our full suite of vehicle models. This foresight has allowed us to seamlessly switch from ICE to EV production and will be critical to our expected operational flexibility for producing multiple SUV models on the same assembly line simultaneously. From a logistics perspective, we are confident in our outbound shipping capabilities to global locations from our Hai Phong facility, given it is directly next to the Lach Huyen port in Vietnam, with significant access to global roll-on/roll-off cargo shipping partners. The Lach Huyen deep-sea port, which opened in 2018 with 14 meters of depth and has a capacity of 100,000 deadweight tons (“DWT”), is one of the deepest and largest ports in the country.

Bolstering our manufacturing operations in Vietnam is an on-site, integrated supplier park that facilitates reliable and cost-effective collaboration with our partner-suppliers, as well as logistical efficiency for parts and supply to our factory shops. Our manufacturing operations in Vietnam have a significant cost advantage for sourcing key supplies and components because we source approximately 60% of the components for our EVs (excluding batteries) from suppliers in Vietnam, most of which are established international suppliers, based on the total value of parts produced or packed in Vietnam as a percentage of the total free-on-board cost of our vehicles (excluding batteries) as of September 30, 2022. There are a number of key suppliers on-site in Hai Phong, including ZF, FORVIA and Lear Corporation. We also have plans to expand our integrated supplier park in Hai Phong with additional suppliers from Korea and China. In addition to the supplier park, some of our suppliers are located directly on our general assembly line, ensuring full integration and alignment across the manufacturing process. Outside of our on-site park, we have relationships with approximately 620 additional suppliers globally. One of our most important partners and a subsidiary of Vingroup, VinES, is a key battery pack supplier to us and is in the process of developing battery cell production capabilities in Vietnam. We intend for VinES-produced battery cells to eventually be included in the battery packs that VinES supplies to us. VinES is in the process of constructing a gigafactory in Central Vietnam to expand its battery pack production capabilities. In addition, VinES is developing a second lithium cell facility in Ha Tinh, Vietnam, in collaboration with Gotion. The supplier park and strategic supply chain have been beneficial to us in navigating and mitigating

 

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supply chain issues in the automobile industry in recent months. We believe we have been early and proactive in managing our supply chain and are focused on a diversified approach, particularly in our battery sourcing. We also have a dual-design approach to chip integration, which allows us to achieve the same functionality across vehicles with a variety of chip manufacturers. The flexibility we have built into our vehicles allows for diversification across the supply chain, without reliance on a single supplier for critical vehicle parts.

We believe that we have laid the groundwork to achieve future profitable growth through automation, access to a low-cost labor pool in Vietnam, and the ability to achieve economies of scale through our mass market approach and volume efficiencies with suppliers. Our existing and fully automated manufacturing facility has the potential to be a significant competitive advantage for us as we rollout new vehicle platforms in the coming years. Relative to other geographies, Vietnam offers a very competitive cost of labor and a technically-skilled labor force, and we believe we have ample experience in automotive production, supplier management and optimizing operating efficiencies to produce greater margin benefits. We believe that targeting the highest-growing segments of the market, with our ability to produce vehicles at scale, will provide clear economies of scale from a supply and production standpoint. Our investments in our operational and manufacturing capabilities have allowed us to create structural levers for growth and give us confidence in our path to profitability.

In 2022, we entered into a series of agreements with North Carolina state and local authorities to build a manufacturing facility spanning across a site measuring approximately 712 hectares in Chatham County, North Carolina. Commissioning of the facility is targeted for the second half of 2024. The facility is expected to have an annual capacity of 150,000 vehicles per year. We believe this facility will help to diversify our manufacturing footprint in a critical growth market where we plan to expand and can enable us to take advantage of available state and local incentives. Additionally, our customers in the United States (“U.S.”) may be able to take advantage of U.S. federal tax credits once our North Carolina facility commences operations and final assembly of our vehicles, subject to, among other things, their income eligibility as well as our ability to meet requirements on battery components and critical minerals. We aim to replicate the successes of our Hai Phong facility as we extend our manufacturing footprint to the U.S. We intend for our North Carolina facility to have the same high level of automation and flexibility as our Hai Phong facility, closely situated supplier-partners and an integrated supplier park and supply chain.

To launch our products in international markets, we are employing a direct-to-consumer (“D2C”) sales model built around a personalized and approachable experience, whether via our customer app, online through our virtual showrooms and VinFast website, or alternatively, in person at one of our branded, fully-owned VinFast showrooms across the globe. Our global roll-out plan will focus on North America and Europe in the medium-term, and we plan to have 15 showrooms in the U.S., 13 showrooms in Europe (within Germany, France and the Netherlands) and eight showrooms in Canada by the end of 2022. We have opened six showrooms in the U.S., all of which are in California, one showroom in Paris, France, one showroom in Cologne, Germany and two showrooms in Toronto and Quebec, Canada. In Vietnam, we have 87 showrooms, of which 56 showrooms are owned and operated by us and the remaining are opened in collaboration with our dealers. We plan to roll out three different showroom models (1S, 2S and 3S), each adapted for the intended customer experience, with smaller showrooms for consumer education in high footfall traffic areas and more traditional showrooms with test-driving capabilities in targeted areas. Our showrooms serve as a place for customers to experience the VinFast brand and products, to meet as members of the VinFast community and as a hub for VinFast service solutions. This online-to-offline (“O2O”) sales model is a key facet of our business strategy.

Our commitment to environmental, social and governance (“ESG”) initiatives is institutionalized through a thoughtful, comprehensive and forward-thinking ESG strategy. Our products are meticulously designed with a low-to-zero emission framework and to minimize impact on the environment. We have adopted industry best practices to reduce our carbon footprint and target best-in-class environmental standards. As we lead the charge

 

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to a brighter, greener and safer future, we plan to leverage our social and governance policies as key catalysts for achieving our vision. Our social policies reflect our commitment to our customers, employees and communities, while our governance structure reflects our core values of fairness, efficiency, accountability and transparency. We seek to periodically validate our progress in honoring our ESG commitment and to identify areas for improvement. As part of this effort, in 2022, we engaged Morningstar Sustainalytics to perform a broad-based Corporate ESG Assessment of our company covering seven distinct ESG categories: carbon – product and services; human capital; product governance; business ethics; carbon-own operations; human rights – supply chain; and corporate governance. We received an overall indicative Corporate ESG Assessment score of 23.3, which places us in the “medium risk” category as of July 2022. Our indicative score would place us in the top ten (9th ranked out of 72) of automobile companies and having the top ESG rating (lowest potential risk) compared with other pure EV car companies, in each case among companies assessed by Sustainalytics.

We are led by a keenly focused management team that is highly motivated to deliver on our mission of making EVs smarter and more inclusive. Our Global CEO, Le Thi Thu Thuy, also holds the position of Vice Chairwoman of Vingroup and was one of the key Vingroup executives behind the push into vehicle manufacturing. She was responsible for the formation of VinFast and led the execution of a startup plan from the ground up in 2017, with our first vehicles delivered only 21 months later. She has built a highly experienced, diverse and globally sourced team to execute our strategy. This team includes veterans from the automotive and technology industries with an average of 23 years of relevant industry experience. Our entrepreneurial and innovative culture from the top down in our organization is driven by our core belief that we are “boundless together.”

We had net losses of VND18,950.2 billion and VND32,219.0 billion ($1,348.1 million) in 2020 and 2021, respectively, and total debt (which is our short-term and current portion of long-term interest-bearing loans and borrowings and long-term interest-bearing loans and borrowings, excluding borrowings from related parties) of VND47,169.8 billion ($1,973.6 million) as of December 31, 2021. We had net losses for the period of VND18,000.1 billion and VND34,535.4 billion ($1,445.0 million) for the nine months ended September 30, 2021 and 2022, respectively, and total debt of VND59,552.2 billion ($2,491.7 million) as of September 30, 2022.

Smart Mobility and the VinFast Differentiators

Our full-service driver and ownership experience is a hallmark of the VinFast brand and built around the concept of Smart Mobility, which we believe differentiates us from our competitors. To us, Smart Mobility encompasses the following:

 

   

Premium Quality Product

 

   

Thoughtful design for a boundless premium experience – We evoke EMOTION and PASSION between driver and car

 

   

Top-of-the-line vehicle lineup – We offer a LUXURIOUS and STYLISH product line with skilled craftsmanship in every detail

 

   

TECHNOLOGY FOR LIFE” – We embrace PERSONALIZATION and CONNECTIVITY with a full suite of standard smart infotainment features including a heads-up display, virtual personal assistant, in-car commerce and mobile office capabilities, creating a space for lifestyle between home and office

 

   

Sustainability – We aim to deliver our products RESPONSIBLY to help promote a greener world for us all

 

   

Steadfast focus on meeting world-class safety standards – We focus unwaveringly on SAFETY

 

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Inclusive Price

 

   

ACCESSIBILITY – We seek to offer our products in a more approachable and accessible way relative to closest EV peers to help increase opportunities for greater EV adoption globally

 

   

We offer high performance, luxurious features, premium quality, an advanced suite of enhanced technology and cutting-edge engineering execution at a COMPETITIVE price point

 

   

FLEXIBLE purchase options, including own, lease, and our Battery Subscription Program to suit any customer’s preference

 

   

Peace-of-Mind Ownership Experience

 

   

Our goal is to provide BEST-IN-CLASS after-sale service with 10-year / 125,000-mile warranty and 24/7 roadside assistance

 

   

WORRY-FREE experience through our “INVISIBLE SERVICE” model with remote and mobile service offerings

 

   

EASE-OF-ACCESS to our network of service showrooms and integrated suite of EV charging solutions through VinFast Power Solutions and partners such as Electrify America and Bosch

Our Business Strengths

We believe we are well-positioned to achieve our strategic goals through several key business strengths, including the following:

 

   

Comprehensive Mobility Ecosystem with Strategic Focus on High Growth Segments: We boast a broad EV mobility platform, including electric cars, e-scooters and e-buses. We believe we have achieved a leading market share across each of our vehicle segments in Vietnam. We have strategically targeted the highest-growth segments and have formulated our growth outlook with data from reputable global automotive industry consultants in building our international expansion plan. Not only do we forecast an increasing secular shift to EVs, but we have also studied our key growth markets and targeted the SUV segment initially, the segment of the passenger light vehicle market with the highest expected growth in demand. As customer demand increases for long distance travel, larger in-vehicle space and larger storage space, Frost & Sullivan expects the C, D, and E vehicle segments to grow globally at 3.4%, 3.8% and 3.8% CAGRs, respectively, from 2021 to 2027. Our TAM is forecasted to reach $1.3 trillion, representing an annual shipment of approximately 35 million vehicles, by 2027, according to Frost & Sullivan. We believe we are reaching the fastest growing market at a competitive price point relative to our closest EV peers. The F&S Customer Survey conducted in February 2022 found that customers who have placed reservations for VinFast EVs prefer our vehicles over those of direct peers mainly for our attractive design, inclusive price (taking into account our optional Battery Subscription Program) and outstanding technology, with more than 74% of respondents selecting these as the most important factors influencing their reservation decision. We believe our pricing model, providing luxury-level features and premium quality at a competitive price point, positions our EV platform for achievable penetration of our addressable market, through the potential for conversion of a greater number of ICE drivers into new EV drivers. We have seen success in this conversion effort thus far. A majority of our U.S. customers who placed reservations for VinFast EVs and participated in the F&S Customer Survey are switching from ICE vehicles to a VinFast EV. Over 69% of F&S Customer Survey respondents currently owning at least one car and over 89% of respondents own ICE vehicles. Given our strategic focus on EVs, we have tailored our business model to target segments that we believe will achieve the highest growth and profitability across the EV spectrum.

 

   

Attractive Lineup of Skillfully Engineered, Luxurious EV SUVs: Our comprehensive lineup of EVs, highlighted by the VF 8 and VF 9, enhances and complements the lives of our drivers through their

 

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lifestyle-friendly design. Incorporating high quality craftsmanship, alongside our proprietary tech-forward infotainment system, we aim to provide a luxurious, advanced and customizable offering of the features that EV drivers have come to desire. Every decision that we make in the design of our vehicles is framed with the driver in mind – from our spacious seats to the colored heads-up display, simplistic dashboard and personal assistant interface, we expect the VinFast system to become fully integrated into our drivers’ lives. On the exterior, our signature lighting that frames our “V” logo sweeps out to the corners of the car and powerfully exudes our brand. The overarching character of our vehicles provides a comfortable and modern feel, while making a powerful statement on the VinFast Lifestyle. In addition, we plan to introduce new trims for the VF 8 and VF 9 in the next two years to provide a comprehensive and higher-end product offering, focusing on sustainable materials and adding more premium features such as higher-end interior materials, elevated smart features and enhanced ADAS.

 

   

Innovation-Driven, Technology-Centric Platform: We offer integrated, state-of-the-art technology across our vehicle segments and in our associated mobile application platform. Our platform was built with the philosophy of “technology for life,” driven by the belief that technology should enable the safest, most driver-friendly experience possible. To us, “technology for life” involves being thoughtful with our design features and R&D efforts, while maintaining a strategic focus on the highest value and most practical features to support our customers’ needs. Our development teams work with well-established engineering service providers and suppliers of high-quality components to build differentiated and personalized features, such as virtual assistants, in-car e-commerce, in-car entertainment, facial recognition, voice biometrics and more to create a truly personalized driving experience. With safety being of paramount importance, our heads-up-display, standard across all VinFast EV models, helps to ensure drivers’ eyes remain on the road to avoid the distraction of looking at consoles or panels below. In addition, we are focused on including the latest practical safety features through our ADAS implementation. Each of the vehicles that we currently plan to launch are planned to be offered with ADAS Level 2 capabilities. We plan to implement components of ADAS Level 3 in our vehicles in early 2024 and thereafter progress to ADAS Level 4 capabilities. Our technology platform provides ancillary revenue stream opportunities for VinFast over the ownership cycle, including features available for a monthly subscription fee.

 

   

Differentiated Ownership Experience to Drive Brand Loyalty: Our vision is to transform the traditional vehicle ownership model into a customized experience for our drivers, thereby increasing brand loyalty and adding more value to our drivers. We aim to do this through four key initiatives: our cloud-based companion app, unique warranty offer, “invisible service” program and VinFast Power Solutions. We intend for our app to allow for a fully-connected experience and act as a hub for owner-to-owner interaction, vehicle service, infotainment connectivity and more. Our 10-year / 125,000-mile comprehensive warranty, including our roadside assistance package, demonstrates our commitment to the quality of our products. Our “invisible service” program will aim to bring best-in-class convenience to our customers through remote care (diagnostics and virtual repairs), mobile services (provided by a fleet of EV vans) and roadside assistance, all of which will be accessible through our customer app and our 24/7 service centers. Finally, through our VinFast Power Solutions, we aim to alleviate anxiety around charging and autonomy by offering at-home smart charging solutions coupled with access to an extensive charging network through our E-Mobility platform.

 

   

Flexible Offering at an Inclusive Price Point: We believe that providing a flexible, high-quality product offering at an inclusive price point is critical to our “boundless together” philosophy. This philosophy offers the benefits of EVs to a broader population than possible today, which we believe will provide flexibility for us to capture market share. Our inclusive pricing model differentiates us from most OEMs in the market today that are pursuing the higher-priced premium segment. We target a broader market and offer a lower total cost of ownership (“TCO”) proposition compared to the

 

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average of our peers, without compromising on our design or technology suite. In short, we believe we offer the greatest value per mile of driver range relative to our peers. We believe we deliver this value not only through our competitive pricing relative to peers but also through our flexible ownership options, including our Battery Subscription Program, to reach a broader driver and ownership base. We have multiple advantages that allow us to maintain price competitiveness, including our highly-automated manufacturing facility, our access to a low-cost labor base in Vietnam, our well-diversified supplier base, relatively favorable tax environment and established trade agreements between Vietnam and the U.S., European Union and other major global markets. These relative strengths have allowed us to build a competitive cost structure that enables our inclusive pricing model.

 

   

Demonstrated Speed to Market and Ability to Execute: We have demonstrated our ability to deliver on market capture and brand building within Vietnam. With our initial line of ICE vehicles, we reached start of production within 21 months from company inception. Within 18 months from product launch, we gained the leading market share in Vietnam for each of our product segments, based on management’s analysis of publicly available data, taking market share from global automotive OEMs from Europe, the U.S. and Asia who have historically dominated these segments. From a product launch perspective, we had great success with the launch of our VF e34, Vietnam’s first EV that we pioneered last year, setting records in Vietnam by receiving over 25,000 reservations after 3 months, and receiving more than 417,500 organic discussions on social media in the two days following the announcement. The VF e34 was voted the “Green vehicle of 2022” and “Favorite C-segment CUV in 2022” by Otofun and among the top 10 best-selling vehicles in Vietnam in June 2022 according to Vietnamese Automobile Manufacturer’s Association (“VAMA”), TC Group and our public sales report. Similarly, our “The Future is Now” delivery event for the VF 8 at our manufacturing facility in Hai Phong in September 2022 has been featured by over 700 news outlets and has received over 8.5 million views on social media platforms. We believe our success in Vietnam has been enabled by our flat organizational structure, quick decision-making, and strong cooperation with internal and external parties. Our appearance at CES in January 2022 where we unveiled our VF 8 and VF 9 models, which was posted on various social media platforms and websites, received 7.7 million views in aggregate across social media platforms and websites within the first 48 hours of the unveiling. We have been featured by approximately 2,500 international and local media outlets, reaching a global audience of approximately 10 million with over 21 million impressions. After we debuted our planned EV lineup at CES in January 2022, we began accepting reservations globally for our VF 8 and VF 9 models and received approximately 24,000 reservations in the first 48 hours. As of September 30, 2022, we had reservations for approximately 58,000 VF 8 and VF 9 EVs globally, of which approximately 20% were reservations with non-refundable reservation fees and the remainder are cancellable reservations with small refundable reservation fees. At present, we are concurrently developing four new EV models, which we plan to roll out in the international markets within the next two years.

 

   

Highly Automated Manufacturing Capabilities: We produce vehicles out of our factory in Hai Phong, which we believe is one of the most highly automated and modern manufacturing facilities in Southeast Asia. Our manufacturing facility opened in 2018 and has supported the production of seven vehicle models (four ICE models, one e-bus model and three EV models) and nine e-scooter models with 16 different variants. The automobile manufacturing factory has a maximum production capacity rate (i.e. maximum number of vehicles that can be constantly manufactured in a year with additional shifts per day throughout the year) of up to 300,000 EVs per year and a lean production capacity rate (i.e. the number of vehicles that can be constantly manufactured in a year without additional shifts) of up to 250,000 vehicles per year. In order to facilitate volume expansion that we expect to achieve, we currently plan to expand our global maximum production capacity to a rate of up to 1,100,000 vehicles per year by 2026, and we anticipate the utilization rates to improve in line with our growing global production capacity and demand for VinFast vehicles. Both production volumes and capacity would be subject to market opportunities, demand, feasibility study, the availability of financing and timely completion of our capacity expansion projects. We believe our proven manufacturing capabilities will

 

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enable us to deliver on a global scale. In addition, we benefit from an integrated supplier park at our Hai Phong facility with our key partners on site, including ZF, FORVIA, Lear Corporation and others, which helps us to achieve economies of scale, drive manufacturing optimization and reduce costs. We source approximately 60% of the components for our EVs (excluding batteries) from suppliers in Vietnam, most of which are established international suppliers, based on the total value of parts produced or packed in Vietnam as a percentage of the total free-on-board cost of our vehicles (excluding batteries) as of September 30, 2022. Our location in Hai Phong, the third-largest city in Vietnam and home to one of its largest deep-sea ports, provides a competitive advantage in logistics as we ship our vehicles across the globe. Additionally, in 2022, we entered into a series of agreements with North Carolina state and local authorities to build a manufacturing facility spanning across a site measuring approximately 712 hectares in Chatham County, North Carolina. Commissioning of the facility is targeted for the second half of 2024.

 

   

Foundational Support from Vingroup: Our relationship with our corporate parent, Vingroup, affords us a superior competitive footing relative to other peers entering the electric vehicle market, especially through the partnership channels of Vingroup. Vingroup, together with VinFast’s shareholders, has provided substantial financial and strategic support to VinFast since our founding. As of September 30, 2022, approximately $7.5 billion has been deployed to fund operating expenses and capital expenditures of VinFast since 2017 by Vingroup, its affiliates and external lenders. We have benefited from access to the full range of intellectual property (“IP”) and R&D capabilities in the Vingroup technology ecosystem. One of the Vingroup companies that we expect will continue to play an integral role in our operation is VinES, one of our key battery partners. We have sourced battery packs from VinES since VinES commenced production of battery packs in the second quarter of 2022. VinES plans to be a fully integrated battery cell and pack manufacturer and is developing its own battery cell technology and battery cell production capabilities in Vietnam. As affiliates in the Vingroup ecosystem, VinES is expected to grow in lockstep with us to remain a tier 1 supplier of batteries to us as we expand. To that end, another of our Vingroup affiliates has made an investment in ProLogium, a manufacturer of next-generation solid-state batteries, which we believe will lead to future opportunities for us and VinES to collaborate in applying next-generation solid-state battery technology to VinFast vehicles. We believe this may reduce uncertainties associated with reliance on unrelated third parties outside of the Vingroup ecosystem for batteries. VinES is in the process of constructing a gigafactory in Central Vietnam to expand its battery pack production capabilities. In addition, VinES is developing a second lithium cell facility in Ha Tinh, Vietnam, in collaboration with Gotion.

 

   

Experienced, Diverse and Entrepreneurial Management: Our leadership team is singularly focused on achieving the original goals set out by Vingroup when VinFast was founded: to establish a high-quality, globally recognized e-mobility EV manufacturer in Vietnam. We are led by Global CEO, Le Thi Thu Thuy, who also holds the position of Vice Chairwoman of Vingroup. With 25 years of experience, Ms. Le was one of the key Vingroup executives instrumental in the push for the creation of a tech-forward vehicle manufacturing company. She has assembled a deep bench of talent from the automotive, technology and finance industries, unified by the spirit of “boundless together” and dedicated to driving the electric vehicle revolution for VinFast. We also benefit from the diverse experiences of our senior management team who come from different industries, including those that have previously served in different roles in leading automotive and technology companies, such as BMW, Ford, General Motors, McLaren and Microsoft.

Our Key Focus Areas and Long-Term Growth Strategies

Our long-term growth strategy is anchored on the following key pillars:

 

   

Increase Global Reach to Meet Demand: Our strategy is to continue growing our global footprint into areas where we expect high EV demand growth.

 

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North America (the U.S. and Canada) and Europe, represent the largest addressable markets for our EVs, together expected to represent approximately 42% of the global EV market by 2027, according to Frost & Sullivan. We plan to target these markets concurrently as we roll out our initial line of EVs and expand our sales network through new showroom openings. Based on our current growth strategy and the expected market opportunity, we anticipate the U.S. and Europe will be of similar significance to us in the medium to long-term. Based on our current outlook for growth in demand for our vehicles, particularly in the B, D and E segments, we expect the VF 6s and VF 8s to account for the majority of our sales volume and the VF 8s and VF 9s to account for the majority of our EV revenue in the near-term.

We plan to expand both our physical showrooms and other sales efforts so that we can continue to provide greater access to our products and price points as market conditions warrant. In Phase One of our global roll-out, we are beginning in the U.S., Canada, Germany, France, the Netherlands and Vietnam. Concurrently, we expect to roll out our online platform across the globe to execute on our digital strategy to complement the in-person experience. Our website will allow for full customization of the vehicle and use virtual reality to allow for a near-tangible buying experience from the comfort of our customers’ homes. We plan to open more than 70 showrooms across North America and Europe by the end of 2023, which will either be owned and operated by us or opened in collaboration with our dealers. In Phase Two, we plan to expand our penetration in our initial target markets of the U.S., Canada, Germany, France, the Netherlands and Vietnam and to begin distributing VinFast vehicles in other markets globally through partnerships with strategically selected distributors. In addition, we continue to build out our B2B strategy of entering into business relationships with large corporations and well-known leasing, mobility and short-term rental suppliers. Since the beginning of our global rollout, we have evaluated potential demand from the B2B customer segment and identified it as a meaningful contributor to our strategic vision. We believe that short-term rentals serve as valuable test drive opportunities for our vehicles that can drive more future owners to our online sales channel. In addition, we plan to offer insurance and maintenance services to expand our revenue streams, and may evaluate pre-owned and remarketing opportunities to further service our customers and financial service providers as part of our overall B2B strategy.

 

 

LOGO

 

  Notes:

  1.

Including VinFast-owned showrooms and partnership showrooms.

  2.

Pre-construction work for phase 1 of the Manufacturing Center in North Carolina commenced in the third quarter of 2022, with commissioning targeted for the second half of 2024.

 

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Continue Augmenting our “Technology for Life” Offering: We intend to remain at the forefront of automotive technology through our in-house R&D and external partnerships. We seek to deliver the best experience for our drivers with innovative customer-centric applications inside and outside the vehicles. We plan to continuously make our vehicles smarter over time through OTA system updates, and we intend to leverage the power of data to understand and serve our drivers better through artificial intelligence (“AI”). Through a network of renowned partners in various industries, we aim to continue creating a technology ecosystem that allows us to seamlessly adapt to the changing technology landscape broadly, and develop features with the driver in mind, such as adding additional languages on our voice assistant, more connectivity with mobile phones and more. We have more technologies and applications still in the pipeline (such as enhanced autonomous features with ADAS or “advanced driver assistance system”) and plan to incorporate them into our vehicles to constantly provide a state-of-the-art driving experience that we believe will attract new drivers to our brand, build brand loyalty with existing drivers and help VinFast stand out as a leader among our peers. Each of the vehicles that we currently plan to launch are planned to be offered with ADAS Level 2 capabilities. We plan to implement components of ADAS Level 3 in our vehicles in early 2024 and thereafter progress to ADAS Level 4 capabilities.

 

   

Innovate Our Commercial Approach to Drive Incremental Market Share: We intend to rapidly expand our sales network across the globe, while simultaneously building out after-sales infrastructure to support our drivers. We intend to approach the market with a significant social media presence, as well as traditional advertising and in-person showrooms. A large tenet of our growth strategy will come from our O2O customer engagement strategy, with the aim of allowing a high level of customization and personalization for our drivers. Customers will be able to engage with us online through our website and companion app, while our showroom network will provide an offline, tangible in-person experience. We believe continued direct engagement is important, not only though our membership program, but also through multiple touchpoints on social media. We believe the insights gained through direct interaction with our drivers will allow us to respond efficiently to customer needs in future vehicle feature development. Additionally, we plan to work with VinES on an ongoing basis to optimize our battery costs, in order to maintain our price point differentiation in the EV market.

 

   

Expand Our Product Offering: We plan to continually evaluate the benefits of expanding our portfolio into other high-growth, high-demand EV segments in the future. We plan to introduce new trims for the VF 8 and VF 9 in the next two years. Our forthcoming “green” trim is expected to be made from sustainable materials and serve as a more eco-friendly option for drivers. Our forthcoming “lux” trim is expected to be made with higher-end materials to offer drivers a more luxurious surrounding and feature elevated E/E performance, interior design, infotainment and ADAS features. We also intend to evaluate expansion into segments such as sedans, pickup trucks and commercial electric vehicles. We have a track record of rolling out our vehicle platforms at a fast pace and aim to capitalize on market opportunities complementary to our platform. Our in-house development of new products is based on research on the demands of our drivers, and we are built to be nimble in responding to market opportunities. With respect to our current anticipated all-electric SUV product line, in addition to the VF e34 (C-segment) rolled out in 2021 and the VF 8 (D-segment) rolled out in 2022, we plan to launch the VF 9 (E-segment) in early 2023, followed by the VF 5 (A-segment), VF 6 (B-segment) and VF 7 (C-segment) in 2023. These vehicles are being released in high-growth markets that we have researched for size and demand opportunity, and we will use the same level of scrutiny in conducting our market research to determine how and when to expand into new product lines and relevant markets. The VF 5, VF 6 and VF 7 were recognized on Forbes Wheels’ list of “The 10 coolest cars from CES 2022.”

 

   

Enhance and Refine Our Service Offering: Building on our customer-centric mindset throughout our development and commercial processes, we plan to continue expanding and improving our service offering. As we continue to expand into additional geographies globally, we plan to build upon our service network and mobile service platform to ensure on-demand coverage for all drivers. Given our vehicles are

 

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OTA-upgrade enabled, we intend to continue developing technology to make servicing a remote or hands-free process to the greatest extent possible. Along with expanding our service offering, we expect to add incremental charging partners to our network, ensuring seamless and accessible charging.

 

   

Pursue Enhanced Manufacturing Automation and Capacity Expansion: We plan to expand our global maximum production capacity to a rate of up to 1,100,000 vehicles per year by 2026 (assuming the realization of expected growth in demand for our EVs and the availability of financing for, and timely and on-budget completion of, capacity expansion projects). This expansion is expected to come in the form of investments in technology, equipment and infrastructure to add manufacturing capacity within our existing facility in Hai Phong, as well as opening an additional factory in the U.S. In 2022, we entered into a series of agreements with North Carolina state and local authorities to build a large-scale manufacturing center at the Triangle Innovation Point megasite in North Carolina’s Chatham County. Pre-construction work for phase 1 of the factory commenced in the third quarter of 2022, with commissioning targeted for the second half of 2024. Phase 1 of the facility is expected to have an initial capacity of 150,000 vehicles per year, with the site, layout and infrastructure of the facility designed to accommodate further capacity expansion to 250,000 vehicles per year upon completion of phase 2. We believe this facility will help diversify our manufacturing footprint in a critical growth market where we plan to expand and take advantage of applicable state and local incentives. We plan to continue to manufacture our vehicles in Vietnam and export them to the U.S. to fill U.S. orders until our North Carolina facility commences production and meets our U.S. volume requirements. In addition, we plan to continue improving the efficiency of our manufacturing process with the implementation of additional automated technology throughout the entire manufacturing value chain, which we believe is already conforming to Industry 4.0 standards of interconnectivity, automation, machine-learning and real-time data processing incorporation.

 

   

Broaden Our Ancillary Revenue Streams: Our vehicles’ built-in features provide a large opportunity for ancillary revenue streams in the future. We envision the following potential ancillary revenue streams in addition to our primary revenue focus on vehicle and aftermarket sales: licensing of higher-tech autonomy features, licensing the use of advanced infotainment and data sharing features, “invisible service” program, vehicle financing and subscription services through our infotainment platform. From a data collection perspective, we see a large opportunity to develop increased features and functionalities by sharing our collective intelligence with partners as well.

 

   

Drive Intelligent Growth through Organic and Inorganic Opportunities: We plan to pursue potential organic and inorganic growth opportunities which align with our business strategy. We plan to put capital to work to grow in new organic channels, including broadening and improving upon our current portfolio offering (such as potential supplier integration and additional vehicle segments). We plan to also explore potential avenues of inorganic growth in furtherance of the mission of Smart Mobility. To date, we and our affiliates have made investments in early-stage technology companies that could be additive to our platform in the future, including: StoreDot, which plans to manufacture extremely fast charging lithium-ion battery cells; ProLogium, which is developing solid-state battery cells; and Autobrains, a developer of AI for autonomous driving. We look forward to the possibility of building relationships with other companies that share our entrepreneurial, innovative spirit and plan to continue making relevant investments to expand the VinFast ecosystem by bringing strategic partners together with meaningful capital.

 

   

Continue to Promote and Invest in our ESG Framework: As we continue to expand in new global markets, we acknowledge global warming and climate related risks. As a company, we are resiliently pursuing zero-emission vehicles both through innovation and sustainability. We have declared our commitment to sustainability as a signer of the COP26 ZEV declaration and The Climate Pledge. We have set a target to be carbon neutral by 2040 in all our operations. Recognizing the need for green and clean energy, we ceased production of ICE vehicles in early November 2022 and converted our

 

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manufacturing entirely to EV vehicles in line with our journey to reduce our carbon footprint and pursue environmental stewardship. Apart from the inherent environmental benefits of our product line, we plan to strategically collaborate with VinES to operate a battery recycling program in the pursuit of achieving zero waste to landfill. We conduct social outreach programs in the communities where we operate in support of local enterprises and social economic upliftment and for our employees and stakeholders, as a key component of our operations. From a governance perspective, we continue to serve the best interests of our shareholders through a balanced board of directors with a focus on diversity, equity and inclusion in our leadership and complying with the latest index and regulatory requirements. We expect promoting this ESG framework will generate recognition for our brand, while also promoting a well-rounded and inclusive environment that we expect will be attractive to current and future VinFast stakeholders.

Summary of Risk Factors

Our business is subject to numerous risks and uncertainties that may materially affect our business, financial condition, results of operations and prospects, as more fully described in “Risk Factors” immediately following this prospectus summary. These risks include, among others, the following:

 

   

We are a growth stage company that has a history of losses, negative cash flows from operating activities and negative working capital;

 

   

We will require significant additional capital to support business growth. We expect to fund our capital requirements through additional debt and equity financing, including related party financing. Such capital might not be available on commercially reasonable terms, or at all, and could, among other things, be burdensome and lead to dilution of your shareholding in our company;

 

   

We face risks associated with being a new entrant in the EV industry and the marketing and sale of our EVs in international markets where we have not yet made any deliveries of vehicles;

 

   

Our long-term results depend upon our ability to successfully introduce and market new products and services, which may expose us to new and increased challenges and risks;

 

   

We may not succeed in growing our brand in markets outside Vietnam. Our brand, reputation, public credibility and consumer confidence in our business could be harmed by negative publicity;

 

   

We may be unable to adequately control the costs associated with our operations;

 

   

We are dependent, directly and indirectly, on suppliers for component parts and raw materials. Suppliers may fail to deliver components and raw materials according to our schedule and at prices, quality and volumes acceptable to us;

 

   

Our success will be dependent upon our ability to maintain relationships with existing suppliers who are critical and necessary to the output and production of our vehicles and to create relationships with new suppliers;

 

   

The automotive market is highly competitive, and we may not be successful in competing in this industry;

 

   

The process of establishing manufacturing facilities outside of Vietnam, and expanding our capacity within Vietnam, may be subject to delays or cost overruns, may not produce expected benefits or may cause us to not meet our projections for future production capacity;

 

   

Our reservations may not result in completed sales of our vehicles and our actual vehicle sales and revenue generated for their sales could differ materially from the number of reservations received;

 

   

Our Battery Subscription Program is relatively novel in the electric vehicle industry and may not attain wide consumer acceptance;

 

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Our future growth is dependent on the demand for, and upon consumers’ willingness to adopt EVs, which may be affected by various factors, including developments in EV or alternative fuel technology;

 

   

If there is inadequate access to EV charging stations or related infrastructure, our business may be materially and adversely affected;

 

   

The unavailability, reduction or elimination of government and economic incentives or government policies which are favorable for EV manufacturers and buyers could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects;

 

   

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately and timely report our financial condition, results of operations or cash flows, which may adversely affect investor confidence;

 

   

We have identified material weaknesses in our internal control over financial reporting. If our remediation of such material weaknesses is not effective, or if we experience additional material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements and comply with applicable laws and regulations could be impaired;

 

   

Our corporate actions that require shareholder approval will be substantially controlled by our controlling shareholders who will have the ability to control or exert significant influence over such matters, which may prevent you and other shareholders from influencing significant decisions and reduce the value of your investment; and

 

   

We have relied on Vingroup for financial support and are dependent on Vingroup affiliates for key aspects of our business. Accordingly, we have engaged in various related party transactions with Vingroup, and any potential conflicts of interest could have an adverse effect on our business and results of operations. Due to our close association with Vingroup and its affiliates, we could also be impacted by matters affecting their reputation, including litigation, regulatory or other matters.

Corporate History

We commenced operations in June 2017 in Hanoi, Vietnam, through our Vietnamese subsidiary, VinFast Trading and Production Joint Stock Company (“VinFast Vietnam”). In May 2018, we changed our name to VinFast Trading and Production Limited Liability Company and relocated our head office to Hai Phong, Vietnam. The construction of our electric scooter manufacturing plant was completed in April 2018 and we started production of our first electric scooter model, branded Klara, in November 2018. We broke ground on our automobile manufacturing plant in September 2017 and officially launched the plant in June 2019.

In December 2021, VinFast Vietnam was converted into a joint stock company under the name, VinFast Trading and Production Joint Stock Company.

To facilitate our initial public offering in the U.S., we established our offshore holding structure through a series of transactions that resulted in VinFast Vietnam’s operations being reorganized under the Singapore-incorporated registrant, VinFast Auto Ltd. The registrant acquired an aggregate 99.9% voting interest in VinFast Vietnam from Vingroup and VIG, who in turn became majority shareholders of the registrant. For more information, see “Corporate History and Structure — Reorganization.”

We ceased all production of ICE vehicles in early November 2022 in connection with our strategic decision to transform into an EV-only manufacturer. As part of this transformation into an EV-only manufacturer, we transferred various ICE Assets (as defined herein) to VIG pursuant to the terms of the ICE Assets Disposal Agreements (as defined herein). We refer to these ICE assets disposal transactions as the “ICE Assets Disposal.” For more information regarding the Reorganization and the ICE Assets Disposal, see “Corporate History and Structure — Phase-out of ICE Vehicle Production.”

 

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Organizational Structure

The following chart summarizes our corporate structure setting forth our ownership interest and the country of incorporation for each of our principal operating subsidiaries as of the date of this prospectus.

 

LOGO

Notes:

(1)

The registrant is currently a Singapore private limited company operating under the name “VinFast Trading & Investments Pte. Ltd.” Prior to the effective date of this Registration Statement, the registrant will convert to a Singapore public limited company. Upon such conversion, the registrant will be known as VinFast Auto Ltd.

(2)

Based on proportion of voting power held. The registrant owns 87.7% of this subsidiary’s total outstanding share capital, including non-voting preferred shares.

Corporate Information

Our company was incorporated in Singapore on January 19, 2015 as Fiscus Consultancy Pte. Ltd., a private limited company (Company Registration No. 201501874G) under the Companies Act 1967 of Singapore (the “Singapore Companies Act”). Our company’s name was changed to VinFast Trading & Investment Pte. Ltd. on April 8, 2021. Prior to the effective date of this Registration Statement, the registrant will convert to a Singapore public limited company. Upon such conversion, the registrant will be known as VinFast Auto Ltd.

Our principal executive offices are located at Dinh Vu – Cat Hai Economic Zone, Cat Hai Islands, Cat Hai Town, Cat Hai District, Hai Phong City, Vietnam. Our telephone number at this address is +84 225 3969999. Our registered office in the Singapore is located at 120 Lower Delta Road, #02-05 Cendex Centre, Singapore 169208.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.vinfastauto.us. The information contained on our website is not a part of this prospectus. Our agent for service of process in the U.S. is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

 

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Implication of Being a Foreign Private Issuer

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable to U.S. domestic issuers. Moreover, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, as a company incorporated in Singapore, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards.

Implication of Being an Emerging Growth Company

As a company with less than $1.24 billion in gross revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups (“JOBS”) Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We do not plan to “opt out” of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least $1.24 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ordinary shares that are held by non-affiliates is at least $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

 

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THE OFFERING

 

Issuer

VinFast Auto Ltd.

 

Offering price

We expect that the initial public offering price will be between $                and $                per ordinary share.

 

Ordinary shares offered by us

                ordinary shares (or                ordinary shares if the underwriters exercise their over-allotment option in full).

 

Ordinary shares issued and outstanding immediately after this offering

                ordinary shares (or                ordinary shares if the underwriters exercise their over-allotment option in full).

 

Over-allotment option

We have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of                additional ordinary shares.

 

Use of proceeds

We expect that we will receive net proceeds of approximately $                million from this offering or approximately $                million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $                per ordinary share, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering.

 

  We plan to use the net proceeds of this offering:

 

   

to partially or fully repay the remaining outstanding Share Acquisition P-Notes issued in connection with the Reorganization. In accordance with the terms of the Reinvestment Agreement, Vingroup will reinvest the offering proceeds it receives from the Share Acquisition P-Note into VinFast Vietnam (the “IPO Proceeds Reinvestment”) less VND6.0 trillion ($251.0 million) corresponding to the advance capital contribution made by Vingroup to VinFast Vietnam in March 2022. See “Corporate History and Structure — Reorganization” for more information. We plan to use the IPO Proceeds Reinvesment and any net proceeds remaining after repayment of the outstanding Share Acquisition P-Notes as follows:

 

   

investments in research and development of products, services and technology sales (approximately         % of the net proceeds of this offering);

 

   

investments in sales and marketing and expansion of sales channels (approximately         % of the net proceeds of this offering);

 

   

investments in the development of our manufacturing facilities (approximately         % of the net proceeds of this offering); and

 

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the balance for working capital and general corporate purposes, which may include potential strategic investments and acquisitions, although we have not identified any specific investments or acquisition opportunities at this time.

 

  See “Use of Proceeds” for more information.

 

Dividend policy

Subject to our constitution and in accordance with the Singapore Companies Act, our board of directors may, without the approval of our shareholders, declare and pay interim dividends but any final dividends we declare must be approved by an ordinary resolution at a general meeting of our shareholders. See “Dividend Policy.”

 

Risk factors

See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.

 

Lock-up

We, our directors, executive officers, and all of our existing shareholders have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ordinary shares or similar securities for a period of                days after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

 

Listing

We intend to apply to have our ordinary shares listed on Nasdaq under the symbol “VFS.” Our ordinary shares will not be listed on any other stock exchange or traded on any automated quotation system.

 

Payment and settlement

The underwriters expect to deliver the ordinary shares to purchasers against payment therefor through the facilities of The Depository Trust Company on                , 2023.

The number of ordinary shares to be outstanding after this offering is based on 2,411,764,800 ordinary shares outstanding as of September 30, 2022.

 

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SUMMARY CONSOLIDATED FINANCIAL DATA

The financial information in this prospectus as of December 31, 2020 and for the year then ended has been derived from the consolidated financial statements of VinFast Trading and Production Joint Stock Company, which are included elsewhere in this prospectus. The financial information in this prospectus as of December 31, 2021 and for the year then ended and as of September 30, 2022 and for the nine-months ended September 30, 2021 and 2022 has been derived from the consolidated financial statements of VinFast Trading & Investment Pte. Ltd., which are included elsewhere in this prospectus. The financial statements of VinFast Trading and Production Joint Stock Company and VinFast Trading & Investment Pte. Ltd. are prepared in accordance with U.S. GAAP.

We ceased all production of ICE vehicles in early November 2022 in connection with our strategic decision to transform into an EV-only manufacturer. Accordingly, our historical results for any prior period are not necessarily indicative of results expected in any future period.

You should read this Summary Consolidated Financial and Operating Data section together with the consolidated financial statements included elsewhere in this prospectus and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Summary Consolidated Balance Sheet Data

 

     As of December 31,     As of September 30,  
     2020     2021     2022  
    

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

   

USD

(in millions)

 

Cash and cash equivalents

     827.7       3,024.9       126.6       1,854.6       77.6  

Inventories, net

     5,352.2       6,683.7       279.7       12,514.2       523.6  

Short-term amounts due from related parties

     8,840.5       1,997.2       83.6       2,862.5       119.8  

Total current assets

     20,449.5       26,692.5       1,116.8       36,857.1       1,542.1  

Property, plant and equipment, net

     52,089.7       51,788.3       2,166.9       61,498.8       2,573.2  

Other investments

     11,031.3       —         —         —         —    

Total assets

     92,905.9       85,321.5       3,569.9       105,380.8       4,409.2  

Amounts due to related parties

     3,171.4       56,035.3       2,344.6       76,613.6       3,205.6  

Total current liabilities

     20,040.8       87,305.3       3,652.9       126,989.4       5,313.4  

Long-term interest-bearing loans and borrowings

     46,352.8       31,343.1       1,311.4       34,486.2       1,442.9  

Total non-current liabilities

     66,685.0       74,957.4       3,136.3       83,213.5       3,481.7  

Ordinary Shares – VinFast Auto (2,411,764,800 shares issued and outstanding as of September 30, 2022; 2,411,764,800 shares issued and outstanding as of December 31, 2021)(1)

     —         553.9       23.2       553.9       23.2  

Contributed charter capital – VinFast Vietnam(2)

     38,707.3       —         —         —         —    

Accumulated losses

     (44,356.2     (77,416.9     (3,239.2     (111,915.0     (4,682.6

Capital reserve – VinFast Vietnam

     11,753.2       —         —         —         —    

Equity attributable to equity holders of the parent

     6,150.1       (76,926.5     (3,218.7     (104,770.0     (4,383.7

 

Notes:

(1)

In January 2022, the Company effected a 100-for-one split of its ordinary shares. Amounts prior to the share split have been revised on a retroactive basis to give effect to the share split.

(2)

Following the Reorganization, the consolidated statements of shareholders’ equity for the year ended December 31, 2021 represented changes of equity components from VinFast Vietnam to our company. The consolidated statements of shareholders’ equity for the year ended December 31, 2020 represented equity components of VinFast Vietnam, the predecessor.

 

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Summary Consolidated Statements of Operations

 

    For the Year Ended December 31,     For the Nine Months Ended
September 30,
 
    2020     2021     2021     2022  
   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

 

Revenues

           

Sales of vehicles

    11,771.7       13,898.6       581.5       9,550.0       8,779.7       367.3  

Sales of merchandise

    1,436.1       1,405.4       58.8       1,122.7       46.4       1.9  

Sales of spare parts and components

    343.0       538.2       22.5       356.7       1,463.6       61.2  

Rendering of services

    22.0       96.6       4.0       74.5       159.8       6.7  

Rental income

           

Revenue from leasing activities

    117.5       89.4       3.7       74.0       51.0       2.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenues (*)

    13,690.3       16,028.2       670.6       11,177.9       10,500.5       439.4  

Cost of vehicles sold

    (18,618.8     (23,327.0 )      (976.0     (16,166.9     (17,485.1     (731.6

Cost of merchandise sold

    (1,388.8     (1,398.3 )      (58.5     (1,115.4     (46.2     (1.9

Cost of spare parts and components sold

    (234.0     (437.2 )      (18.3     (292.7     (1,310.1     (54.8

Cost of rendering services

    (11.2     (65.4 )      (2.7     (51.0     (193.5     (8.1

Cost of leasing activities

    (132.6     (56.1 )      (2.3     (40.9     (42.8     (1.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales

    (20,385.5     (25,284.0)       (1,057.9)       (17,666.8 )      (19,077.8 )      (798.2 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross loss

    (6,695.1 )      (9,255.8 )      (387.3 )      (6,489.0 )      (8,577.3 )      (358.9 ) 

Operating expenses:

           

Research and development costs

    (3,929.8     (9,255.4     (387.3     (5,266.5     (14,041.6     (587.5

Selling and distribution costs

    (1,346.6     (2,203.8     (92.2     (1,268.4     (3,361.2     (140.6

Administrative expenses

    (1,206.5     (2,424.6     (101.4     (1,702.7     (1,981.2     (82.9

Compensation expenses

    —         (4,340.3     (181.6     —         —         —    

Net other operating (expenses)/income

    (67.5     412.5       17.3       714.0       (1,475.3     (61.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

    (13,245.5     (27,067.4)       (1,132.5)       (14,012.5 )      (29,436.5 )      (1,231.7 ) 

Finance income

    248.7       446.1       18.7       376.9       91.9       3.8  

Finance costs

    (4,553.9     (4,598.2     (192.4     (3,182.6     (5,454.8     (228.2

Net (loss)/gain on financial instruments at fair value through profit or loss

    (1,494.6     (1,710.0     (71.5     (1,858.3     1,277.3       53.4  

Investment gain

    224.8       956.6       40.0       909.5       —         —    

Share of losses from equity investees

    (42.0     (36.8     (1.5     (35.1     —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax expense

    (18,862.5     (32,009.7)       (1,339.3)       (17,802.2 )      (33,522.2 )      (1,402.6 ) 

Tax expense

    (87.8     (209.2     (8.8     (197.9     (1,013.3     (42.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss for the year/period

    (18,950.2     (32,219.0)       (1,348.1)       (18,000.1 )      (34,535.4 )      (1,445.0 ) 

 

(*)

Including sales to related parties in 2020, 2021, the nine months ended September 30, 2021 and 2022, of VND56.4 billion, VND516.5 billion ($21.6 million), VND131.1 billion and VND1,650.8 billion ($69.1 million), respectively.

 

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Summary Consolidated Cash Flows Data

 

    For the Year Ended December 31,     For the Nine Months Ended
September 30,
 
    2020     2021     2021     2022  
   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

 

Net cash flows used in operating activities

    (9,349.2     (28,969.1     (1,212.1     (22,661.4     (25,528.8     (1,068.1

Net cash flows (used in)/from investing activities

    (1,839.0     2,420.1       101.3       2,797.2       (11,102.5     (464.5

Net cash flows from financing activities

    10,453.8       28,855.2       1,207.3       21,405.6       35,452.7       1,483.4  

Net (decrease)/increase in cash and cash equivalents

    (734.4     2,306.2       96.5       1,541.4       (1,178.6     (49.3

Cash and cash equivalents at the end of the year/period

    827.7       3,024.9       126.6       2,277.9       1,854.6       77.6  

 

 

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RISK FACTORS

An investment in our ordinary shares involves significant risks. You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ordinary shares. Any of the following risks could have a material and adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ordinary shares could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We are a growth stage company that has a history of losses, negative cash flows from operating activities and negative working capital.

We had net losses of VND18,950.2 billion and VND32,219.0 billion ($1,348.1 million) in 2020 and 2021, respectively. We had net losses for the period of VND18,000.1 billion and VND34,535.4 billion ($1,445.0 million) for the nine months ended September 30, 2021 and 2022, respectively. We had net cash flows used in operating activities of VND9,349.2 billion and VND28,969.1 billion ($1,212.1 million) in 2020 and 2021. We had net cash flows used in operating activities of VND22,661.4 billion and VND25,528.8 billion ($1,068.1 million) for the nine months ended September 30, 2021 and 2022. We expect to continue to incur operating and net losses in the near term as we scale the production of our VF e34 (C-segment), VF 5 (A-segment), VF 6 (B-segment), VF 7 (C-segment), VF 8 (D-segment) and VF 9 (E-segment) vehicles, establish our manufacturing operations and expand our marketing, sales and service network in our target markets outside of Vietnam.

Our ability to achieve profitability, positive cash flows from operating activities and a net working capital surplus will depend on many factors, including our ability to achieve commercial acceptance, increase utilization of our production capacity to produce EVs in large quantities as planned and increase sales of our EVs in our target markets beyond Vietnam where our operations have historically been focused, including the U.S., Canada, France, Germany, the Netherlands and, in the long-term, elsewhere in Asia and Europe and other factors discussed in this “Risk Factors” section.

Vingroup has issued support letters in connection with the audit of our 2020 and 2021 financial statements and the review of our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2022 to the effect that Vingroup has the ability and will continue to provide financial support sufficient to meet our needs for continued operation, subject to necessary procedures to facilitate such support. Our financial statements have been issued on a going concern basis taking into consideration the support letters, our business plan and the cash and cash equivalents held by our group. The latest support letter is valid until the earliest of the date on which our company obtains adequate third party funding for our capital requirements, or until Vingroup ceases to control our company, but in all cases no sooner than the date falling 12 months after the issuance date of the unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2022.

We will require significant additional capital to support business growth. We expect to fund our capital requirements through additional debt and equity financing, including related party financing. Such capital might not be available on commercially reasonable terms, or at all, and could, among other things, be burdensome and lead to dilution of your shareholding in our company.

The design, manufacture, sale and servicing of automobiles is a significantly capital intensive business. As of December 31, 2021 and September 30, 2022, we had total debt (which is our short-term and current portion of long-term interest-bearing loans and borrowings and long-term interest-bearing loans and borrowings, excluding borrowings from related parties) of VND47,169.8 billion ($1,973.6 million) and VND59,552.2 billion ($2,491.7 million), respectively. As of December 31, 2021 and September 30, 2022, we had VND7,497.5 billion ($313.7 million) and VND3,182.0 billion ($133.1 million) of undrawn lines of credit for short-term financing under our existing credit facilities, respectively, and VND3,024.9 billion ($126.6 million) and VND1,854.6 billion ($77.6 million) in cash and cash equivalents, respectively. In the next few years, we expect

 

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to require a significant amount of additional capital, including working capital, to scale the production of our VF e34 (C-segment), VF 5 (A-segment), VF 6 (B-segment), VF 7 (C-segment), VF 8 (D-segment) and VF 9 (E-segment) vehicles, our production capacity expansion in both Vietnam and the U.S., showroom roll-out, our Battery Subscription Program, and other items. We will also require a significant amount of additional working capital to support our business expansion in the medium-term.

Following the completion of this offering, we expect to rely on equity and/or debt financing available in the public and also private markets to meet our present and future working capital and capital expenditure requirements. Raising additional funds through future issuances of equity or convertible debt securities would likely lead to our existing shareholders suffering dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. Any debt financing that we may secure in the future may contain covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities and may also be burdensome in terms of increasing interest expenses. In addition, among other macroeconomic factors, an increase in interest rates would adversely affect our ability to secure additional debt financing and would result in higher interest payments. If interest rates remain at elevated levels or continue to rise, it may be more difficult for us to obtain debt financing on terms that are commercially favorable or in line with our budget and expectations, and our interest payments may increase.

Our capital requirements will depend on many factors, including, but not limited to:

 

   

our need to develop new features and enhance our products;

 

   

our investments in manufacturing, sales and distribution infrastructure and systems and any capital improvements to our existing infrastructure and systems;

 

   

technological advancements;

 

   

market acceptance of our products and product enhancements, and the overall level of sales of our products;

 

   

our R&D and sales and marketing expenses;

 

   

our ability to control costs;

 

   

our ability to maintain existing manufacturing equipment;

 

   

opportunities for investments, acquisitions and similar actions;

 

   

inflationary pressures and their effect on consumer spending and our ability to obtain financing on commercially acceptable terms;

 

   

general economic conditions in the countries where we manufacture our EVs and in our target markets;

 

   

the effects of international conflicts on the international supply chains and the global economy as a whole; and

 

   

changes in business conditions or other unanticipated developments.

Vingroup is our largest shareholder and has provided us with funding in the form of debt financing, corporate loan guarantees, and capital contributions. Vingroup has also issued support letters in connection with the audit of our 2020 and 2021 financial statements and the review of our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2022, as described above. We may continue to depend, in part, on financing and other support from our affiliates in the future. There can be no assurance that in the future financing from our affiliates will continue to be available to us in sufficient amounts or at all due to their level of indebtedness, other financial obligations or overall funding position, or that, as an alternative to financing from our affiliates, we will be able to obtain third-party debt financing or access the capital markets in a timely manner and on terms that are acceptable to us or at all. In addition, a number of our

 

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financing agreements provide that various payment delays or defaults by Vingroup would constitute a cross default under the terms of our agreements, and therefore an adverse change in Vingroup’s financial condition could impact our debt maturity profile and liquidity requirements.

Our outstanding indebtedness may affect our ability to obtain additional financing to meet our future requirements. Some of our financing arrangements require us and Vingroup, as guarantor, to ensure a collateral cover ratio of at least one times when measured on a quarterly basis. See “Description of Certain Indebtedness.” Our collateral cover ratio in respect of loans totaling VND29,636.8 billion ($1,240.0 million) fell below the required ratio as of September 30, 2022 but was restored subsequently by Vingroup to meet the required ratio. As of the date of this prospectus, the Group is in the process of completing administrative procedures with the relevant regulatory bodies to register the additional collateral. If the value of this collateral declines in the future, we will be required to provide, or arrange for, additional collateral to ensure our compliance with the terms of these financing arrangements. If we are unable to do so, including due to the inability of Vingroup to provide the support that we require, it may result in a breach of the terms of our financing arrangements.

Any inability to raise financing on commercially acceptable terms or at all could result in our failure to implement our business plans and strategy or cause us to experience disruptions in our operating activities, and our business, financial condition, results of operations, cash flows and prospects would be materially and adversely affected.

We face risks associated with being a new entrant in the EV industry and the marketing and sale of our EVs in international markets where we have not yet made any deliveries of vehicles.

Our company was established in Vietnam in 2017 and commenced the delivery of ICE vehicles in 2019. Our operations prior to 2021 have focused primarily on the manufacture and sale of ICE vehicles and electric scooters. In 2021, we launched our first EV model in Vietnam, our VF e34, and in early 2022, we began accepting reservations for our second and third models, the VF 8 and VF 9, with VF 8 being launched in September 2022 and VF 9 expected to be launched in early 2023. We will face many of the risks and challenges typically associated with commencing operations in the relatively new EV industry. Unforeseen risks associated with moving from an ICE to EV manufacturer could also adversely affect us. It may be difficult to predict our future revenues and appropriately budget for our expenses given our relatively limited operating history in the EV industry.

In Vietnam, our future success will depend on our ability to continue designing, producing and selling safe, high-quality vehicles as we transition to being an EV-only manufacturer. In addition, a significant part of our growth strategy entails the marketing and sale of our EVs in markets outside of Vietnam. Our growth strategy will expose us to a number of risks, including, but not limited, to:

 

   

competition with other manufacturers whose brands are more well known in the local target market and who may have more experience and financial resources;

 

   

increased costs associated with developing and maintaining effective marketing and distributing presence in various countries;

 

   

risks associated with establishing and maintaining manufacturing operations in new jurisdictions;

 

   

unanticipated changes in prevailing economic conditions and regulatory requirements, such as rising inflation, interest rate increases by the U.S. Federal Reserve and other central banks, the availability and cost of credit and economic recession or fears thereof;

 

   

costs relating to compliance with different commercial, legal and regulatory requirements of the new markets in which we offer or plan to offer our products and services;

 

   

the availability and reliability of electric vehicle charging and other electric infrastructure;

 

 

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our ability to expand our marketing, sales and service network in our target markets outside of Vietnam;

 

   

our ability to price our services, including after-sales services;

 

   

our ability to adopt new technologies and advance our technological capabilities;

 

   

our ability to effectively manage our intended rapid growth, including increased order volume and the launch and production of multiple new EV models concurrently. For example, we currently plan to roll out the VF 8 (D-segment) and the VF 9 (E-segment) in North America and Europe, and the VF 5 (A-segment), VF 6 (B-segment) and VF 7 (C-segment) thereafter. The successful roll out of multiple vehicles within a short span of time, particularly as a new entrant in the EV industry may subject us to additional risks which could impact our reputation;

 

   

our ability to produce and deliver our EVs on schedule, which may depend on factors beyond our control, including vehicle licensing and safety and other certification processes in our target markets;

 

   

fluctuations in foreign currency exchange rates;

 

   

changes in EV subsidy policies in our target markets that adversely affect the availability or level of subsidies to us and/or our ability to compete with domestic EV makers in such markets;

 

   

costs associated with shipping and logistics for transporting our products to end markets;

 

   

failure to develop appropriate risk management and internal control structures tailored to overseas operations;

 

   

different safety concerns and measures needed to address accident related risks in different countries and regions; and

 

   

trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses.

Any of the factors described above may have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Our long-term results depend upon our ability to successfully introduce and market new products and services, which may expose us to new and increased challenges and risks.

Our growth strategy depends in part on our ability to continue augmenting our “technology for life” offering, increase our global reach to meet demand, innovate our commercial approach, expand our product offerings, enhance and refine our service offering, pursue enhanced manufacturing automation and capacity expansion, broaden our ancillary revenue streams, pursue organic and inorganic growth opportunities and promote and invest in our ESG initiatives.

As we introduce new products and services or refine, improve or upgrade versions of existing products and services, we cannot predict the level of market acceptance or the amount of market share these products or services will achieve, if any. We cannot assure you that we will not experience material delays in the entry into new markets and the introduction of new products and services in the future. Consistent with our strategy of offering new products and product refinements, we expect to continue to use a substantial amount of capital for product refinement, research and development, and sales and marketing.

If we are unable to successfully implement our long-term growth strategy, our business, financial condition, results of operations, cash flows and prospects could be adversely affected.

We may not succeed in growing our brand in markets outside Vietnam. Our brand, reputation, public credibility and consumer confidence in our business could be harmed by negative publicity.

Our business and prospects are affected by our ability to grow our brand in markets outside Vietnam. We expect that our ability to develop, maintain, and strengthen credibility and confidence in our brand will depend on the success of our marketing and branding efforts.

 

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Our reputation and brand are vulnerable to threats that can be difficult or impossible to predict, control, and costly or impossible to remediate. From time to time, our vehicles will be reviewed by media or other third parties. Any negative reviews or reviews that compare us unfavorably to competitors could adversely affect consumer confidence in our vehicles. Negative publicity about us can harm our ability to attract and retain customers, third-party partners, and key employees, our reputation, business, and results of operations, even if they are baseless or satisfactorily addressed. These allegations, even if unproven or meritless, may lead to inquiries, investigations, or other legal actions against us by regulatory or government authorities as well as private parties. Any regulatory inquiries or investigations and lawsuits against us, perceptions of inappropriate business conduct by us or perceived wrongdoing by any member of our management team, among other things, could substantially damage our reputation and public credibility and cause us to incur significant costs to defend ourselves. Any negative market perception or publicity regarding our suppliers or other business partners that we closely cooperate with, or any regulatory inquiries or investigations and lawsuits initiated against them, may also have an impact on our brand, public credibility and customer confidence in our products, or subject us to regulatory inquiries, investigations or lawsuits. We may incur additional costs on marketing activities to rehabilitate our brand and reputation.

Any negative media publicity about the EV industry or product or service quality problems of other automakers in the industry in which we operate, including our competitors, may also negatively impact our brand, public credibility and consumer confidence by association, and may also affect the value of your investment.

We may be unable to adequately control the costs associated with our operations.

We have devoted significant capital to developing and growing our business, including establishing our manufacturing factory in Vietnam, designing and developing our initial EV model, the VF e34 (C-segment), as well as our future EV models, VF 5 (A-segment), the VF 6 (B-segment), VF 7 (C-segment), VF 8 (D-segment) and VF 9 (E-segment), purchasing and maintaining equipment and tooling, procuring required parts and raw materials, building our network of sales and servicing infrastructure through our partnerships and developing our charging infrastructure in Vietnam. We expect to incur further costs that will impact our profitability, including costs associated with developing new EV models, upgrading existing models, procuring car components and raw materials, ramping up production at our manufacturing facility in Hai Phong, establishing new manufacturing facilities, hiring and retaining qualified employees to meet our growing business needs, further expanding our charging infrastructure in Vietnam and internationally and marketing our EVs and our brand in existing and new markets. These costs may increase due to many factors, including factors beyond our control, such as higher transportation costs, currency fluctuations, tariffs, inflation and adverse economic or political conditions.

The prices for parts and raw materials may fluctuate depending on factors beyond our control, including market conditions, inflation, supply chain shortages and global demand for these materials. Inflationary pressures in 2021 and 2022 increased our commodity, freight and raw material costs and the effects of inflation may have an adverse impact on our costs, margins and profitability in the future. Our initiatives to alleviate inflationary pressures may not be successful or sufficient.

Furthermore, there can be no assurance that we will be willing or able to recover any increased costs by increasing the prices of our EVs. Future increases in the cost of shipping, parts or raw materials could increase our costs and lower our margins. If we are unable to design, develop, manufacture, market, sell, and service our vehicles and provide services in a cost-efficient manner, our margins, profitability, and prospects would be materially and adversely affected.

We are dependent, directly and indirectly, on suppliers for component parts and raw materials. Suppliers may fail to deliver components and raw materials according to our schedule and at prices, quality and volumes acceptable to us.

We depend on third-party suppliers for key components in our vehicles, including axles, chassis, seats, battery packs, semiconductor chips, interior parts, and steering columns. We also procure raw materials required

 

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to manufacture and assemble our vehicles, such as steel, aluminum and resin. Raw materials such as these are also used by our battery cell suppliers. Raw materials may be subject to price fluctuations due to various factors beyond our control, including market conditions and global demand for these materials, which may directly or indirectly, have an adverse impact on our operating costs and profit margins. The supply chain exposes us to multiple potential sources of delivery failure or component shortages.

If suppliers become unable to provide, or experience delays in providing components and raw materials, our business could be disrupted. If existing supply agreements are terminated or renewed on less favorable terms, we may face difficulty or delays in finding replacement suppliers able to provide components or other supplies of comparable quality. Any such alternative suppliers may be located a long distance from our manufacturing facilities, which may lead to increased costs or delays, or the terms of such new agreements may be made on less favorable terms. If our manufacturers or suppliers become unwilling or unable to provide an adequate supply of semiconductor chips, with respect to which there has been a global shortage, we would not be able to find alternative sources in a timely manner and our business would be adversely impacted. We source the battery cells and battery packs in our EVs from third party suppliers. These suppliers include our affiliate, VinES, which is a key battery pack supplier to us and is in the process of developing battery cell production capabilities in Vietnam. While we have not experienced a material disruption in the manufacture of our vehicles due to any shortages in the supply of battery cells, we cannot assure you that we will be able to continue to obtain a sufficient number of battery cells, components or battery packs at a reasonable cost to support our operations. We cannot assure you that VinES, a recently established EV battery supplier, and other third party suppliers will be able to meet our battery cell and battery pack requirements in the manner that we expect. Furthermore, as we seek to increase our production capacity in the future, the impacts of global supply constraints, if they continue, may be magnified in the future.

Changes in business or macroeconomic conditions, governmental regulations and other factors beyond our control or that we do not presently anticipate could affect our ability to receive components from suppliers. Such events could pose challenges or delays to the construction of, and ramp up at, new facilities, such as our planned manufacturing facility in North Carolina, by adversely impacting the availability or costs of raw materials and components used in the construction of such facilities or production of our vehicles. Under our supply agreements, we have in the past, and could again in the future, be subject to penalties and price adjustments as a result of any volume shortfalls in our orders.

Concerns over inflation, geopolitical issues, global financial markets and the COVID-19 pandemic have led to increased economic instability and expectations of slower global economic growth. For example, following Russian military actions related to Ukraine in February 2022, commodity prices, including the price of oil, gas, nickel, copper and aluminum, have increased. Such disruptions to the global economy, together with inflationary pressures, has at times disrupted, and in the future may disrupt, the global supply chain and affect our ability to secure (or the cost of securing) components, raw materials or other supplier. In the past, global supply chain disruption has in turn adversely impacted the delivery schedule for our vehicles. An increase in raw material costs may require us to increase our product prices and battery subscription fees, which could adversely impact our price competitiveness.

Suppliers may experience disruptions in their operations, including due to equipment breakdowns, labor strikes or shortages, shipping container shortages, financial difficulties, natural disasters, component or material shortages, cost increases, acquisitions, changes in legal or regulatory requirements, or other similar problems. The unavailability of any component or supplier could, if not covered by contingency supplier plans, result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products and services. A portion of our parts and components are obtained through short- and medium-term orders rather than long-term supply agreements. This may expose us to fluctuations in prices of components, materials and equipment.

Semiconductor chips are a vital input component to the electrical architecture of our EVs. There has been a global shortage of semiconductor chips since 2020, due in part to the COVID-19 pandemic and increased

 

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demand for consumer electronics that use these chips. Although we have sought to manage the impact of the shortage through proactive inventory management and close collaboration with our suppliers, the shortage has resulted in increased chip delivery lead times and increased costs to source available semiconductor chips, which has led to delays in our production. To the extent this semiconductor chip shortage continues, and we are unable to mitigate the effects of this shortage, we may incur higher production costs and our ability to deliver our vehicles on schedule and in sufficient quantities to fulfill customer reservations and to support our growth through sales to new customers would be adversely affected. In addition, we may be required to incur additional costs and expenses in managing ongoing chip shortages, including additional research and development expenses, engineering design and development costs in the event that new suppliers must be onboarded on an expedited basis. Further, ongoing delays in production and shipment of vehicles due to a continuing shortage of semiconductor chips may harm our reputation and discourage additional reservations and vehicle sales, and otherwise materially and adversely affect our business and operations. Other shortages may occur in the future and the availability and cost of the affected components may be difficult to predict.

Cyber-attacks and malicious internet-based activity directed at supply chains have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems or the third-party information technology systems that support us and our services. Ransomware attacks, including by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data, and income, reputational harm, and diversion of funds. While we conduct risk assessments and gap analyses and have implemented monitoring and defense solutions for our networks, devices applications, data, system processes and users and designed our EVs to comply with cyber-security standards in the relevant target markets and to offer in-vehicle solutions to protect them from and respond to risks in real time, there can be no assurance that any mitigation measures that we have taken or will take will be successful in preventing or minimizing the consequences of cyber-attacks or similar incidents.

Our success will be dependent upon our ability to maintain relationships with existing suppliers who are critical and necessary to the output and production of our vehicles and to create relationships with new suppliers.

Our success will be dependent upon our ability to maintain our relationships with existing suppliers and enter into new supplier agreements. We rely on suppliers to provide key components and technology for our vehicles. Supplier agreements that we have, and may enter into with key suppliers in the future, may have provisions where such agreements can be terminated in various circumstances, including potentially without cause. In addition, if our suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, we would be required to take measures to ensure components and materials remain available. Any supply chain disruption could affect our ability to deliver vehicles and could increase our costs and negatively affect our liquidity and financial performance.

The automotive market is highly competitive, and we may not be successful in competing in this industry.

The automotive industry is highly competitive. We will be competing for sales with established EV manufacturers and new entrants, including established ICE vehicle manufacturers that have entered or are seeking to enter the EV segment and earlier entrants into the EV industry. Some of our competitors may have established market positions, well known brands and relationships with customers and suppliers. Competition for EVs could intensify in the future, including due to increased demand and a regulatory push for alternative fuel vehicles, continuing globalization, new market entrants into the EV space and consolidation in the worldwide automotive industry. We expect that more competitors will enter the EV market, and these new entrants will further increase competition. Further, we may experience increased competition for components and other parts of our vehicles, which may have limited supply. We expect competition in automotive industry to intensify in the

 

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future in light of increased demand, continuing globalization and consolidation in the worldwide automotive industry, brand differentiation, product design, pricing and total cost of ownership, after-sales service and manufacturing scale and efficiency. Increased competition may lead to lower sales which may result in downward price pressure and adversely affect our business, financial condition, results of operations, cash flows and prospects.

The process of establishing manufacturing facilities outside of Vietnam, and expanding our capacity within Vietnam, may be subject to delays or cost overruns, may not produce expected benefits or may cause us to not meet our projections for future production capacity.

We are planning to establish manufacturing facilities outside of Vietnam and have identified the U.S. for our initial international expansion. In addition, we plan to expand our capacity at our Hai Phong facility. We plan to increase our global maximum production capacity to a rate of up to 1,100,000 vehicles per year by 2026 (assuming the realization of expected growth in demand for our EVs and the availability of financing for, and timely and on-budget completion of, capacity expansion projects) through the foregoing. Our ability to meet delivery timelines could be impacted, which would impact our sales volume and could impact our reputation. Construction and expansion of EV manufacturing facilities involve significant risks and capital. Unforeseen events could lead us to adjust our plans and impact our projected production capacity. We could experience construction delays or other difficulties beyond our ability to control or predict. Any failure to complete these capital-intensive projects on schedule and within budget could adversely impact our business, financial condition, results of operations, cash flows and prospects. Construction projects are subject to supervision and approval procedures, including but not limited to project approvals and filings, construction land and project planning approvals, environment protection approvals, pollution and hazardous waste discharge permits, work safety approvals, fire protection approvals and the completion of inspection, acceptance and other applicable procedures by relevant authorities. There may also be delays and foreseen costs in obtaining the relevant licenses, permits and approvals to operate these facilities, which in turn could impact our business, financial condition, results of operations, cash flows and prospects.

Our reservations may not result in completed sales of our vehicles and our actual vehicle sales and revenue generated for their sales could differ materially from the number of reservations received.

Our reservation program for our VF e34, VF 8 and VF 9 requires customers to place a small reservation fee. Each reservation fee is cancellable and fully refundable without penalty until the customer enters into a sale and purchase agreement for the vehicle they select. We have experienced cancelations in the past, and it is possible that a significant number of customers who reserved our vehicles, including corporate customers and third party dealers with multi-vehicle orders as well as customers that have reserved multiple EVs, may not ultimately complete their purchases for any reason, including due to reasons and factors which may be outside of our control, such as rising inflation, deterioration of economic conditions in our end markets, and the availability and cost of consumer credit. We do not typically verify the identity of customers making reservations. Customers who have made reservations may have made reservations for multiple vehicles while deciding which vehicle to ultimately purchase and may continue to evaluate the attractiveness of vehicle pricing and other factors, in each case up until the time they are given the opportunity to place orders. The wait time from the time a reservation is made until the time the vehicle is delivered, and any delays beyond expected wait times, could impact consumer decisions on whether to ultimately make a purchase and result in customer dissatisfaction. From time to time, we have experienced delayed vehicle deliveries which have resulted in customer dissatisfaction, and there can be no assurance that this will not happen again in the future. As we recognize revenue upon the sale of a vehicle at the time the vehicle is delivered to the customer, our reservation numbers may not be indicative of our future revenue generations and prospects. Furthermore, a portion of our reservations represent reservations made by Vingroup employees who receive discounts on interest payments with respect to vehicle financing as employees of Vingroup-affiliated companies. As a result, our historical pace of attracting reservations may not be indicative of our pace of attracting reservations in the future.

 

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Our Battery Subscription Program is relatively novel in the electric vehicle industry and may not attain wide consumer acceptance.

We offer our customers the option to purchase our vehicles with the battery as well as the flexibility to participate in our Battery Subscription Program. Our Battery Subscription Program is intended to supplement our primary model of outright sale of the full chassis and battery and to provide a flexible alternative that makes our EVs accessible at a lower, inclusive price point. We believe that our Battery Subscription Program is a unique sales model for EVs, and there can be no assurance that consumers will embrace the Battery Subscription Program. If potential customers do not find our Battery Subscription Program attractive, it could impact the competitiveness of our vehicles and the rate of growth of our business and market penetration, and in turn, our business, financial condition, results of operations, cash flows and prospects.

We expect our results of operations for 2022 to reflect sales of ICE vehicles in Vietnam even after we cease production of ICE vehicles and complete the ICE Assets Disposal.

In connection with our strategic decision to transform into an EV-only manufacturer, we ceased all production of ICE vehicles and completed the ICE Assets Disposal to VIG in early November 2022. For more information about the ICE Assets Disposal, see “Corporate History and Structure — Phase-out of ICE Vehicle Production.” Notwithstanding our cessation of ICE vehicle production in early November 2022, our results of operations in 2022 will continue to include the results of our ICE vehicle manufacturing business because we delivered ICE vehicles during the year.

We will retain all servicing, warranty and other obligations and liabilities related to ICE vehicles that we have produced and we will retain all rights, obligations and liabilities under ICE vehicle-related supplier contracts that we are not able to novate to VIG or other parties outside of our Group. We have incurred and will incur additional costs associated with break fees or settlement costs related to our outstanding obligations under such contracts, which will be recorded in our consolidated statements of operations as compensation expenses. We have also extended the warranty policy for all ICE vehicles sold and to be sold (which are ICE vehicles that we produced prior to ceasing our ICE manufacturing operations and are scheduled to be delivered) to the earlier of 10 years or the first 200,000 kilometers. Accordingly, we expect to incur costs in the future related to legacy ICE vehicles warranties.

In addition, certain of these ICE vehicle components and spare parts suppliers are also our intended suppliers for our EV vehicles and any differences or disputes in respect of ICE vehicle supply contracts could adversely affect our general business relationship and our ability to acquire necessary EV vehicle parts and components, which in turn could adversely affect our business, financial condition, results of operations, cash flows and prospects.

Our future growth is dependent on the demand for, and upon consumers’ willingness to adopt EVs, which may be affected by various factors, including developments in EV or alternative fuel technology.

Our future growth is dependent on the demand for, and upon consumers’ willingness to adopt EVs. Demand for EVs may be affected by many factors, such as factors directly impacting EV prices or the cost of purchasing and operating EVs such as sales and financing incentives, prices of raw materials and parts and components, cost of petroleum and governmental regulations, including tariffs, import regulations, evolving technical regulations and standards, and other taxes. Concerns over global economic conditions, stock market volatility, energy costs, geopolitical issues, inflation and central banks’ decisions to increase interest rate increases in response, the availability and cost of credit, and slowing of economic growth and forecasts of a recession in our target markets and the global economy may dampen demand for EVs. Demand for EVs may also be adversely affected by increases in demand for ICE vehicles relative to demand for EVs, which in turn may be driven by many factors. Volatility in EV demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect our business, prospects, financial condition, results of operations, and cash flows.

 

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The market for EVs is still evolving, characterized by changing EV and alternative fuel technologies, a competitive pricing environment, evolving government regulations and industry standards, and changing consumer demands and behaviors. We may be unable to keep up with changes in EV technology or alternatives to battery-generated electricity as a fuel source and, as a result, our competitiveness may suffer. Developments in alternative fuel technologies, such as hydrogen, ethanol, fuel cells, or compressed natural gas, may materially and adversely affect our business and prospects in ways we do not currently anticipate. Existing and other battery cell technologies, fuels or sources of energy may emerge as consumer’s preferred alternative to our vehicles. As technologies change, we will need to source and integrate the latest technology into our vehicles. The introduction and integration of new technologies into our vehicles may increase our costs and capital expenditures required for the production and manufacture of our vehicles. Any failure by us to cost efficiently implement new technologies or adjust our manufacturing operations could adversely affect our business, prospects, financial condition, results of operations, and cash flows.

If there is inadequate access to EV charging stations or related infrastructure, our business may be materially and adversely affected.

Demand for our vehicles will depend in part upon the availability and quality of charging infrastructure. In Vietnam, we face risks associated with owning and operating our EV charging station network and must ensure that our network reach and infrastructure is sufficient to meet our customers’ needs. Outside of Vietnam, we market our VinFast Power Solutions program and our ability to provide our customers with stress-free charging services, including an extensive network of charging stations through strategic partnerships. Our partners’ charging infrastructure could be impacted by challenges such as:

 

   

the logistics, including any delays or disruptions, of maintaining a network of charging stations;

 

   

successful integration of our EVs with third-party charging networks;

 

   

inadequate capacity or over capacity in certain areas, security risks or risk of damage to vehicles, charging equipment or real or personal property;

 

   

obtaining any required permits, land use rights and filings;

 

   

the potential for lack of customer acceptance of our partners’ charging solutions; and

 

   

the risk that government support for EV and alternative fuel solutions and infrastructure may not continue.

While the prevalence of charging stations generally has been increasing, charging station locations are currently less widespread than gas stations in all of our target markets. Some potential customers may choose not to purchase our EVs because of the lack of more widespread charging infrastructure. Although we intend to establish far-reaching charging networks in our target markets, we and our charging solutions partners may be unable to expand our charging networks as fast as we intend or as the public desires, or to place the charging stations in places our customers believe to be optimal. There can be no assurance that our partners will continue to work with us on terms acceptable to us, or at all. To the extent we or our charging solutions partners are unable to meet customer expectations or experience difficulties in providing charging solutions, our reputation and business may be materially and adversely affected. If we are unable to meet user expectations or experience difficulties in providing our charging solutions, our business, financial condition, results of operations, cash flows and prospects may be materially and adversely affected.

The unavailability, reduction or elimination of government and economic incentives or government policies which are favorable for EV manufacturers and buyers could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Any reduction, elimination, ineligibility, unavailability or discriminatory application of government subsidies, favorable trade policies and free trade agreements and economic incentives that we currently or expect to receive may result in the diminished competitiveness of the alternative fuel and electric vehicle industry generally or our vehicles. In particular, we benefit from favorable tax concessions in Vietnam and the U.S. See

 

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“Regulations.” Conversely, applicable laws may impose additional barriers to electric vehicle adoption, including additional costs and adversely affect the growth of the alternative fuel automotive markets and our business, financial condition, results of operations, cash flows and prospects. Incentives may also be put in place which benefit alternative technologies, which could adversely impact demand for EVs.

In certain markets, customers may also benefit from government incentives for the purchase of electric vehicles in the form of rebates, tax credits and other financial incentives. These governmental rebates, tax credits and other financial incentives may lower customer purchase costs or provide savings in connection with the purchase of EVs or use of EV infrastructure. For example, the Inflation Reduction Act of 2022 (the “IRA”) provides tax credits in connection with the purchase of certain EVs through 2032. However, in order for the purchase of an EV to qualify for such credits, the EV must satisfy certain requirements, including, among others, that a specified percentage of the value of the battery components in the EV be manufactured or assembled in the U.S., the final assembly of the vehicle be conducted in the U.S., the retail price of the vehicle not exceed a specified threshold which varies by vehicle type and eligible taxpayers must have incomes below certain thresholds. Our EVs currently produced in Vietnam for export to the U.S. are not qualified for the tax credits under the IRA. In 2022, we entered into a series of agreements with North Carolina state and local authorities to build a manufacturing facility spanning across a site measuring approximately 712 hectares in North Carolina. Commissioning of the facility is targeted for the second half of 2024. Once this facility commences operations and final assembly of our EVs, our customers in the U.S. may be able to be entitled to this tax credit, subject to, among other things, their income eligibility as well as our ability to meet requirements on battery components and critical minerals. We are monitoring the issuance of the detailed guidance on these requirements by the Internal Revenue Service (“IRS”) and will be evaluating its implications on our supply chain ecosystem in order to satisfy such requirements. If purchases of our EVs are not able to qualify for tax credits under the IRA, demand for our EVs may decrease. There is uncertainty as to the expected benefit or impact from the IRA due to the IRA’s eligibility criteria related to consumer income, battery components and critical minerals. In addition, under the IRA, qualifying used EVs will also be eligible for a tax credit, which could cut into the sales of new EVs. Further, to the extent our vehicles now or in the future benefit from incentives, incentives may take time to be disbursed and may not impact customer purchase decisions as expected. Incentives may also expire on specified dates, end when the allocated funding is no longer available, or be reduced or terminated as a matter of regulatory or legislative policy. There is no guarantee that the rebates, tax credits or other financial incentives for alternative energy production, alternative fuel, and EVs which have been made available will be available in the future. If current tax incentives are not available in the future, demand for EVs may stagnate or decline, which could adversely affect our business, financial condition, results of operations, cash flows and prospects.

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately and timely report our financial condition, results of operations or cash flows, which may adversely affect investor confidence.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. We commenced the process of documenting and testing our control procedures in the fourth quarter of 2022 in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, and during the course of this assessment we may identify certain weaknesses and deficiencies in our control over financial reporting other than those summarized below. Beginning with our second annual report following this offering, we will be required pursuant to SEC rules to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board (“PCAOB”), a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis. In addition, our independent registered public accounting firm will be required to formally attest to and report on the effectiveness of our internal control over financial reporting pursuant to the SEC rules commencing the later of

 

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the year following our first annual report required to be filed with the SEC or the date we are no longer an “emerging growth company” (“EGC”) (as defined in the JOBS Act). See “— Risks Related to the Ownership of Our Securities — We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.” At the time when we are no longer an EGC, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal controls are designed, documented, operated or reviewed. Remediation efforts may not enable us to avoid a material weakness in the future.

Although efforts to document, test, evaluate and remediate our internal control over financial reporting are in progress, there is a risk that we will not be able to conclude, within the prescribed timeframe, that our internal control over financial reporting is effective as required by Sarbanes-Oxley Act Section 404. Testing and maintaining internal control may divert our management’s attention from other matters that are important to our business. During the evaluation and testing process, we may identify one or more material weaknesses in internal control over financial reporting, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the SEC rules or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could cause the price of our ordinary shares to decline and could subject us to investigation or sanctions by the SEC. Failure to remedy any material weakness in internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict future access to the capital markets. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

We have identified material weaknesses in our internal control over financial reporting. If our remediation of such material weaknesses is not effective, or if we experience additional material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements and comply with applicable laws and regulations could be impaired.

Although we are not yet subject to the certification or attestation requirements of Section 404 of the Sarbanes-Oxley Act, in connection with the audit of VinFast Trading and Production Joint Stock Company’s consolidated financial statements as of December 31, 2021 and for the year then ended, our management and our independent registered public accounting firm identified deficiencies that represented material weaknesses in our internal control over financial reporting. The material weaknesses identified by management related to (i) insufficient comprehensive accounting policies and procedures to facilitate preparation of U.S. GAAP consolidated financial statements and (ii) insufficient financial reporting and accounting personnel with appropriate knowledge, skills, and experience in the application of U.S. GAAP and Securities and Exchange Commission (“SEC”) rules to prepare consolidated financial statements and related disclosures completely and accurately.

We have adopted a remediation plan to address the material weaknesses identified above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal Control over Financial Reporting” for details of our remediation plan. Material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period and management has concluded, through testing, that these controls are operating effectively.

We cannot assure you that that we will successfully implement our remediation plan, or that our remedial efforts will be sufficient to address the control deficiencies that led to the material weaknesses in internal control over financial reporting, or that they will prevent potential future material weaknesses or control deficiencies. If our remediation efforts are not successful or other material weaknesses or control deficiencies are identified in the

 

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future, the accuracy and timing of our financial reporting may be adversely affected, and consequently we may be unable to file timely periodic reports in compliance with securities laws and stock exchange listing requirements, which may diminish investor confidence in our financial reporting and our share price may decline.

Additionally, we have not performed an evaluation of our internal control over financial reporting as permitted under the JOBS Act; accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, beginning with our second annual report after the completion of this offering.

Our vehicles currently make use of lithium-ion battery cells; lithium-ion battery cells have been observed to catch fire or vent smoke and flame.

The battery packs in our EVs make use of lithium-ion cells. On rare occasions, lithium-ion cells have been reported to vent smoke and flames in a manner that can ignite nearby materials, although we have not experienced such issues with the battery packs in our EVs today. If the battery packs in our EVs experience failure, it could subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. In addition, negative public perceptions regarding the suitability of lithium-ion cells for automotive use or any future incident involving lithium-ion cells such as a vehicle or other fire, even if not involving our vehicles, could seriously harm our business. In addition, we store lithium-ion cells at our EV manufacturing facilities, which could prove hazardous if not stored and handled properly, resulting in damages, injuries or adverse publicity. Moreover, any failure of a competitor’s electric vehicle or energy storage products may indirectly cause indirect adverse publicity for our industry as a whole, us and our products. Such adverse publicity could negatively affect our brand and harm our business, financial condition, results of operations, cash flows and prospects.

We collaborate with a range of third parties, including for certain business partners for key aspects of our business, and any failure of these partners to deliver their services adequately will adversely impact our business, operations, reputation, results of operations and prospects.

We contract with third parties to provide certain products and services to our customers. The battery packs in our EVs are supplied by VinES and other third parties. The charging network access that we provide in international markets are owned and managed by third party charging network infrastructure providers. In Vietnam, although we provide our own charging stations, we rely on third party infrastructure providers for support of our charging network services and equipment, and may also engage third parties to provide certain after-sales services, such as body repairs and roadside assistance. We have entered into arrangements with financial institutions to provide consumer financing for our EVs. We plan to partner with third parties for after-sales services during our initial expansion outside of Vietnam, including roadside and off-road assistance and collision repairs.

Although we take care to select our third-party business partners and contractors, we cannot control their actions. If our vendors fail to perform as we expect, our operations and reputation could suffer if the failure harms the vendors’ ability to serve us and our customers. One or more of these third-party vendors may experience financial distress, staffing shortages or liquidity challenges, file for bankruptcy protection, go out of business, or suffer disruptions in their business. We may not be able to renew or enter into new arrangements with our third-party providers on terms satisfactory to us. If we successfully grow our business as expected, our third-party providers will be required to meet increased requirements from us as we seek to serve greater customer demand.

We also depend, directly and indirectly, on third-party construction contractors for the expansion of our manufacturing capacity. We plan to construct manufacturing facilities in the U.S. and expand the capacity at our manufacturing facility in Hai Phong, Vietnam. In part to support our battery requirements, VinES is in the

 

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process of constructing a gigafactory in Central Vietnam to expand its battery pack production capabilities. In addition, VinES is developing a second lithium cell facility in Ha Tinh, Vietnam, in collaboration with Gotion. Any delay or deficiency in the work of such third-party contractors could, directly or indirectly, have a material and adverse effect on our business, operations and prospects.

The use of third-party vendors represents an inherent risk to us that could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Our research and development efforts may not yield expected results.

Technological innovation is critical to our success. We have developed some of our technologies in-house, and we also collaborate with third-party business partners, including our affiliates in the Vingroup technology ecosystem, for the design and continued development of our EV offerings. We have invested in our research and development efforts and expect to continue doing so in the future. Research and development activities are inherently uncertain, and there can be no assurance that we will continue to achieve technological breakthroughs and successfully commercialize such breakthroughs. A delay in the development or regulatory approval (if applicable) of technologies for our new EV models could delay our expected timelines to bring new vehicles to market or to provide upgrades to existing models or generally fail to meet customer demand, which would in turn damage our brand and reputation, adversely affect our business, financial condition, results of operations, cash flows and prospects and cause liquidity constraints.

Our vehicles rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design defects, or if we are unsuccessful in addressing or mitigating technical limitations in our systems, or if we are unable to coordinate with vendor and suppliers in a timely and effective manner, our business could be adversely affected.

Our vehicles rely on software and hardware that is highly technical and complex and may require modification and updates over the life of the vehicles. In addition, our vehicles depend on the ability of such software and hardware to store, retrieve, process and manage data. Our software and hardware may contain errors, bugs, vulnerabilities or design defects, and our systems are subject to certain technical limitations that may compromise our ability to meet our objectives. Some errors, bugs, vulnerabilities, or design defects inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use. Although we will attempt to remedy any issues we observe in our vehicles effectively and rapidly, such efforts may not be timely, may hamper production or may not be to the satisfaction of our customers.

Additionally, we expect to periodically deploy updates to the software (whether to address issues, deliver new features or make desired modifications). If our OTA update procedures fail to properly update the software or otherwise have unintended consequences to the software, the software within our customers’ vehicles will be subject to vulnerabilities or unintended consequences resulting from such failure of the OTA update until properly addressed. If those remote updates fail, cause malfunctions, do not function as anticipated or have unintended consequences, the functionality of our customers’ EVs and the safety of users of the vehicle could become compromised. Such OTA updates must also comply with applicable regulations and standards.

In the design, development and production of our vehicles, we utilize third-party software and complex technological hardware, some of which are licensed to us pursuant to licensing agreements and others which we have acquired from experienced business partners through technology transfer transactions. The development and implementation of such technologies in our EVs is inherently complex and requires that we coordinate with our business partners, vendors and suppliers to integrate such technology into our EVs and ensure the interoperability of the various parts. If we are unable to develop the software and technology systems necessary to operate our vehicles, our competitive position could be harmed. We may also fail to detect defects and errors that are subsequently revealed, and our control over the performance of third-party services and systems may be limited.

 

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The occurrence of software or hardware issues or other difficulties involving our technology or other systems can adversely impact the customer experience and result in customer dissatisfaction with our vehicles. If we are unable, particularly as a new entrant to the EV industry, to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software and hardware, or fail to deploy updates to our software properly or otherwise achieve customer satisfaction, we would suffer damage to our reputation, loss of customers, loss of revenue or liability for damages, any of which could adversely affect our business, prospects, financial condition, results of operations, and cash flows.

Our warranty reserves may be insufficient to cover future warranty claims, which could adversely affect our business, financial condition, results of operations, cash flows and prospects.

We provide a manufacturer’s warranty on all new vehicles at the time of sale as well as a warranty on batteries in our EVs. In addition, notwithstanding the sale of the ICE Assets to VIG, the liabilities continue to rest with us. Pursuant to the warranties associated with the ICE vehicles, we are responsible for servicing the ICE vehicles and handling the warranty claims over the life of the warranty. We have also extended the warranty policy for all ICE vehicles sold and to be sold (which are ICE vehicles that we produced prior to ceasing our ICE manufacturing operations and are scheduled to be delivered) to the earlier of 10 years or the first 200,000 kilometers. We also offer a warranty for battery replacement once the charging capacity falls below 70% during the duration of the battery lease with our Battery Subscription Program, which may be longer than the warranty period under our outright sale model.

We maintain a warranty reserve for these obligations. The amount of the warranty reserve represents our best estimate of the projected costs to repair or replace items under warranties, as well as the nature and frequency of future claims. We cannot assure you that the warranty reserves that we maintain will be sufficient to fully cover claims that may arise. In addition, given the durations of our 10-year / 125,000-mile vehicle manufacturer’s warranty offering and our battery warranty under the Battery Subscription Program, we may encounter unforeseen or higher costs. We could, in the future, become subject to significant and unexpected warranty claims, resulting in significant expenses, which would in turn materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

If our vehicle owners customize our vehicles with aftermarket products, or attempt to modify our vehicles’ charging systems, the vehicles may not operate properly, which may create negative publicity and could harm our brand and business.

Automotive enthusiasts may seek to alter our vehicles to modify their performance which could compromise vehicle safety and security systems. Also, customers may customize their vehicles with aftermarket parts that can compromise driver safety. We do not test, nor do we endorse, such changes or products. In addition, customers may attempt to modify our vehicles’ charging systems or use improper external cabling or unsafe charging outlets that can compromise the vehicle systems or expose our customers to injury from high voltage electricity. Such unauthorized modifications could reduce the safety and security of our vehicles and any injuries resulting from such modifications could result in adverse publicity, which may negatively affect our brand and thus harm our business, financial condition, results of operations, cash flows and prospects.

We may be subject to risks associated with autonomous driving technologies.

Our vehicles are being designed with connectivity for an autonomous hardware suite and will offer some autonomous functionality. Autonomous driving technologies are subject to risks and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on driver interactions, and drivers may not be accustomed to using or adapting to such technologies. To the extent accidents associated with our autonomous driving systems occur, we could be subject to liability, negative publicity, government scrutiny, and further regulation. Moreover, any incidents related to autonomous driving systems of our competitors could adversely affect the perceived safety and adoption of our vehicles and

 

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autonomous driving technology more broadly. Any of the foregoing could materially and adversely affect our business, prospects, financial condition, results of operations, and cash flows.

Autonomous driving technology is also subject to considerable regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which are beyond our control. Our vehicles also may not achieve the requisite level of autonomy required for certification and rollout to consumers or satisfy changing regulatory requirements which would require us to redesign, modify or update our autonomous hardware and related software systems.

Our historical results of operations are not, and our past growth may not, be indicative of our future performance or prospects.

This prospectus includes financial information (i) as of December 31, 2020 and for the year then ended derived from the consolidated financial statements of VinFast Trading and Production Joint Stock Company and (ii) as of December 31, 2021 and for the year then ended and as of September 30, 2022 and for the nine months ended September 30, 2021 and 2022 derived from the consolidated financial statements of VinFast Trading & Investment Pte. Ltd.

We operated primarily as an ICE vehicle manufacturer prior to 2022. In January 2022, we announced our strategic decision to cease ICE vehicle production to transform into a pure-play manufacturer of EVs. In early November 2022, we ceased all production of ICE vehicles and completed the ICE Assets Disposal to our affiliate, VIG. During the nine months ended September 30, 2022, we were in the process of gradually phasing out our legacy ICE vehicle manufacturing operations, while also making investments in R&D investment for new EV models and ramping up production of our EVs, leading to our initial deliveries of the VF e34 and VF 8 in Vietnam. During that period, we also grew our footprint outside of Vietnam and began accepting reservations for the VF 8 and VF 9 in North America and Europe. For these reasons, we believe that our results of operations during the periods presented in this prospectus are not comparable. Moreover, the historical financial information included in this prospectus may not be indicative of our future performance or prospects.

We have experienced rapid growth of our business in the past as an ICE vehicle manufacturer with operations focused on our home market of Vietnam where our parent company’s Vingroup brand is well recognized, we offer a range of marketing initiatives and promotions and we believe domestically produced vehicles have certain competitive advantages. There can be no assurance that we will be able to achieve similar rapid growth of our business in our international markets where the business, regulatory and consumer landscapes may differ significantly from Vietnam. As such, our past growth and historical financial results of operations may not be indicative of our future performance or prospects.

Our business depends on the continued efforts of our people and our ability to recruit new talent and our operations may be disrupted if we lose their services.

Our success depends on the continued efforts of our people, including our key management and employees with expertise in various areas. We had turnover in some of our key management and other personnel in the past, including certain senior executives in 2021 and 2022. If our personnel are unable or unwilling to continue their services with us, we might not be able to replace such personnel in a timely manner or without incurring additional costs or we might not be able to find replacements with appropriate experience. The automotive industry is characterized by high demand and intense competition for talent, and as we build our brand and become more well-known outside of Vietnam, the risk that competitors or other companies may seek to hire our talent could increase. In addition, we may need to expend significant time and expense to train new employees that we are required to hire.

 

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We may be compelled to undertake product recalls or other actions, which could adversely affect our reputation and brand, and our business, financial condition, results of operations, cash flows and prospects.

We may be subject to adverse publicity, damage to our brand, and costs for recalls of our vehicles. In October 2022, we recalled approximately 700 of our VF e34 vehicles, which we sell exclusively in Vietnam, after being informed by our airbag supplier that certain side impact sensors for the airbags could malfunction. The recall procedure entails the replacement of the airbag’s side impact sensor and reconfiguration of the airbag control module. We expect that the costs related to the recall will be borne by the supplier, including the costs of work performed at our service shops in Vietnam. Although, as a result of the foregoing, we do not expect our results of operations to be directly materially affected by this recall, we cannot assure that this recall will not lead to other adverse consequences. In the future, we may at various times, voluntarily or involuntarily, initiate a recall if any of our vehicles, including any systems or parts sourced from our suppliers, prove to be defective or non-compliant with applicable laws and regulations. Such recalls, whether voluntary or involuntary, could involve significant expense and could adversely affect our brand image in our target markets, as well as our business, financial condition, results of operations, cash flows and prospects.

Pandemics and epidemics, natural disasters, terrorist activities, political unrest and other geopolitical risks could disrupt our production, delivery, and operations, which could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Global pandemics, epidemics, or fear of spread of contagious diseases, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce or restrict our supply of materials and services, incur significant costs to protect our employees and facilities, or result in regional or global economic distress, which may materially and adversely affect our business, financial condition, results of operations, cash flows and prospects. Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical risks could have a similar adverse effect on our business, financial condition, results of operations, cash flows and prospects. Any one or more of these events may impede our production and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

In February 2022, Russian military forces launched a military action in Ukraine. The ongoing military action between Russia and Ukraine, sanctions and other measures imposed against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic by the U.S. and other countries and bodies around the world, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, has in the past and in the future could continue to adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations. Additional potential sanctions and penalties have also been proposed and/or threatened. Although our operations have not experienced material and adverse impact on supply chain, cybersecurity or other aspects of our business from the ongoing conflict between Russia and Ukraine, during times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. We cannot predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government reactions, are rapidly developing and beyond our control. The extent and duration of the military action, sanctions and resulting market disruptions could be significant, could result in increases in commodity, freight, logistics and input costs and could potentially have substantial impact on the global economy and our business for an unknown period of time.

In August 2022, Nancy Pelosi, the Speaker of the U.S. House of Representatives, visited Taiwan despite comments in opposition of the visit from the People’s Republic of China (“PRC”) government. The PRC government subsequently conducted military exercises in the region and imposed a ban on certain exports and imports with Taiwan. Against this backdrop, we cannot assure you that future developments in the relationship

 

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between mainland China and Taiwan will not adversely affect our supply chain, our industry and the global economy and our business, financial condition and results of operations.

Our servers and data are located in data centers that have implemented data protection and disaster recovery measures and protocols, backup systems and redundancies. Nevertheless, fires, earthquakes, floods, typhoons, power loss, telecommunication failures, break-ins, riots, terrorist attacks or other similar events at the sites of our service providers may still cause damage or interruption to our systems and operations. Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our business, financial condition, results of operations, cash flows and prospects.

We will be subject to risks associated with foreign exchange rate fluctuations and interest rate changes.

We intend to operate in numerous markets worldwide and as such will be exposed to risks stemming from fluctuations in currency and interest rates.

Our exposure to currency risk is mainly linked to differences in the geographic distribution of our manufacturing and commercial activities, resulting in cash flows from sales being denominated in currencies different from those of purchases or production activities.

Our direct exposure to interest rate risk stems from our use of various forms of financing to cover future funding requirements for our activities and changes in interest rates can affect our net revenues, finance costs and margins. Although we may manage risks associated with fluctuations in currency and interest rates through financial hedging instruments, fluctuations in currency or interest rates could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows.

In addition, we intend to offer financing of our vehicles to potential customers through a third-party financing partner or partners and are subject to risks of interest rate changes that affect the availability of affordable consumer credit. If interest rates rise, customers may not desire or be able to obtain financing to purchase or lease our vehicles.

Risks Related to Relationship with Vingroup

Our corporate actions that require shareholder approval will be substantially controlled by our controlling shareholders who will have the ability to control or exert significant influence over such matters, which may prevent you and other shareholders from influencing significant decisions and reduce the value of your investment.

Vingroup, VIG and Asian Star hold equity interests of 51.5%, 33.5% and 15.0% in our company. Each of these shareholders is majority owned by Mr. Pham Nhat Vuong. Immediately following the completion of this offering, Vingroup, VIG and Asian Star will own                 %,                 % and                 % of our issued and paid-up ordinary shares. While the business of our company will be managed by, or under the direction or supervision of, our directors, as long as these shareholders and Vingroup’s Chairman continue to control shares representing a majority of our voting power, they will generally be able to determine the outcome of all corporate actions requiring shareholder approval, and control or exert significant influence on the composition of the board of directors. If our controlling shareholders do not dispose of their ordinary shares, they could retain control over us for an extended period of time or indefinitely. Our controlling shareholders may decide to sell a significant portion of our ordinary shares to a third party, including to one of our competitors, thereby giving that third party substantial influence over our business and our affairs. Such a sale could be contrary to the interests of our other shareholders. Business opportunities may arise that are attractive to us and our controlling shareholders’ other interests, and there can be no assurance that our controlling shareholders will direct those opportunities to us.

 

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Instead, our controlling shareholders may seek to direct us to engage with Vingroup affiliates instead of unrelated third parties. We do not have any non-competition agreements in place with any of our affiliates, and as a result, although we believe Vingroup intends to conduct its EV business solely through us, Vingroup or its affiliates could in the future, provide products or services which compete with ours.

Our Global CEO, Ms. Le Thi Thu Thuy, also holds the position of Vice Chairwoman of Vingroup. This relationship could create, or appear to create, conflicts of interest when faced with decisions with potentially different implications for us and our Vingroup affiliates.

Because our controlling shareholders’ interests may differ from the interests of our other shareholders, actions taken by our controlling shareholders may be more favorable to those shareholders than to us or our other shareholders. This concentration of ownership may also discourage, delay or prevent a change in control of our company. As a result, the substantial control of our controlling shareholders over our company may reduce the value of your investments.

We have relied on Vingroup for financial support and are dependent on Vingroup affiliates for key aspects of our business. Accordingly, we have engaged in various related party transactions with Vingroup, and any potential conflicts of interest could have an adverse effect on our business and results of operations. Due to our close association with Vingroup and its affiliates, we could also be impacted by matters affecting their reputation, including litigation, regulatory or other matters.

We have relied on our parent company, Vingroup, for financial support. Vingroup and its affiliates have been our key investors since inception, and have made significant investments in us, including in the form of debt financing, corporate loan guarantees and capital contributions. For details, see “Related Party Transactions.”

We depend on Vingroup affiliates for key aspects of our business, including the provision of technology services and R&D by affiliates in the Vingroup technology ecosystem. We also sublease the site in Hai Phong, Vietnam where our main manufacturing facility is located, from Vinhomes Industrial Zone Investment Joint Stock Company (“VHIZ JSC”). We obtain certain shared management assistance services and license key intellectual property used in our business from Vingroup, including our trade name, our logo, our EV names, such as VINFAST VF 5, VINFAST VF 6, VINFAST VF 7, VINFAST VF 8 and VINFAST VF 9, and our e-scooter names, such as Klara, Theon and Feliz, and the industrial design for our VF 9 model. We have also relied on Vingroup and its affiliates for a number of other commercial arrangements. These include loans from and to Vingroup and its affiliates, leases of retail and advertising spaces, procurement of goods and services related to information security and technology, raw materials and spare parts and social and other services such health care and education that we provide as employee benefits and compensation. We also expect to rely on related parties for construction to increase the manufacturing capacity of our facilities. We may in the future enter into additional transactions with entities in which members of our board of directors and other related parties hold ownership interests.

Our affiliate, VinES, is a key battery pack supplier to us and also is expected to manufacture battery cells and include those battery cells in the battery packs that they supply to us in the future. We do not have control over the business operations of VinES, though it remains our affiliate within the Vingroup ecosystem. Accordingly, we cannot guarantee the smooth operation of and stability and quality of service delivered by VinES. VinES faces similar new entrant risks that we face as a new entrant in the EV industry. See “— Risks Relating to Our Business and Industry — We face risks associated with being a new entrant in the EV industry and the marketing and sale of our EVs in international markets where we have not yet made any deliveries of vehicles.” VinES will also provide consulting and management services for battery-related matters for batteries that we purchase from VinES as well as third-party battery suppliers, including technology consulting, the supply of resources, network building, pricing of input materials and battery products, battery testing and development, contract negotiation, registration and application for battery certification and recycling solutions. For details, see “Related Party Transactions — Agreements with VinES Relating to the Battery Business.”

 

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While the fees generated by Vingroup and its affiliates for these services are not material in the context of Vingroup’s consolidated annual turnover, if such agreements are terminated or we are unable to renew the agreements on similar or favorable terms, or to secure an alternative supplier or service provider, our business could be materially disrupted and our results of operations, financial condition and prospects could be materially and adversely affected.

In addition, we benefit from various co-marketing programs and cross-promotional activities with Vingroup affiliates. For example, as part of its promotional and appreciation campaign to new and existing homebuyers, Vinhomes Joint Stock Company (“Vinhomes”) has provided customers with gifts, including but not limited to VinFast vouchers. VinFast vouchers may be used towards payment for the purchase of our vehicles in Vietnam. To date, a significant proportion of our historical vehicle sales which have primarily been ICE vehicles, have been made with the application of a VinFast voucher provided to the customers by Vinhomes. There is no assurance that such programs will continue or will be repeated, and the demand for, and sales of, our vehicles could be adversely affected in the absence of such co-marketing programs. See “Related Party Transactions — Transactions with Vingroup Affiliates — Cross-Promotional Activities.”

As a Vingroup subsidiary, our reputation is linked to an extent with Vingroup and its affiliates. As such, any event or publicity that adversely affects the business or reputation, including litigation, regulatory or other matters, of Vingroup or any of its affiliates, could also have an adverse impact on our brand and reputation, even if such event or publicity is not associated with our products and services. We may incur additional costs in addressing such matters regardless of merit or outcome. This may also divert our management’s time and attention. In addition, we, Vingroup and its affiliates could be adversely impacted by events or reports impacting the industries in which we or they operate even if such events or reports are not directly related to us or our affiliates.

Transactions with the entities in which related parties hold ownership interests present potential for conflicts of interest, as the interests of these entities and their shareholders may not align with the interests of our company and our unaffiliated shareholders with respect to the negotiation of, and certain other matters related to, our purchases from and other transactions with such entities. Conflicts of interest may also arise in connection with the exercise of contractual remedies under these transactions, such as default.

Risks Related to Information Technology, Cybersecurity and Data Privacy

We utilize third-party service providers to support our service and business operations and any disruption or delays in service from these third-party providers could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Our brand, reputation and ability to attract customers depends on the reliable performance of our vehicles and the supporting systems, technology, and infrastructure. For example, we outfit our vehicles with in-vehicle services and functionality that use data connectivity to monitor performance and capture opportunities for cost-saving preventative maintenance. The availability and effectiveness of these services depend on the continued operation of information technology and communication systems. We rely on leading third party providers to host our cloud computing and storage needs. We do not own, control, or operate our cloud computing physical infrastructure or their data center providers. Although we have put in place disaster recovery plans, including the use of multiple cloud service providers spread out across different locations, our systems and operations are still vulnerable to damage or interruption from, among others, fire, flood, power loss, natural disasters, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, system vulnerabilities, earthquakes and other events at the sites of such providers. Ransomware within our information systems could target our manufacturing and/or business capabilities limiting the availability and uptime of these systems or eliciting payment from us. The occurrence of any of the foregoing events could result in damage to systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for losses that may occur.

 

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Problems faced by our third-party cloud service providers with their telecommunications network providers with which they contract or with the systems by which they allocate capacity among their customers, including us, could adversely affect the experience of our customers. Our third-party cloud service providers could decide to close their facilities without adequate notice resulting in loss of service and negative effects in our systems. Any financial difficulties, such as bankruptcy reorganization, faced by our third-party providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict.

Business interruption insurance that we may carry in the future may not be sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business, which may result from interruptions in our service as a result of system failures. Any errors, defects, disruptions or other performance problems with our services could harm our business, financial condition, results of operations, cash flows and prospects.

Breaches in data security, failure of information security systems and privacy concerns could subject us to penalties, damage our reputation and brand, and adversely impact our business, financial condition, results of operations, cash flows and prospects.

We and our suppliers and service providers may face challenges with respect to information security and privacy, including in relation to the collection, storage, transmission and sharing of information. We and our suppliers and service providers collect, transmit and store confidential and personal and sensitive information of our employees and/or customers, including names, accounts, user IDs and passwords, vehicle information, and payment or transaction related information. We are also subject to certain laws and regulations, such as “Right to Repair” laws, that require us to provide third-party access to our network and/or vehicle systems. In addition, our EVs are connected to the internet and are accessible by various persons, whether remotely or in person, including by technicians during car maintenance services, and we may integrate our service providers’ software or services into our systems and applications, all of which further heighten the risk of breaches of our EVs’ security systems and unauthorized access to personal data stored in the EV systems.

Increasingly, companies are subject to a wide variety of attacks on their networks and information technology infrastructure on an ongoing basis. Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, denial of service attacks, ransomware attacks and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our (and our suppliers’) internal networks, vehicles, infrastructure, and cloud deployed products and the information they store and process. In addition, hardware, components and software that are produced by us or third parties and utilized in our EVs may contain design or manufacturing defects that could unexpectedly interfere with the operation or security of our EVs.

Although we have implemented security measures to prevent such attacks, our networks and systems may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or other causes, and as a result, an unauthorized party may obtain access to our systems, networks, or data. If a threat actor is able to hack into our EV systems, the safety of the EV and its passengers may become at risk. We and our suppliers have in the past been subject to ransomware and phishing attacks. Though we do not believe we experienced any material losses or any sensitive or material information was compromised, we were unable to determine conclusively that this was the case. We have implemented remedial measures in response to such incidents. We cannot guarantee that such measures will prevent all incidents in the future.

We work with various third-party suppliers and service providers in the course of operating our business, and we depend on such third parties to take appropriate measures to protect the security and integrity of their information and systems. We cannot assure you that the measures taken by our third-party suppliers and service providers will be effective.

 

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We and our third-party suppliers and service providers may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or threats. A breach in our data security or that of our suppliers or service providers could create system disruptions or slowdowns and provide malicious parties with access to information stored on our networks, resulting in data being publicly disclosed, altered, lost, or stolen, which could subject us to liability and adversely impact our business, financial condition, results of operations, cash flows and prospects. Further, any breach in our data security or those of our third-party suppliers and service providers could allow malicious parties to access sensitive systems, such as our product lines and the vehicles themselves. Such access could adversely impact the safety of our employees, our customers and third parties.

Furthermore, cybersecurity organizations around the world have published warnings of increased cybersecurity threats to businesses, and external events, like the conflict between Russia and Ukraine, may increase the likelihood of cybersecurity attacks. We and our suppliers and service providers may be subject to retaliatory cyberattacks by state or non-state actors in response to economic sanctions and other political actions taken by governments in the North America or Europe where we operate.

Any actual, alleged or perceived failure to prevent a security breach or to comply with our cybersecurity policies or cybersecurity-related legal obligations, failure in our systems or networks, or any other actual, alleged or perceived data security incident we or our suppliers or service providers suffer, could result in damage to our reputation, negative publicity, loss of customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems and provide any required notifications and consents, including to regulators and/or individuals, and otherwise respond to any incident, claims, regulatory investigations and enforcement actions, costly litigation, administrative fines and other liabilities. We would also be exposed to a risk of loss or litigation and potential liability under laws, regulations and contracts that protect the privacy and security of personal data. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs and fees, diversion of internal resources, and reputational harm.

In addition, we may incur significant financial and operational costs to investigate, remediate and implement additional tools, devices and systems designed to prevent actual or perceived security breaches and other security incidents, as well as costs to comply with any notification obligations resulting from any security incidents. Any of these negative outcomes could adversely impact the market perception of our products and customer and investor confidence in our company, and would materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

We retain certain information about our customers, which may subject us to customer concerns or various privacy and consumer protection laws.

We use our vehicles’ electronic systems to log certain information about each vehicle’s use, such as location, charge time, battery usage, mileage and driving behavior, among other things, in order to aid us in vehicle diagnostics and repair and maintenance, as well as to help us customize and optimize the driving and riding experiences. Our customers may object to the use of this data, which may harm our reputation and business. Possession and use of our customers’ driving behavior and data in conducting our business may subject us to legislative and regulatory burdens in Vietnam and other jurisdictions that could require notification of data breach, restrict our use of such information, and hinder our ability to acquire new customers or market to existing customers. If customers allege that we have improperly released or disclosed their sensitive personal data, we could face legal claims, lawsuits and reputational harm. If third parties improperly obtain and use sensitive personal data of our customers, we may be required to expend significant resources to resolve these problems.

As we expand our operations internationally, we will be required to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal information in the U.S., Canada, Europe

 

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and elsewhere. See “Regulations.” Such regulations may impose additional regulatory obligations regarding the handling of personal information and further provide certain individual privacy rights to persons whose data is processed. Data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. We are monitoring these developments, but we may, in addition to other impacts, experience additional costs associated with increased compliance burdens and restrictions on the conduct of our business and the manner in which we interact with our customers.

Failure to comply with applicable laws and regulations could result in regulatory enforcement actions against us. For example, our misuse of or failure to secure personal information could result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, and/or result in significant liability and damage to our reputation and credibility. These possibilities, if borne out, could have a negative impact on revenues and profits. If a third party alleges that we have violated applicable data privacy laws, we could face legal claims, damages and administrative fines as well as reputational harm among consumers, investors, and strategic partners.

Any unauthorized control or manipulation of our vehicles’ systems could result in a loss of confidence in us and our vehicles and harm our business.

Our vehicles contain complex technology systems. We have designed, implemented, and tested security measures intended to prevent cybersecurity breaches or unauthorized access to our information technology networks, our vehicles and their systems, and intend to implement additional security measures as necessary and to comply with the relevant standards of our target markets, such as ISO 21434:2021, UNECE R-155 and R-156 regulations on the safety of connected vehicles. However, hackers and other malicious actors may attempt in the future to gain unauthorized access to modify, alter, and use networks, vehicle software and our systems to gain control of, or to change, our vehicles’ software or to gain access to data stored in or generated by the vehicle. Errors and vulnerabilities, including zero day vulnerabilities, in our information technology systems will be probed by third parties and could be identified and exploited in the future, and our remediation efforts may not be timely or successful. Any unauthorized access to or control of our vehicles or their systems or any unauthorized access to or loss of data could result in risks to our customers and other third parties, unsafe driving conditions, or failure of our systems, any of which could result in interruptions in our business, legal claims or proceedings which may or may not result in our favor and could subject us to significant liability. In addition, regardless of their veracity, reports of unauthorized access to our vehicles, their systems or data, as well as other factors that may result in the perception that our vehicles, their systems or data are capable of being “hacked” and lack appropriate safety controls, could negatively affect our brand and harm our business, financial condition, results of operations, cash flows and prospects.

Risks Related to Regulations and Litigation

We are subject to evolving laws, regulations, standards and policies, and any actual or perceived failure to comply could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.

The laws, regulations, standards and policies are continuously evolving. The costs of compliance, including remediation of any discovered issues and any changes to our operations mandated by new or amended laws, may be significant, and any failures to comply could result in additional expenses, delays or fines. As we expand our business into the target markets, we are in the process of reviewing the applicable laws and regulations in each jurisdiction, including required approvals, licenses and permits. Such laws, regulations, standards and policies continue to rapidly change, which increases the likelihood of a patchwork of complex or conflicting regulations, or which could adversely increase our compliance costs or otherwise affect our business.

All vehicles sold must comply with applicable standards, including mandated safety standards, in each market where our vehicles are sold. Vehicles must pass various tests and undergo certification and processes

 

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before being delivered from the factory and being sold to consumers. Our manufacturing facilities may be subject to scheduled and unscheduled inspections by government agencies. Failure by us to satisfy motor vehicle standards and relevant certification and approval requirements would materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Our business plan includes the direct sale of vehicles to retail consumers. The laws governing licensing of dealers and sales of motor vehicles vary from jurisdiction to jurisdiction. For example, in the U.S., most states require a dealer license to sell new motor vehicles within the state, and many states prohibit manufacturers from being a licensed dealer and directly selling new motor vehicles to retail consumers. The application of these types of laws to our operations continues to be difficult to predict but could pose operational challenges for us in the future. We and others in our industry may face legal challenges to this distribution model, including from car dealers and their lobbying organizations. Because laws vary from jurisdiction to jurisdiction, our distribution model must be carefully established, and our sales and service processes must be continually monitored for compliance with the various state requirements, which change from time to time. Regulatory compliance and likely challenges to the distribution model may add to the cost of our business.

Our business could be adversely affected by trade tariffs, export control laws or other trade barriers.

Our business could be affected by the imposition of tariffs, export control laws and other trade barriers, which may make it more costly or difficult for us to export our vehicles to the imposing country. We will become subject to additional tariffs, laws and barriers as we enter into new markets. We may experience cost increases as a result of existing or future tariffs, and may not be able to pass on such additional costs to our customers, or otherwise mitigate the costs. In the event that we raise prices to help cover the higher costs, we may face lower demand for our exported vehicles. A violation of export control laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal penalties, collateral consequences, remedial measures and legal expenses. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Misconduct by our employees could expose us to legal liabilities, reputational harm and/or other damages to our business.

Our employees play critical roles in ensuring the safety and reliability of our products and services and/or our compliance with relevant laws and regulations. Certain of our employees have access to sensitive information (including customer data) and/or proprietary technologies and know-how. We cannot assure you that our employees will always abide by the terms of their labor contracts, our codes of conduct, policies and procedures nor that the precautions we take to detect and prevent employee misconduct will always be effective. If any of our employees engage in any misconduct, illegal or suspicious activities, including but not limited to, misappropriation or leakage of sensitive client information or proprietary information, we and such employees could be subject to legal claims and liabilities and our reputation and business could be adversely affected as a result. In addition, while we seek to effectively screen candidates during the recruitment process, we cannot assure you that we will be able to uncover misconduct of job applicants that occurred before we offered them employment, or that we will not be affected by legal proceedings against our existing or former employees as a result of their actual or alleged misconduct.

We may from time to time be subject to claims, disputes, lawsuits and other legal and administrative proceedings. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Except as disclosed in “Business — Legal Proceedings,” we are currently not party to any material legal or administrative proceedings. However, in light of the nature of our business, we and our management are susceptible to potential claims or disputes. We and certain of our management have been, and may from time to time in the future be, subject to or involved in various claims, disputes, lawsuits and other legal and

 

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administrative proceedings. Lawsuits and litigations may cause us to incur defense costs, utilize a significant portion of our resources and divert management’s attention from our day-to-day operations, any of which could harm our business. Claims arising out of actual or alleged violations of law, breach of contract or torts could be asserted against us by customers, business partners, suppliers, competitors, employees or governmental entities in investigations and legal proceedings.

We may become subject to product liability claims, which could harm our business, financial condition, results of operations, cash flows and prospects if we are not able to successfully defend or insure against such claims.

The automotive industry experiences significant product liability claims, including in respect of defects in or malfunctions of batteries leased under our Battery Subscription Program, and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in property damage, personal injury or death. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim, even if unsuccessful, could generate substantial negative publicity about our vehicles and business. A product liability claim could also slow or prevent commercialization of our future vehicle candidates which would have a material adverse effect on our brand, business, prospects and operating results. Any lawsuit seeking significant monetary damages may have a material adverse effect on our brand and reputation, and our business, financial condition, results of operations, cash flows and prospects.

Our insurance coverage strategy may not be adequate to protect us from all business risks.

We have limited liability insurance coverage for our products and business operations. While we currently carry commercial general liability, commercial automobile liability, product liability, excess liability, workers’ compensation, employment practices liability and directors’ and officers’ insurance policies, and plan to cover all mandatory insurance policies, we cannot be certain that our insurance coverage will be sufficient to cover all future claims against us and any other business-related risks, including any losses resulting from product defects, fires, natural calamities or acts of God. Any imposition of liability that is not covered by our existing insurance, or is in excess of our existing insurance coverage could harm our business operations and results.

A successful liability claim against us due to injuries or other costs suffered by our customers could generate substantial negative publicity about our vehicles and materially and adversely affect brand and reputation, as well as our business, financial condition, results of operations, cash flows and prospects. In addition, we do not have any business disruption insurance. Any business disruption event could result in substantial cost to us and diversion of our resources.

We are subject to various environmental, health and safety laws and regulations that could impose substantial costs on it and cause delays in expanding our production facilities.

Our operations are subject to environmental laws and regulations in the jurisdictions where we operate, including laws relating to the use, handling, storage, disposal of and human exposure to hazardous materials. Environmental, health and safety laws and regulations are complex and may require significant time, management attention and costs to ensure continued compliance. Changes in these laws or other new environmental, health and safety laws and regulations may require us to change our operations, potentially resulting in a material adverse effect on our business, financial condition, results of operations, cash flows and prospects. These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Violations of these laws could result in substantial fines and penalties, third-party damages, suspension of production, remedial actions or a cessation of our operations. Contamination at properties we own or operate or properties to which we send hazardous substances may result in liability for us under environmental laws and regulations.

Our operations are also subject workplace safety laws and regulations, which require compliance with various workplace safety requirements, including requirements related to environmental safety. These laws and

 

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regulations can give rise to liability for oversight costs, compliance costs, bodily injury (including workers’ compensation), fines, and penalties. Additionally, non-compliance could result in delay or suspension of production or cessation of operations. The costs required to comply with workplace safety laws can be significant, and non-compliance could adversely affect our production or other operations, which could have a material adverse effect on our business, prospects and results of operations.

As we expand into new markets, we will become subject to additional environmental, health and safety laws and regulations. We may incur additional costs to ensure compliance with such laws and regulations, as well as to manage local labor practices.

Increasing scrutiny and changing expectations from our investors, customers and employees with respect to our ESG practices may impose additional costs on us or expose us to new or additional risks.

Investors, customers, employees, regulators and other stakeholders have expressed increasing interest in our ESG practices. Such practices may be taken into consideration by investors in making their investment decisions, and they may not invest in us if they believe that our ESG practices are inadequate or may invest in our competitors if our ESG practices are perceived to be less robust than that of our competitors. The criteria by which companies ESG practices are assessed are subject to change. We may be subject to heightened scrutiny from stakeholders and other third parties in respect of our ESG performance, and we may be required to undertake costly initiatives to maintain a positive ESG outlook or to satisfy any new criteria. Our brand and reputation may be adversely affected if we fail to meet applicable ESG standards or fail to maintain our rating. In addition, our competitors may achieve similar or better ratings than us in the future.

We may be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions, and similar laws, and noncompliance with such laws can subject us to administrative, civil, and criminal penalties, collateral consequences, remedial measures, and legal expenses, all of which could adversely affect our brand and reputation and our business, financial condition, results of operations, cash flows and prospects.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption laws and regulations. The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our brand and reputation and business, financial condition, results of operations, cash flows and prospects. Our policies and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

Non-compliance with applicable anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, contractual breaches, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in our ordinary shares.

 

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Risks Related to Intellectual Property

Our use of open source software in our applications could subject our proprietary software to general release, adversely affect our ability to sell our services and subject us to possible litigation, claims or proceedings.

We use open source software in connection with the development and deployment of our products and services, and we expect to continue to use open source software in the future. Companies that use open source software in connection with their products have, from time to time, faced claims challenging the use of open source software and/or compliance with open source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms. Some open source software licenses may require users who distribute proprietary software containing or linked to open source software to publicly disclose all or part of the source code to such proprietary software and/or make available any derivative works of the open source code under the same open source license, which could include proprietary source code. In such cases, the open source software license may also restrict us from charging fees to licensees for their use of our software. While we monitor the use of open source software and try to ensure that open source software is not used in a manner that would subject our proprietary source code to these requirements and restrictions, such use could inadvertently occur, in part because open source license terms are often ambiguous and have generally not been interpreted by U.S. or foreign courts.

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We rely on a combination of owned, jointly owned and licensed patents, trade secrets (including those in our know-how), copyrights, service marks, trademarks and other rights granted by intellectual property laws, as well as employee and third-party nondisclosure agreements, intellectual property licenses and other contractual rights to establish and protect our technology and intellectual property rights. While Vingroup has registered our tradename, logo and V line design worldwide, our EV and e-scooter names have only been registered in our target markets, while the industrial designs for various EV models have only been submitted and registered in various key markets. Thus, our intellectual property rights may not be enforceable across various international jurisdictions and may be challenged, contested, circumvented or invalidated by third parties.

The occurrence of any of the foregoing events may result in limitations in the scope of our intellectual property or restrictions on our use of our intellectual property rights or may adversely affect the conduct of our business. Despite our efforts to protect our owned, jointly owned and licensed intellectual property rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take to prevent misappropriation may not be successful. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue which would adversely affect our business, financial condition, results of operations, cash flows and prospects.

We may need to defend ourselves and our employees, agents and contractors against patent, trademark and/or other intellectual property right infringement claims, which may be time-consuming and would cause us to incur substantial costs.

We are involved in and may in the future become party to additional intellectual property infringement proceedings. From time to time, we may receive communications from holders of patents, trademarks, trade secrets or other intellectual property or proprietary rights alleging that we are infringing, misappropriating, diluting or otherwise violating such rights either directly or through our employees, agents or contractors. Such

 

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parties may in the future bring suits against us alleging infringement or other violation of such rights, or otherwise assert their rights and urge us to take licenses to their intellectual property. Moreover, if the third-party technology partners (including our affiliates) with whom we jointly own or from whom we license intellectual property rights infringe, misappropriate, dilute or otherwise violate other parties’ intellectual property rights, we may also be subject to liability pursuant to any ensuing litigation.

Litigation or other legal proceedings relating to intellectual property claims, regardless of merit, may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities, even if we ultimately prevail in such proceedings. Further, if we or the third-party technology partners with whom we jointly own or from whom we license intellectual property rights are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

 

   

cease selling or leasing, incorporating certain components into, or using vehicles or offering goods or services that incorporate or use the intellectual property that we allegedly infringe, misappropriate, dilute or otherwise violate;

 

   

pay substantial royalty or license fees or other damages;

 

   

seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable or exclusive terms or at all;

 

   

redesign or re-engineer our vehicles or other technology, goods or services, which may be costly, time-consuming or impossible; or

 

   

establish and maintain alternative branding for our products and services.

Although our contracts with third parties typically include indemnification clauses which require such parties to indemnify us against any damages arising from infringements of other’s intellectual property rights, in the event of a successful claim of infringement against us or our third-party technology partners, or if we fail or are unable to obtain a license to the infringed technology or other intellectual property right, our business, financial condition, results of operations, cash flows and prospects could still be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. Our rights to indemnity may not fully cover the costs or damages arising from any intellectual property right infringements that may occur.

Risks Relating to Vietnam

There are risks associated with investments in companies with operations in Vietnam, including in relation to political, economic and legal conditions.

Currently, substantially all of our assets are located in Vietnam. As a result, future political, economic, legal and social conditions in Vietnam, as well as certain actions and policies that the government may or may not take or adopt, could materially and adversely affect our business, financial condition, results of operations and prospects. The laws and regulatory apparatus affecting the Vietnamese economy are evolving with continuing improvements and increasing transparency but are still not as well established as the laws and regulatory apparatus of regions such as Western Europe and the U.S. laws and regulations may be interpreted and enforced differently in different provinces across Vietnam. Policy changes and interpretations of applicable laws may produce unexpected consequences. In addition, corporate government and shareholders’ rights, uncertainties and limitations remain in Vietnam in relation to the interpretation and enforcement of laws. Major tax laws and regulations in Vietnam have undergone significant changes in the past decade and may continue to be amended, supplemented and clarified in the future. We cannot predict when Vietnam’s legal system will obtain the level of certainty and predictability of other jurisdictions with more developed legal systems. Any adverse changes in our tax status in Vietnam or tax laws, regulations or policies in Vietnam could adversely affect our business, financial condition, results of operations and prospects. In addition, relevant authorities may take different interpretations of tax laws than we do, leading us to incur costs or liabilities.

 

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The performance and growth of our business in Vietnam is dependent on the health of the overall economy of Vietnam, and in particular, the automotive market and consumer demand as well as strong credit growth. Vietnam’s economy has been subject to significant fluctuations in the past, and any estimates or projections of future economic growth in Vietnam are subject to potential risks and uncertainties. The Vietnamese economy may also be adversely affected by external factors, including the monetary policy changes implemented in the U.S. and Europe. In recent months, prompted by rising benchmark U.S. dollar interest rates and a strengthening U.S. dollar, the central bank of Vietnam has raised policy rates, whilst the Vietnamese Dong has weakened against the U.S. dollar. The local economy is also seeing tightening liquidity as a result of these rate hikes and the Vietnamese government’s move to increase oversight over corporate bond issuances and refinancing, which resulted in certain criminal investigations. In addition, market volatility has increased, including softness in the real estate sector, which could adversely impact Vingroup and its subsidiaries.

Asset realization in bankruptcy proceedings may be time-consuming and expensive.

Despite the improved Vietnamese law on bankruptcy that came into effect on January 1, 2015, there is significant uncertainty on its implementation and interpretation due to lack of regulatory guidance and political sensitivities. Accordingly, the bankruptcy process in Vietnam may be complex, uncertain and time-consuming. After bankruptcy is declared, the general meeting of creditors may, subject to certain provisions of law, decide to apply either business rehabilitation or asset liquidation on the enterprise. However, in the event that any creditor or any participant in the general meeting of creditors has any objection to the resolution passed by the general meeting of creditors, it can request for a judicial review of the resolution. Upon review, the judge may convene another general meeting of the creditors if he finds reasonable grounds to do so. The decision to apply either business rehabilitation or asset liquidation on the enterprise must be confirmed by the judge before being implemented by the parties. Due to these complexities, a significant amount of time may pass before a creditor is able to recover from a Vietnamese debtor.

Vietnamese foreign exchange control may limit our ability to utilize our revenue effectively and affect our ability to receive dividends and other payments from our Vietnamese subsidiary.

Our operations are also based in Vietnam and therefore faces the risk of foreign exchange controls limiting our ability to receive dividends from our Vietnamese subsidiary. At present, foreign invested enterprises in Vietnam are, subject to conditions, generally permitted to exchange Vietnamese Dong into foreign currency at credit institutions licensed to provide foreign exchange services in Vietnam to repatriate profits and make outward remittances of foreign currency for the purchase of supplies and services, among others, provided that such foreign invested enterprise declares the intended use of the money and provides appropriate supporting documents. Such remittances are restricted to being made through registered accounts at authorized banks which are licensed to operate in Vietnam, and profits must first be converted into foreign currency prior to remittance. While under the Vietnamese government’s current foreign exchange policy, there is a low risk of foreign exchange controls restricting our ability to freely utilize our revenue and to receive dividends from our Vietnamese subsidiary, there is no assurance that the Vietnamese government will not, in future, extend its foreign exchange controls to restrict or prevent profits from being repatriated by foreign invested entities. Such a change would limit our ability to receive dividends from our Vietnamese subsidiary, through which all of our revenue is generated, and would cause a material and adverse effect on our business, financial condition and results of operations.

Investors may face difficulties enforcing foreign court judgments against us.

Substantial part of our Group’s assets is located in Vietnam. It may be difficult for investors to enforce against us judgments obtained from courts outside Vietnam with regard to any actions pertaining to our assets located in Vietnam. In addition, certain of our directors and officers are residents of Vietnam and Singapore, and the majority of the assets of such persons are located in Vietnam. As a result, it may be difficult for investors to effect service of process upon Vietnam-resident directors and officers, or to enforce against them judgments obtained in courts outside Vietnam predicated upon the laws of jurisdictions other than Vietnam. Vietnam is a

 

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party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and a few bilateral treaties relating to the recognition and enforcement of foreign courts’ judgments but not to any other multinational treaty in this regard. Vietnam’s Civil Procedure Code provides that a civil judgment or decision of a foreign court is enforceable in Vietnam only if there is a treaty in this regard between Vietnam and such foreign country or on a reciprocal basis or if permitted by Vietnamese laws. Vietnam’s Civil Procedure Code also sets out several grounds for Vietnamese courts to refuse the recognition and enforcement of foreign judgments, decisions or even foreign arbitral awards.

Under Vietnam’s Civil Procedure Code, a judgment of a foreign court will not be recognized and enforced in Vietnam where, among others, the competent Vietnamese court in which the recognition and enforcement is requested determines that the recognition and enforcement of such judgment in Vietnam is contrary to the “fundamental principles of the laws of Vietnam.” Such term is not clearly defined and is subject to the discretion of the relevant Vietnamese court.

Risks Related to the Ownership of Our Securities

The trading price of our ordinary shares may be volatile, which could result in substantial losses to investors.

The price for the ordinary shares in this offering will be determined by negotiations among the selling shareholders, us and representatives of the underwriters, and it may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell the ordinary shares at or above the offering price or at any other price or at the time that you would like to sell.

The trading price of our ordinary shares may be volatile and could fluctuate widely due to factors beyond our control, depending on many factors, including:

 

   

variations in our revenues, earnings and cash flow;

 

   

announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

 

   

announcements of new services and expansions by us or our competitors;

 

   

changes in financial estimates by securities analysts;

 

   

detrimental adverse publicity about us, our services or our industry;

 

   

additions or departures of key personnel;

 

   

release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

 

   

potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which our shares will trade.

In the past, shareholders of public companies have brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

 

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Future sales of the ordinary shares or other equity securities, and the availability of a large number of such securities for sale, could depress the price of the ordinary shares.

The sale of a significant number of the ordinary shares or other equity securities in the public market after this offering, or the perception that such sales may occur, could materially and adversely affect the market price of the ordinary shares. These factors could also materially impair our ability to raise capital through equity offerings in the future. See “Shares Eligible for Future Sale” for a discussion of possible future sales of our ordinary shares.

Upon completion of this offering, we will have                ordinary shares outstanding, assuming no exercise by the underwriters of their option to purchase additional                ordinary shares. The ordinary shares sold in this offering will be freely tradable without restriction under the Securities Act of 1933 (“Securities Act”), except for any shares purchased by any of our existing “affiliates,” as that term is defined in Rule 144 under the Securities Act. Shares held by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. Although our directors, executive officers, the selling shareholders and certain holders of our ordinary shares and securities convertible into or exchangeable for our ordinary shares, who will hold in aggregate ordinary shares representing                % of our issued share capital immediately following the completion of this offering (assuming no exercise by the underwriters of their option to purchase additional ordinary shares), will be subject to a lock-up, any substantial sale or perceived substantial sale of the ordinary shares over a short period of time after the expiration of the lock-up period could cause the price of the ordinary shares to fall. In addition, the representatives of the underwriters, on behalf of the underwriters, may release all or some portion of the ordinary shares subject to the lock-up agreements prior to the expiration of the lock-up period.

Similar sales of ordinary shares by holders after vesting of awards or holders of options who have exercised their options under any incentive plan that we may in the future implement could also cause the price of the ordinary shares to fall.

There can be no assurance that we will not be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ordinary shares.

A non-U.S. corporation will be classified as a passive foreign investment company, or “PFIC,” for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of “passive” income; or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. Based on our current and expected income and assets (taking into account the expected cash proceeds and our anticipated market capitalization following this offering), we do not presently expect to be a PFIC for the current taxable year. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis after the close of each taxable year and that depends, in part, upon the composition of our income and assets. In addition, the application of the PFIC rules to companies with our composition of income and assets is subject to significant uncertainty. Fluctuations in the market price of our ordinary shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the second part of the test described above may be determined by reference to the market price of our ordinary shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering.

If we were to be or become a PFIC for any taxable year during which a U.S. Holder (as defined in “Taxation — U.S. Federal Income Tax Considerations”) holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Taxation — U.S. Federal Income Tax Considerations — Passive Foreign Investment Company Considerations.”

 

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We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies. As a company with less than $1.24 billion in net revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. As an emerging growth company, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include an exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable to U.S. domestic issuers, including:

 

   

the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

 

   

the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

 

   

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

   

the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

Purchasers in this offering will experience dilution if the Exchangeable Bonds are exchanged for our ordinary shares.

On April 29, 2022 and June 4, 2022, our company and Vingroup entered into the Vingroup EB Subscription Agreements (as defined herein) with certain investors pursuant to which Vingroup agreed to issue to such investors, and such investors agreed to subscribe for, $625.0 million in aggregate principal amount of Exchangeable Bonds (as defined herein). As of September 30, 2022, the aggregate principal amount of outstanding Exchangeable Bonds was $625.0 million. Based on the unadjusted initial Deed Poll Exchange Rate (as defined herein), on an as-exchanged basis (assuming a hypothetical exercise of Deed Poll Exchange Rights (as defined herein) immediately upon the completion of this offering and an initial public offering price of

 

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$             per share, which is the midpoint of the price range set forth on the cover page of this prospectus), the EB Investors would own             % of our company immediately upon completion of the exchange of the Exchangeable Bonds, and you will incur dilution at such time. For more information, see “Related Party Transactions — Vingroup Exchangeable Bonds.”

Risks Relating to Investments in Singapore Companies

Singapore take-over laws contain provisions which may vary from those in other jurisdictions.

We are subject to the Singapore Take-Over Code. The Singapore Take-Over Code contains certain provisions that may possibly delay, deter or prevent a future take-over or change in control of us. Under the Singapore Take-Over Code, except with the consent of the Securities Industry Council of Singapore (“SIC”), any person acquiring an interest, whether by a series of transactions over a period of time or not, either on his own or together with parties acting in concert with him, in 30% or more of our voting rights, is required to extend a take-over offer for all the relevant class(es) of shares in our capital in accordance with the Singapore Take-Over Code. Except with the consent of the SIC, such a take-over offer is also required to be made if a person holding between 30% and 50% (both inclusive) of our voting rights, either on his own or together with parties acting in concert with him, acquires additional voting shares representing more than 1% of our voting rights in any six-month period. In the case where our company has more than one class of equity share capital, a comparable take-over offer must be made for each class of shares in accordance with the Singapore Take-Over Code and the SIC should be consulted in advance in such cases. While the Singapore Take-Over Code seeks to ensure an equality of treatment among shareholders in take-over or merger situations, its provisions could substantially impede the ability of the shareholders to benefit from a change of control and, as a result, may adversely affect the market price of the ordinary shares and the ability to realize any benefit from a potential change of control. In addition, an offeror must treat all shareholders of the same class in an offeree company equally. This concentration of ownership could accelerate, delay, defer or prevent a change in control of us or a successful offer under the Singapore Take-Over Code by another person.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Industry,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

 

   

our mission, goals and strategies;

 

   

our future business development, financial conditions and results of operations, including international expansion and the development of manufacturing operations overseas;

 

   

our expectations regarding demand for EVs;

 

   

changes in technology;

 

   

our expectations regarding our relationships with our customers, third-party merchants, strategic business partners, and other third parties;

 

   

competition in our industry;

 

   

our proposed use of proceeds;

 

   

relevant government policies and regulations relating to our business; and

 

   

general economic and business conditions in the markets where we operate and seek to expand.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and other sections in this prospectus. You should read thoroughly this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The pre-owned consumer electronics market may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of the ordinary shares. In addition, the rapidly evolving nature of this industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to

 

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update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

 

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USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately $                , or approximately $                if the underwriters exercise their over-allotment option in full, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of $                per ordinary share, which is the midpoint of the price range shown on the front page of this prospectus. A $1.00 increase (decrease) in the assumed initial public offering price of $                per ordinary share would increase (decrease) the net proceeds to us from this offering by $                , assuming the number of ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

We plan to use the net proceeds of this offering to repay the remaining outstanding Share Acquisition P-Notes issued in connection with the Reorganization, in part or in full, depending on the size of the offering. As of the date of this prospectus, the amount outstanding under the Share Acquisition P-Note held by Vingroup was approximately $1,078.8 million on a consolidated group basis. The Share Acquisition P-Notes do not bear interest and mature on March 1, 2025. See “Corporate History and Structure — Reorganization” for more information.

In accordance with the terms of the Reinvestment Agreement (as described in “Corporate History and Structure – Reorganization), Vingroup will reinvest the offering proceeds that it receives from the Share Acquisition P-Note into VinFast Vietnam (the “IPO Proceeds Reinvestment”) less VND6.0 trillion ($251.0 million) corresponding to the advance capital contribution made by Vingroup to VinFast Vietnam in March 2022. We plan to use the IPO Proceeds Reinvestment and any net proceeds from this offering remaining after the repayment of the outstanding Share Acquisition P-Notes as follows:

 

   

investments in research and development of products, services and technology sales (approximately                 % of the net proceeds of this offering);

 

   

investments in sales and marketing and expansion of sales channels (approximately                 % of the net proceeds of this offering);

 

   

investments in the development of our manufacturing facilities (approximately                 % of the net proceeds of this offering); and

 

   

the balance for working capital and general corporate purposes, which may include potential strategic investments and acquisitions, although we have not identified any specific investments or acquisition opportunities at this time.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering and the IPO Proceeds Reinvestment. Our management, however, will have broad discretion to apply such proceeds. If an unforeseen event occurs or business conditions change, we may use such proceeds differently than as described in this prospectus.

Pending our use of the net proceeds from this offering and the IPO Proceeds Reinvestment as described above, we intend to invest such proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments. No assurance can be given that we will invest such proceeds in a manner that produces income or that does not result in a loss in value. These investments may have a material adverse effect on the U.S. federal income tax consequences of your investment in our ordinary shares. See “Risk Factors — Risks Relating to the Ownership of Our Securities — There can be no assurance that we will not be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ordinary shares” and “Taxation — Certain U.S. Federal Income Taxation Considerations — Passive Foreign Investment Company Considerations.”

 

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DIVIDEND POLICY

We currently have not adopted a dividend policy with respect to future dividends and we do not have any present plan to pay any dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on then existing conditions, including our financial condition, results of operations, contractual restrictions (including in the agreements governing our credit facilities or other debt instruments), capital requirements, business prospects and other factors our board of directors may deem relevant.

While we do not have any present plan to pay any dividends on our ordinary shares in the foreseeable future after this offering, we may, in the future, by ordinary resolution, declare dividends at a general meeting of our shareholders, but no dividend shall be payable except out of our profits available for distribution, as derived from the standalone audited financial statements of our company and not from our audited consolidated financial statements. The amount of any such dividend shall not exceed the amount recommended by our board of directors. Subject to our constitution and in accordance with the Singapore Companies Act, our board of directors may, without the approval of our shareholders, declare and pay interim dividends but any final dividends we declare must be approved by an ordinary resolution at a general meeting of our shareholders. VinFast Auto Ltd. is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries. Regulations in certain markets where we utilize dividend payments may restrict the ability of our subsidiaries to pay dividends to us.

 

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2022:

 

   

on an actual basis;

 

   

on an as adjusted basis to reflect completion of the ICE Assets Disposal, consisting of: (i) the assignment of VND24.2 trillion ($1,012.9 million) of the Share Acquisition P-Note held by VIG to VinFast Vietnam in June 2022, which, upon completion of the ICE Assets Disposal in November 2022, satisfied a portion of the ICE Assets Disposal consideration owed to us from VIG and eliminated our payment obligations relating to the Share Acquisition P-Note assigned by VIG, and (ii) the payment of the remaining ICE Assets Disposal consideration of approximately VND2.8 trillion ($116.8 million), which VIG intends to pay in cash no later than 15 business days after the completion of the offering; and

 

   

on an as further adjusted basis to reflect: (i) the sale of                 ordinary shares by us in this offering at an assumed initial public offering price of $                 per ordinary share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise the over-allotment option, (ii) the use of the net proceeds from this offering by us to repay the remaining VND25.8 trillion ($1,078.8 million) outstanding under the Share Acquisition P-Note held by Vingroup, in part or in full, depending on the size of the offering, and (iii) the application of those net proceeds received by Vingroup to make the IPO Proceeds Reinvestment (less VND6.0 trillion ($251.0 million) corresponding to the advance capital contribution from Vingroup in March 2022) in accordance with the terms of the Reinvestment Agreement.

 

     As of September 30, 2022  
     Actual      As Adjusted for
the ICE Assets Disposal
    As Further Adjusted for
this Offering and the IPO
Proceeds Reinvestment
 
    

VND

(in billions)

    

USD

(in millions)

    

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

    

USD

(in millions)

 

Cash and cash equivalents

     1,854.6        77.6                 (1)     
        
(1) 
    

Debt

               

Short-term and current portion of long-term interest-bearing loans and borrowings(2)

     25,066.0        1,048.8            

Long-term interest-bearing loans and borrowings (A)

     34,486.2        1,442.9            
  

 

 

    

 

 

           
     59,552.2        2,491.7            

Amount due to related parties (short-term)

               

Share Acquisition P-Notes(3)

     49,990.5        2,091.7            

Short-term borrowings from related parties

     17,662.7        739.0            

Short-term amounts due to related parties, excluding borrowings from related parties and Share Acquisition P-Notes

     8,960.4        374.9            
  

 

 

    

 

 

           
     76,613.6        3,205.6            

Amount due to related parties (long-term)

               

Long-term borrowings from related parties

     13,723.5        574.2            

Long-term amounts due to related parties, excluding borrowings from related parties

     15,024.6        628.6            
  

 

 

    

 

 

           
     28,748.1        1,202.9            

 

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     As of September 30, 2022  
     Actual     As Adjusted for
the ICE Assets Disposal
     As Further Adjusted for
this Offering and the IPO
Proceeds Reinvestment
 
    

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

    

USD

(in millions)

    

VND

(in billions)

    

USD

(in millions)

 

Equity

               

Ordinary share — VinFast Auto (2,411,764,800 shares issued and outstanding as of September 30, 2022)

     553.9       23.2             

Accumulated losses

     (111,915.0     (4,682.6           

Additional paid-in capital

     6,646.7       278.1             

Other comprehensive loss

     (55.6     (2.3           

Equity attributable to equity holders of the parent

     (104,770.0     (4,383.7           

Non-controlling interests

     (52.0     (2.2           

Total deficit (B)

     (104,822.1     (4,385.9           

Total capitalization (B) + (A)(4)

     (70,335.9     (2,943.0           

 

Notes:

(1)

The balance of consideration for the ICE Assets Disposal amounting to VND2.0 trillion ($83.7 million) was paid in June 2022. See Note 2.1[a] to the unaudited pro forma consolidated financial information included elsewhere in this prospectus.

(2)

A portion of our short-term and current portion of long-term interest bearing loans and borrowings were repaid subsequent to September 30, 2022. See below for details.

(3)

Consists of VND25.8 trillion ($1,078.8 million) of the Share Acquisition P-Note held by Vingroup and VND24,208.3 billion ($1,012.9 million) of the Share Acquisition P-Note held by VIG as of September 30, 2022.

(4)

Calculated as total deficit plus long-term interest-bearing loans and borrowings.

As of September 30, 2022, we had short-term loans to related parties of VND545.4 billion ($22.8 million) consisting of a loan to Vinpearl and other balances due from related parties of VND2,362.2 billion ($98.8 million) outstanding from various Vingroup affiliates. See note 9 to our unaudited historical interim condensed consolidated financial statements included elsewhere in this prospectus for more information.

Our short-term and current portion of long-term interest-bearing loans and borrowings as of September 30, 2022 consist of VND10.0 trillion ($417.4 million) of domestic bonds, VND9.0 trillion ($375.8 million) of the current portion of long-term loans and VND6.1 trillion ($255.6 million) of loans from banks. From October 1, 2022 through December 5, 2022, we have repaid VND5.5 trillion ($230.0 million), which includes VND3.0 trillion ($127.2 million) of domestic bonds that were due in November 2022 and are due in December 2022. The amounts repaid to date were funded through related party loans and available cash. We expect to fund our other near-term debt obligations primarily through related party loans, supplemented by cash generated from operations.

On April 29, 2022 and June 4, 2022, our company and Vingroup entered into the Vingroup EB Subscription Agreements (as defined herein) with certain investors pursuant to which Vingroup issued to such investors, and such investors agreed to subscribe for, $625.0 million in aggregate principal amount of Exchangeable Bonds (as defined herein). Vingroup contributed an aggregate VND13,995.4 billion ($585.6 million) of net proceeds from the Exchangeable Bonds issuance to VinFast Vietnam by subscribing for certain dividend preferred shares of VinFast Vietnam in May and June 2022. On July 1, 2022, we entered into a put option agreement (as amended and supplemented) with Vingroup, pursuant to which Vingroup will have the right to require our company to purchase the dividend preferred shares (or such other VinFast Vietnam shares into which such preferred shares may be converted) held by Vingroup at any time elected by Vingroup after Vingroup has received of a notice to redeem the Exchangeable Bonds, but no later than the maturity date of the Exchangeable Bonds. As of September 30, 2022, the aggregate principal amount of outstanding Exchangeable Bonds was $625.0 million, and we had recorded VND15.3 trillion ($641.7 million) in financial liabilities in respect of the dividend preference shares issued by VinFast Vietnam in connection with the transaction. Bondholders have Deed Poll Exchange Rights (as defined herein) to exchange their Exchangeable Bonds for a specified number of ordinary shares in our

 

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company at the Deed Poll Exchange Rate (as defined herein), which will be determined at the time of exchange and was initially set based on a valuation of our company of $30 billion in April 2022 at the time that the first EB Subscription Agreements were signed. Based on the unadjusted initial Deed Poll Exchange Rate, on an as-exchanged basis (assuming a hypothetical exercise of Deed Poll Exchange Rights immediately upon the completion of this offering and an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus), the EB Investors would own             % of our company immediately upon completion of the exchange of the Exchangeable Bonds. For more information, see “Related Party Transactions — Vingroup Exchangeable Bonds.”

You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Other than as set forth above, there has been no material change in our capitalization since September 30, 2022.

 

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DILUTION

If you invest in our ordinary shares, your interest will be diluted to the extent of the difference between the initial public offering price per ordinary share and our net tangible book value per ordinary share after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

Our net tangible book value as of September 30, 2022 was approximately $(4,448.9) million, representing $(1.8) per ordinary share as of that date. Net tangible book value per share represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities, divided by the number of all of our issued and ordinary shares outstanding as of September 30, 2022. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of $                 per ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes net tangible book value after September 30, 2022, other than to give effect to our sale of the ordinary shares offered in this offering at the assumed initial public offering price of $                 per ordinary share, which is the midpoint of the estimated initial public offering price range, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022 would have been $                 , or $                 per ordinary share and $                 per ordinary share. This represents an immediate increase in net tangible book value of $                per ordinary share and $                 per ordinary share to the existing shareholders and an immediate dilution in net tangible book value of $                per ordinary share and $                per ordinary share to investors purchasing ordinary shares in this offering. The following table illustrates such dilution:

 

     Per
Ordinary
Share
 

Assumed initial public offering price

   $                    

Net tangible book value as of September 30, 2022

   $ (1.8

Amount of dilution in net tangible book value to new investors in this offering

   $    

Percentage of dilution in net tangible book value to new investors in this offering

     %  

A $1.00 increase (decrease) in the assumed initial public offering price of $                per ordinary share would increase (decrease) our net tangible book value after giving effect to this offering by $                , the net tangible book value per ordinary share after giving effect to this offering by $                per ordinary share and the dilution in net tangible book value per ordinary share to new investors in this offering by $                per ordinary share, assuming no change to the number of ordinary share offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

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The following table summarizes, on a pro forma basis as of September 30, 2022, the differences between existing shareholders and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per ordinary share paid before deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The total number of ordinary shares does not include ordinary shares issuable upon the exercise of the over-allotment option granted to the underwriters.

 

     Ordinary Shares
Purchased
    Total Consideration     Average
Price Per
Ordinary
Share
 
     Number    Percent     Amount      Percent  

Existing shareholders

                       $                                         $                    

New investors

                                        $                         $    
  

 

  

 

 

   

 

 

    

 

 

   

Total

        100.0     $        100.0  
  

 

  

 

 

   

 

 

    

 

 

   

The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ordinary shares and other terms of this offering determined at pricing.

 

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ENFORCEABILITY OF CIVIL LIABILITIES

Singapore

We are incorporated under the laws of the Republic of Singapore, and certain of our officers and directors are residents outside the U.S. In addition, a significant portion of our operations and business is conducted, and a substantial portion of our assets are located, outside the U.S.

Although we are incorporated outside the U.S., we have agreed to accept service of process in the U.S. through Cogency Global Inc., our agent designated for that purpose, located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Nevertheless, since a substantial portion of the assets owned by us are located outside the U.S., any judgment obtained in the U.S. against us may not be collectible within the U.S.

An investor may or may not be able to commence an original action against us or our directors or officers, or any person, before the courts outside the U.S. to enforce liabilities under U.S. federal securities laws, depending on the nature of the action.

There is no treaty between the U.S. and Singapore providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or state court in the U.S. based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore, not be automatically enforceable in Singapore. In making a determination as to enforceability of a foreign judgment, the Singapore courts need to be satisfied that the foreign judgment was final and conclusive and on the merits of the case, given by a court of law of competent jurisdiction, and was expressed to be for a fixed sum of money. In general, a foreign judgment would be enforceable in Singapore unless procured by fraud, or if the proceedings in which such judgments were obtained were not conducted in accordance with principles of natural justice, or if the enforcement thereof would be contrary to the public policy of Singapore, or if the judgment would conflict with earlier judgments from Singapore or earlier foreign judgments recognized in Singapore, or if the judgment would amount to the direct or indirect enforcement of foreign penal, revenue or other public laws.

Civil liability provisions of the federal and state securities law of the U.S. permit the award of punitive damages against us, our directors and officers. The Singapore courts do not allow the enforcement of foreign judgments which amount to the direct or indirect enforcement of foreign penal, revenue or other public laws. It is uncertain as to whether a judgment of the courts of the U.S. awarding such punitive damages would be regarded by the Singapore courts as being pursuant to foreign, penal, revenue or other public laws. Such determination has yet to be made by a Singapore court in a reported decision.

In addition, holders of book-entry interests in our ordinary shares will be required to be registered as shareholders in our register of members in order to have standing to bring a shareholder suit and, if successful, to enforce a foreign judgment against us, our directors or our executive officers in the Singapore courts, subject to applicable Singapore laws. A holder of book-entry interests in our ordinary shares may become our registered shareholder by exchanging its interest in our ordinary shares for certificated ordinary shares and being registered in our register of members. The administrative process of becoming a registered shareholder could result in delays prejudicial to any legal proceeding or enforcement action.

Vietnam

Vietnam is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), and a few bilateral treaties relating to the recognition and enforcement of foreign judgments but not to any other multinational treaty in this regard. Foreign arbitral awards can be enforceable in Vietnam under the New York Convention after being recognized by Vietnamese courts in accordance with statutory procedures. However, in principle, Vietnam’s Civil Procedure Code provides that a civil judgment or decision of a foreign court is enforceable in Vietnam only if there is a treaty in this regard

 

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between Vietnam and such foreign country (including international treaties) or on a reciprocal basis. Vietnam’s Civil Procedure Code also sets out several grounds for Vietnamese courts to refuse the recognition and enforcement of foreign judgments and decisions or foreign arbitral awards. Therefore, it may be difficult to enforce in Vietnam any judgment or decision issued by a U.S. court against us or our directors and officers who are citizens of Vietnam.

 

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CORPORATE HISTORY AND STRUCTURE

Corporate History

We commenced operations in June 2017 in Hanoi, Vietnam, through VinFast Vietnam. In May 2018, VinFast Vietnam changed its name to VinFast Trading and Production Limited Liability Company and our head office was relocated to Hai Phong, Vietnam. The construction of our electric scooter manufacturing plant was completed in April 2018 and we started production of our first electric scooter model, branded Klara, in November 2018. We broke ground on our automobile manufacturing plant in September 2017 and officially launched the plant in June 2019.

In December 2021, VinFast Vietnam was converted into a joint stock company under the name, VinFast Trading and Production Joint Stock Company.

Reorganization

To facilitate our initial public offering in the U.S., we established our offshore holding structure through a series of transactions that resulted in VinFast Vietnam’s operations being reorganized under the Singapore-incorporated registrant, VinFast Trading & Investment Pte. Ltd. Prior to the effective date of this Registration Statement, we will convert to a Singapore public limited company. Upon such conversion, we will be known as VinFast Auto Ltd. We refer to these transactions, which are described below, collectively as the “Reorganization.”

To effect the Reorganization, Vingroup and VIG made initial equity capital contributions in cash in the registrant. The registrant acquired an aggregate 99.9% voting interest in VinFast Vietnam in January 2022 from its controlling shareholders, in consideration for cash equivalent to the initial equity capital contributions into the registrant as well as promissory notes with an aggregate principal amount of approximately VND50.0 trillion (the “Share Acquisition P-Notes”) issued by the registrant to the controlling shareholders of VinFast Vietnam. As of September 30, 2022, the amount outstanding under the Share Acquisition P-Notes was approximately VND50.0 trillion ($2,091.7 million). The Share Acquisition P-Notes do not bear interest and mature on March 1, 2025. As a result of these transactions, the former majority shareholders of VinFast Vietnam, being Vingroup and VIG, became the majority shareholders of the registrant and VinFast Vietnam became a subsidiary of the registrant. The current shareholders of VinFast Auto Ltd. as of the date of this prospectus are Vingroup, VIG and another affiliate of VIG.

VinFast Vietnam also entered into a reinvestment agreement (as amended and supplemented, the “Reinvestment Agreement”) with our shareholders pursuant to which each shareholder has agreed to reinvest all proceeds that it receives from the Share Acquisition P-Notes (as applicable) into VinFast Vietnam in return for the issuance of deferred preference shares in VinFast Vietnam. Each shareholder’s reinvestment obligation under the Reinvestment Agreement is unsecured. In March 2022, Vingroup made an advance capital contribution to VinFast Vietnam of VND6.0 trillion ($251.0 million) through a subscription for deferred preference shares of VinFast Vietnam. The amount of proceeds from this offering that Vingroup receives from the Share Acquisition P-Note and reinvests pursuant to the Reinvestment Agreement will be reduced by the amount of such capital contribution. The deferred preference shares will entitle the holders to annual dividends of 0.01% of the subscription price per share, the payment of which may be deferred at VinFast Vietnam’s discretion, and are transferrable, but are non-convertible, non-redeemable and carry no voting rights nor any right to claim on net assets of VinFast Vietnam upon its liquidation, dissolution or winding up (except, in the case of the VND6.0 trillion of deferred preference shares issued referred to above, where such deferred preference shares would have been converted into ordinary shares of VinFast Vietnam), such that we do not expect any material dilution to the registrant’s dividend rights in VinFast Vietnam. Our company will continue to exercise all control and management of VinFast Vietnam, notwithstanding any deferred preference shares of VinFast Vietnam held by our controlling shareholders.

In June 2022, VIG assigned all of the Share Acquisition P-Note that it held, amounting to VND24.2 trillion ($1,012.9 million), to VinFast Vietnam to partially settle its payment obligations to us pursuant to the ICE Assets

 

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Disposal Agreements. In November 2022, our payment obligations related to such assigned Share Acquisition P-Note were subsequently eliminated on a consolidated group basis when we completed the ICE Assets Disposal. Accordingly, the amount that remains outstanding to our existing shareholders under the Share Acquisition P-Notes has been reduced to VND25.8 trillion ($1,078.8 million), and the Share Acquisition P-Note that remains outstanding is held by Vingroup.

We plan to repay the remaining Share Acquisition P-Note held by Vingroup, in whole or in part, using the proceeds from this offering, depending on the size of the offering. In accordance with the terms of the Reinvestment Agreement, Vingroup will reinvest all proceeds that it receives from the Share Acquisition P-Note, less VND6.0 trillion ($251.0 million) corresponding to the advance capital contribution it made to VinFast Vietnam in March 2022.

The effect of the Reorganization, the repayment of the Share Acquisition P-Note held by Vingroup and Vingroup’s performance of the Reinvestment Agreement is to provide that all of the proceeds from this offering that we use to repay the remaining outstanding Share Acquisition P-Note held by Vingroup (after deducting the amount of the March 2022 advance capital contribution from Vingroup) are reinvested into VinFast Vietnam and used to invest in our business and implement our growth strategy.

Phase-out of ICE Vehicle Production

Our company was established in Vietnam in 2017 and commenced the production of ICE vehicles in 2019. Our operations prior to 2021 have focused primarily on the manufacture and sale of ICE vehicles and e-scooters. Our ICE vehicle models are: the Fadil (A-segment), the Lux A (E-segment), the Lux SA (E-segment SUV) and the President (E-segment SUV). Since commencing vehicle production in 2019, the majority of the nearly 88,000 vehicles that we have delivered through the end of September 2022 have been ICE vehicles. We sold approximately 24,200 ICE vehicles in 2020 and 35,600 in 2021. Three of our ICE vehicle models, Fadil, Lux A 2.0 and Lux SA 2.0, ranked first in terms of total shipment volume in 2021, according to Frost & Sullivan.

We ceased all production of ICE vehicles in early November 2022 in connection with our strategic decision to transform into an EV-only manufacturer. As part of this transformation into an EV-only manufacturer, in 2022, we entered into a series of agreements with VIG (as amended, the “ICE Assets Disposal Agreements”) to transfer a portion of our assets used exclusively in the production of ICE vehicles (the “ICE Assets”) to VIG. We refer to these ICE assets disposal transactions as the “ICE Assets Disposal.” We completed the ICE Assets Disposal in early November 2022.

The ICE Assets that we transferred to VIG comprise certain machinery, equipment, tooling and production lines that are used exclusively in the production of our ICE vehicles and that we have determined cannot be retooled for EV production, as well as other technologies used in the production of our ICE vehicles. The consideration for the ICE Assets was VND28,999.0 billion ($1,213.3 million), inclusive of taxes, which was the amount agreed among the parties with reference to the estimated book value of the ICE Assets under Vietnamese accounting standards.

VIG settled a portion of the consideration for the ICE Assets Disposal amounting to VND24.2 trillion ($1,012.9 million) through the assignment of the Share Acquisition P-Note held by VIG to VinFast Vietnam and a payment of VND2.0 trillion ($83.7 million) to VinFast Vietnam in June 2022. Our payment obligations related to the assigned Share Acquisition P-Note were subsequently eliminated when we completed the ICE Assets Disposal in early November 2022. Accordingly, as of the date of this prospectus the amount of consideration for the ICE Assets Disposal which remains outstanding is approximately VND2.8 trillion ($116.8 million). This amount is required to be paid within 24 months from the completion of the transfer. VIG intends to pay in cash no later than 15 business days after the completion of this offering.

Under the Reinvestment Agreement, in the event that VIG disposes of the ICE Assets to any independent third-party (by reference to ownership or management control) for cash (the terms and timing of which we do not control), it is required to reinvest in VinFast Vietnam any and all of the portion of net disposal proceeds that exceeds the amount of the cash payments that VIG has made and will make to VinFast Vietnam, as described above.

 

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Notwithstanding the ICE Assets Disposal and the cessation of production of ICE vehicles in early November 2022, our results of operations in 2022 include results of our ICE vehicle manufacturing business because we delivered ICE vehicles during the year. We have retained all servicing, warranty and other obligations and liabilities related to ICE vehicles that we have produced and we have retained all rights, obligations and liabilities under ICE vehicle-related supplier contracts that we are not able to novate to VIG, Vingroup or other parties outside of our Group.

We have incurred and will incur additional costs associated with break fees or settlement costs related to our outstanding obligations under such contracts, which will be recorded in our consolidated statements of operations as compensation expenses.

We will retain the balance of our ICE Assets that are not transferred to VIG, which comprise our rights, interests and obligations under various license agreements with international car manufacturers related to licenses used in the production of our ICE vehicles. We expect our amortization expenses to increase, particularly in the year ending December 31, 2022, as the phase out of our ICE vehicle production represents the end of these assets’ useful lives.

Vingroup Exchangeable Bonds due 2027

On April 29, 2022 and June 4, 2022, our company and Vingroup entered into the Vingroup EB Subscription Agreements (as defined herein) with certain investors pursuant to which Vingroup agreed to issue to such investors, and such investors agreed to subscribe for, $625.0 million in aggregate principal amount of Exchangeable Bonds (as defined herein). The Exchangeable Bonds were issued on May 10, 2022 and June 10, 2022, but form a single series and rank equally in all respects. As of September 30, 2022, the aggregate principal amount of outstanding Exchangeable Bonds was $625.0 million. For more information, see “Related Party Transactions — Vingroup Exchangeable Bonds.”

 

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Organizational Structure

The following chart summarizes our corporate structure setting forth our ownership interest and the country of incorporation for each of our principal operating subsidiaries as of the date of this prospectus.

 

LOGO

Notes:

(1)

The registrant is currently a Singapore private limited company operating under the name “VinFast Trading & Investments Pte. Ltd.” Prior to the effective date of this Registration Statement, the registrant will convert to a Singapore public limited company. Upon such conversion, the registrant will be known as VinFast Auto Ltd.

(2)

Based on proportion of voting power held. The registrant owns 87.7% of this subsidiary’s total outstanding share capital, including non-voting preferred shares.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

The financial information in this prospectus as of December 31, 2020 and for the year then ended has been derived from the consolidated financial statements of VinFast Trading and Production Joint Stock Company, which are included elsewhere in this prospectus. The financial information in this prospectus as of December 31, 2021 and for the year then ended and as of September 30, 2021 and for the nine months ended September 30, 2021 and 2022 has been derived from the consolidated financial statements of VinFast Trading & Investment Pte. Ltd., which are included elsewhere in this prospectus. The financial statements of VinFast Trading and Production Joint Stock Company and VinFast Trading & Investment Pte. Ltd. are prepared in accordance with U.S. GAAP.

We ceased all production of ICE vehicles in early November 2022 in connection with our strategic decision to transform into an EV-only manufacturer. Accordingly, our historical results for any prior period are not necessarily indicative of results expected in any future period.

You should read this Selected Consolidated Financial Data section together with the consolidated financial statements included elsewhere in this prospectus and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Selected Consolidated Balance Sheet Data

 

    As of December 31,     As of September 30,  
    2020     2021     2022  
    VND
(in billions)
   

VND

(in billions)

    USD
(in millions)
   

VND

(in billions)

   

USD

(in millions)

 

Cash and cash equivalents

    827.7       3,024.9       126.6       1,854.6       77.6  

Inventories, net

    5,352.2       6,683.7       279.7       12,514.2       523.6  

Short-term amounts due from related parties

    8,840.5       1,997.2       83.6       2,862.5       119.8  

Total current assets

    20,449.5       26,692.5       1,116.8       36,857.1       1,542.1  

Property, plant and equipment, net

    52,089.7       51,788.3       2,166.9       61,498.8       2,573.2  

Other investments

    11,031.3       —         —         —         —    

Total assets

    92,905.9       85,321.5       3,569.9       105,380.8       4,409.2  

Amounts due to related parties

    3,171.4       56,035.3       2,344.6       76,613.6       3,205.6  

Total current liabilities

    20,040.8       87,305.3       3,652.9       126,989.4       5,313.4  

Long-term interest-bearing loans and borrowings

    46,352.8       31,343.1       1,311.4       34,486.2       1,442.9  

Total non-current liabilities

    66,685.0       74,957.4       3,136.3       83,213.5       3,481.7  

Ordinary Shares — VinFast Auto (2,411,764,800 shares issued and outstanding as of September 30, 2022; 2,411,764,800 shares issued and outstanding as of December 31, 2021)(1)

    —         553.9       23.2       553.9       23.2  

Contributed charter capital — VinFast Vietnam(2)

    38,707.3       —         —         —         —    

Accumulated losses

    (44,356.2     (77,416.9     (3,239.2     (111,915.0     (4,682.6

Capital reserve — VinFast Vietnam

    11,753.2       —         —         —         —    

Equity attributable to equity holders of the parent

    6,150.1       (76,926.5     (3,218.7     (104,770.0     (4,383.7

 

Notes:

(1)

In January 2022, the Company effected a 100-for-one split of its ordinary shares. Amounts prior to the share split have been revised on a retroactive basis to give effect to the share split.

(2)

Following the Reorganization, the consolidated statements of shareholders’ equity for the year ended December 31, 2021 represented changes of equity components from VinFast Vietnam to our company. The consolidated statements of shareholders’ equity for the year ended December 31, 2020 represented equity components of VinFast Vietnam, the predecessor.

 

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Selected Consolidated Statements of Operations

 

    For the Year Ended December 31,     For the Nine Months Ended
September 30,
 
    2020     2021     2021     2022  
   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

 

Revenues

           

Sales of vehicles

    11,771.7       13,898.6       581.5       9,550.0       8,779.7       367.3  

Sales of merchandise

    1,436.1       1,405.4       58.8       1,122.7       46.4       1.9  

Sales of spare parts and components

    343.0       538.2       22.5       356.7       1,463.6       61.2  

Rendering of services

    22.0       96.6       4.0       74.5       159.8       6.7  

Rental income

           

Revenue from leasing activities

    117.5       89.4       3.7       74.0       51.0       2.1  

Revenues (*)

    13,690.3       16,028.2       670.6       11,177.9       10,500.5       439.4  

Cost of vehicles sold

    (18,618.8     (23,327.0 )      (976.0     (16,166.9     (17,485.1     (731.6

Cost of merchandise sold

    (1,388.8     (1,398.3 )      (58.5     (1,115.4     (46.2     (1.9

Cost of spare parts and components sold

    (234.0     (437.2 )      (18.3     (292.7     (1,310.1     (54.8

Cost of rendering services

    (11.2     (65.4 )      (2.7     (51.0     (193.5     (8.1

Cost of leasing activities

    (132.6     (56.1 )      (2.3     (40.9     (42.8     (1.8

Cost of sales

    (20,385.5     (25,284.0 )      (1,057.9)       (17,666.8 )      (19,077.8 )      (798.2 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross loss

    (6,695.1     (9,255.8     (387.3 )       (6,489.0 )      (8,577.3 )      (358.9 ) 

Operating expenses:

           

Research and development costs

    (3,929.8     (9,255.4     (387.3     (5,266.5     (14,041.6     (587.5

Selling and distribution costs

    (1,346.6     (2,203.8     (92.2     (1,268.4     (3,361.2     (140.6

Administrative expenses

    (1,206.5     (2,424.6     (101.4     (1,702.7     (1,981.2     (82.9

Compensation expenses

    —         (4,340.3     (181.6     —         —         —    

Net other operating (expenses)/income

    (67.5     412.5       17.3       714.0       (1,475.3     (61.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

    (13,245.5     (27,067.4     (1,132.5     (14,012.5 )      (29,436.5 )      (1,231.7 ) 

Finance income

    248.7       446.1       18.7       376.9       91.9       3.8  

Finance costs

    (4,553.9     (4,598.2     (192.4     (3,182.6     (5,454.8     (228.2

Net (loss)/gain on financial instruments at fair value through profit or loss

    (1,494.6     (1,710.0     (71.5     (1,858.3     1,277.3       53.4  

Investment gain

    224.8       956.6       40.0       909.5       —         —    

Share of losses from equity investees

    (42.0     (36.8     (1.5     (35.1     —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax expense

    (18,862.5     (32,009.7     (1,339.3)       (17,802.2 )      (33,522.2 )      (1,402.6 ) 

Tax expense

    (87.8     (209.2     (8.8     (197.9     (1,013.3     (42.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss for the year/period

    (18,950.2     (32,219.0     (1,348.1     (18,000.1 )      (34,535.4 )      (1,445.0 ) 

 

(*)

Including sales to related parties in 2020, 2021, the nine months ended September 30, 2021 and 2022, of VND56.4 billion, VND516.5 billion ($21.6 million), VND131.1 billion and VND1,650.8 billion ($69.1 million), respectively.

 

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Selected Consolidated Cash Flows Data

 

     For the Year Ended December 31,     For the Nine Months Ended
September 30,
 
     2020     2021     2021     2022  
     VND
(in billions)
    VND
(in billions)
    USD
(in millions)
   

VND

(in billions)

   

VND

(in billions)

   

USD

(in millions)

 

Net cash flows used in operating activities

     (9,349.2     (28,969.1     (1,212.1     (22,661.4     (25,528.8     (1,068.1

Net cash flows (used in)/from investing activities

     (1,839.0     2,420.1       101.3       2,797.2       (11,102.5     (464.5

Net cash flows from financing activities

     10,453.8       28,855.2       1,207.3       21,405.6       35,452.7       1,483.4  

Net (decrease)/increase in cash and cash equivalents

     (734.4     2,306.2       96.5       1,541.4       (1,178.6     (49.3

Cash and cash equivalents at the end of the year/period

     827.7       3,024.9       126.6       2,277.9       1,854.6       77.6  

 

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated balance sheet as of September 30, 2022 gives effect to (i) the phase-out of ICE vehicle production (“ICE Production Phase-out”) described under the heading “Corporate History and Structure—Phase-out of ICE Vehicle Production,” and (ii) this offering and its subsequent use of a portion of the proceeds from the offering for the IPO Proceeds Reinvestment as described under the heading “Use of Proceeds” (the “Offering”) as if they had occurred on September 30, 2022. The following unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2022 and the unaudited pro forma consolidated statement of operations for the year ended December 31, 2021 give effect to the ICE Production Phase-out and the Offering as if they had occurred on January 1, 2021.

We have derived the unaudited pro forma consolidated financial information for the nine months ended September 30, 2022 and the unaudited pro forma consolidated statement of operation for the year ended December 31, 2021 from the unaudited historical interim condensed consolidated financial statements of the Company and its subsidiaries as of and for the nine months ended September 30, 2022 and the audited historical consolidated financial statements of the Company and its subsidiaries as of and for the year ended December 31, 2021, included elsewhere in this prospectus. The unaudited pro forma consolidated financial information is qualified in its entirety by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Corporate History and Structure” and the unaudited historical interim condensed consolidated financial statements, the audited historical consolidated financial statements as of and for the year ended December 31, 2021 and related notes included elsewhere in this prospectus.

The pro forma adjustments related to the ICE Production Phase-out, which we refer to as the “ICE Production Phase-out Accounting Adjustments,” are described in the notes to the unaudited pro forma consolidated financial information.

The pro forma adjustments related to the Offering, which we refer to as the “Offering Adjustments,” are described in the notes to the unaudited pro forma consolidated financial information and principally include the IPO Proceeds Reinvestment, comprising:

 

   

the issue of ordinary shares to the purchasers in this offering in exchange for net proceeds of approximately $                million, which assumes that the shares are offered at $                per share (the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses;

 

   

the use of                % or                 million out of the net proceeds to repay the remaining Share Acquisition P-Notes in whole or part, depending on the size of the Offering, which were issued in connection with the Reorganization as described in our “Corporate History and Structure”; and

 

   

the issuance of                deferred preference shares (the “DPS”) through the subsequent reinvestment into VinFast Vietnam pursuant to a reinvestment agreement (as amended and supplemented) as described in our “Corporate History and Structure”.

 

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VINFAST TRADING AND INVESTMENT PTE. LTD.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

September 30, 2022

 

    Currency: VND million  
   

Historical

VinFast

Auto

    ICE Production
Phase-out
Accounting
Adjustments
          Offering
Adjustments
         

Pro forma

VinFast Auto

 

ASSETS

           

CURRENT ASSETS

                                                     

Cash and cash equivalents

    1,854,601       —             [f]    

Trade receivables

    331,083       —            

Advances to suppliers

    10,371,897       —            

Inventories, net

    12,514,181       —            

Short-term prepayments and other receivables

    5,327,082       —            

Short-term derivative assets

    572,887       —            

Short-term amounts due from related parties

    2,862,483       —            

Assets classified as held for sale

    3,019,128            

Other current assets

    3,736       —            
 

 

 

   

 

 

     

 

 

     

 

 

 

Total current assets

    36,857,078       —            
 

 

 

   

 

 

     

 

 

     

 

 

 

NON-CURRENT ASSETS

           

Property, plant and equipment, net

    61,498,787       (12,574,385     [b]        

Intangible assets, net

    1,287,065       (149,186     [c]        

Goodwill

    272,203       —            

Operating lease right-of-use assets

    4,044,097       —            

Finance lease right-of-use assets

    96,582       (96,582     [b]        

Long-term derivative assets

    833,194       —            

Long-term advances to suppliers

    44,270       —            

Long-term amounts due from related parties

    45,128       —            

Other non-current assets

    402,357       —            
 

 

 

   

 

 

     

 

 

     

 

 

 

Total non-current assets

    68,523,683       (12,820,153        
 

 

 

   

 

 

     

 

 

     

 

 

 

TOTAL ASSETS

    105,380,761       (12,820,153        
 

 

 

   

 

 

     

 

 

     

 

 

 

 

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VINFAST TRADING AND INVESTMENT PTE. LTD.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

September 30, 2022 (continued)

 

     Currency: VND million  
    

Historical

VinFast Auto

    ICE Production
Phase-out
Accounting
Adjustments
         Offering
Adjustments
        

Pro forma

VinFast Auto

 

EQUITY AND LIABILITIES

              

CURRENT LIABILITIES

                                                        

Short-term and current portion of long-term interest-bearing loans and borrowings

     25,066,042       —              

Trade payables

     11,360,388       —              

Deposit and down payment from customers

     1,445,222       —              

Short-term accruals

     7,428,421       —              

Other current liabilities

     4,436,009       —       [d]        

Current operating lease liabilities

     639,718       —              

Amounts due to related parties

     76,613,562       (24,308,611   [a]      [g]   
  

 

 

   

 

 

      

 

 

      

 

 

 

Total current liabilities

     126,989,362       (24,308,611          
  

 

 

   

 

 

      

 

 

      

 

 

 

NON-CURRENT LIABILITIES

              

Long-term interest-bearing loans and borrowings

     34,486,181       —              

Long-term derivative liabilities

     15,336,249       —              

Other non-current liabilities

     607,167       —              

Non-current operating lease liabilities

     2,856,238       —              

Long-term deferred revenue

     165,009       —              

Deferred tax liabilities

     1,014,497       —              

Amounts due to related parties

     28,748,136       —              
  

 

 

   

 

 

      

 

 

      

 

 

 

Total non-current liabilities

     83,213,477       —              
  

 

 

   

 

 

      

 

 

      

 

 

 

EQUITY

              

Ordinary shares – VinFast Auto (2,411,764,800 shares issued and outstanding as of September 30, 2022)

     553,892       —            [f]   

Accumulated losses

     (111,914,975     (149,036   [c]        

Additional paid-in capital

     6,646,655       11,626,006     [e]        

Other comprehensive loss

     (55,612     —              
  

 

 

   

 

 

      

 

 

      

 

 

 

Equity attributable to equity holders of the parent

     (104,770,040     11,476,970            

Non-controlling interests

     (52,038     11.637     [e]        
       (149   [c]      [g]   
  

 

 

   

 

 

      

 

 

      

 

 

 

Total deficit

     (104,822,078     11,488,458            
  

 

 

   

 

 

      

 

 

      

 

 

 

TOTAL EQUITY AND LIABILITIES

     105,380,761       (12,820,153          
  

 

 

   

 

 

      

 

 

      

 

 

 

 

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VINFAST TRADING AND INVESTMENT PTE. LTD.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the nine months ended September 30, 2022

 

    Currency: VND million  
   

Historical

VinFast Auto

    ICE Production
Phase-out
Accounting
Adjustments
        Offering
Adjustments
   

Pro forma

VinFast Auto

 

Revenues

                                                   

Sales of vehicles

    8,779,656       (6,377,433   [h]    

Sales of merchandise

    46,414       —          

Sales of spare parts and components

    1,463,614       (193,932   [h]    

Rendering of services and leasing activities

    210,788       —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Revenues

    10,500,472       (6,571,365      

Cost of vehicles sold

    (17,485,112     9,785,831     [h]    

Cost of merchandise sold

    (46,245     —          

Cost of spare parts and components sold

    (1,310,118     191,247     [h]    

Cost of rendering services and leasing activities

    (236,305     —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Cost of sales

    (19,077,780     9,977,078        
 

 

 

   

 

 

     

 

 

   

 

 

 

Gross loss

    (8,577,308     3,405,713        

Operating expenses:

         

Research and development costs

    (14,041,574     164,243     [i]    

Selling and distribution costs

    (3,361,210     408,461     [j]    

Administrative expenses

    (1,981,183     —          

Net other operating loss

    (1,475,251     (207,912   [k]    

Operating loss

    (29,436,526     3,770,505        

Finance income

    91,861       —          

Finance costs

    (5,454,794     —          

Net gain on financial instruments at fair value through profit or loss

    1,277,296       —          

Loss before income tax expense

    (33,522,163     3,770,505        

Tax expense

    (1,013,254     —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss for the period

    (34,535,417     3,770,505        
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss attributable to non-controlling interests

    (37,360     3,771     [l]    
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss attributable to controlling interest

    (34,498,057     3,766,734        
 

 

 

   

 

 

     

 

 

   

 

 

 

Proforma net loss per share (VND)

         

Basic [m]

    (14,304        

Diluted [m]

    (14,304        
    Unit: shares  

Weighted average number of shares used in loss per share computation

         

Basic

    2,411,764,800          

Diluted

    2,411,764,800          

 

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VINFAST TRADING AND INVESTMENT PTE. LTD.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31, 2021

 

    Currency: VND million  
   

Historical

VinFast Auto

    ICE Production
Phase-out
Accounting
Adjustments
        Offering
Adjustments
   

Pro forma

VinFast Auto

 

Revenues

                                                   

Sales of vehicles

    13,898,621       (12,759,931   [h]    

Sales of merchandise

    1,405,368       —          

Sales of spare parts and components

    538,216       (187,339   [h]    

Rendering of services

    96,577       —          

Rental income

         

Revenue from leasing activities

    89,400       —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Revenues

    16,028,182       (12,947,270      

Cost of vehicles sold

    (23,326,953     20,221,662     [h]    

Cost of merchandise sold

    (1,398,339     —          

Cost of spare parts and components sold

    (437,195     180,891     [h]    

Cost of rendering services

    (65,376     —          

Cost of leasing activities

    (56,095     —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Cost of sales

    (25,283,958     20,402,553        
 

 

 

   

 

 

     

 

 

   

 

 

 

Gross loss

    (9,255,776     7,455,283        

Operating expenses:

         

Research and development costs

    (9,255,376     131,977     [i]    

Selling and distribution costs

    (2,203,839     345,031     [j]    

Administrative expenses

    (2,424,560     —          

Compensation expenses

    (4,340,322     4,340,322     [k]    

Net other operating income

    412,472       —          

Operating loss

    (27,067,401     12,272,613        

Finance income

    446,139       —          

Finance costs

    (4,598,235     —          

Net loss on financial instruments at fair value through profit or loss

    (1,710,029     —          

Investment gain

    956,588       —          

Share of loss from equity investees

    (36,786     —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Loss before income tax expense

    (32,009,724     12,272,613        

Tax expense

    (209,237     —          
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss for the year

    (32,218,961     12,272,613        
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss attributable to non-controlling interests

    (35,234     12,273     [l]    
 

 

 

   

 

 

     

 

 

   

 

 

 

Net loss attributable to controlling interest

    (32,183,727     12,260,340        
 

 

 

   

 

 

     

 

 

   

 

 

 

Proforma net loss per share (VND)

         

Basic [m]

    (19,432        

Diluted [m]

    (19,432        
    Unit: shares  

Weighted average number of shares used in loss per share computation

         

Basic

    1,656,188,563          

Diluted

    1,656,188,563          

 

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VINFAST TRADING AND INVESTMENT PTE. LTD.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

1.

Basis of presentation

The unaudited pro forma consolidated financial information has been prepared in accordance to Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Business,” based on the unaudited interim historical condensed financial statements and audited historical financial statements of the Company included elsewhere in this prospectus and is presented based on information currently available and assumptions that we believe are reasonable. The unaudited pro forma consolidated financial information has been provided for illustrative purposes only and may not be indicative of the operating results or financial position had the ICE Production Phase-out and the Offering occurred on the dates indicated above and do not reflect all actions that may be undertaken by us in connection with the ICE Production Phase-out and the Offering. The impacts to our unaudited interim historical condensed financial statements and audited historical statement of operations arising from the ICE Production Phase-out and the Offering will depend on a number of factors, including additional information available on the closing date. Therefore, our actual results will differ from the pro forma adjustments, and the differences may be material. In addition, the unaudited pro forma consolidated financial information may not be indicative of our results of operations and financial position for any future period.

As a public company, we will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur additional annual expenses related to these steps and, among other things, additional directors’ and officers’ liability insurance, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. We have not included any pro forma adjustments relating to these costs.

 

2.

Notes to Unaudited Pro Forma Consolidated Balance Sheet

 

2.1.

ICE Production Phase-out

As part of the ICE Production Phase-out event, the Company entered into a series of ICE Assets Disposal Agreements with VIG, a party under common control of Mr. Pham Nhat Vuong (the founder and Chairman of Vingroup), as described under the heading “Corporate History and Structure — Phase-out of ICE Vehicle Production.” The Company has analogized the accounting for the ICE Assets Disposal agreements from the perspective of a transferring entity using the common control transaction guidance from the perspective of the receiving entity under ASC 805-50. Accordingly, since the Company is the transferring entity, the difference between the consideration receivables (excluding VAT) from VIG and the net book value of the ICE Assets transferred will be recognized as an equity transaction (i.e. a deemed contribution) in accordance with the guidance provided under ASC 805-50.

The income taxes from the ICE Assets Disposal Agreements are incurred on the basis of local Vietnam GAAP taxable income. Since the Company and its subsidiaries have accumulated tax losses which can be used to offset the taxable income from the ICE Assets Disposal Agreements, the Company is not expected to incur any income tax liabilities in connection with the disposal of the ICE Assets. Accordingly, no pro forma adjustments related to income tax liabilities are included with regards to the transfer of assets under the ICE Assets Disposal Agreements. Furthermore, the unaudited interim condensed consolidated statements of operations of the Company and its subsidiaries for the nine months ended September 30, 2022 and the audited consolidated statements of operations of the Company and its subsidiaries for the year ended December 31, 2021 were under a loss making position and did not incur any income tax expenses related to ICE production activities. Accordingly, no pro forma adjustments related to tax expense exclusion are considered to be necessary.

 

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As described under the heading “Corporate History and Structure — Phase-out of ICE Vehicle Production,” the Company and its subsidiaries have retained the balance of ICE Assets that were not transferred to VIG, which comprise rights, interests and obligations under various license agreements with international car manufacturers related to licenses used in the production of ICE vehicles. As the phase out of our ICE vehicle production will represent the end of these assets’ useful lives, we expect these ICE Assets to be fully amortized by the date that the ICE Production Phase-Out event has been completed according to the guidance of ASC 350 – Intangibles – Goodwill and other.

Consequently, the impacts from the ICE Production Phase-out event have been included in the unaudited pro forma consolidated statement balance sheet as follows:

[a] Reflects the remaining consideration to be received under the ICE Assets Disposal Agreements. According to the Transfer Agreements and subsequent amendments, the consideration will be determined at the transfer date but shall not be less than VND27,465.7 billion before value added tax (“VAT”). As we assume that the transfer date had occurred on September 30, 2022 for the purpose of the pro forma, the VAT-exclusive consideration is assumed to be the minimum amount of VND27,465.7 billion less the monthly fixed amount payable to VIG from July 2022 to the transfer date, which is the lease back period. As of September 30, 2022, VinFast Vietnam has received advance payment from VIG in the amount of VND2,000 billion in cash, of which VND1,455 billion was used to settle VAT which was payable based on local tax regulation, and VND444.7 billion was used to settle payment for those components of the ICE Assets that were transferred before September 30, 2022. The remaining advance amount of VND100.3 billion is recorded as “Amounts due to related parties” in the historical unaudited interim condensed balance sheet as at September 30, 2022.

For the purpose of the proforma, out of the total remaining VAT-inclusive consideration for the ICE Assets Disposal, VND24,208.3 billion is expected to be settled by the Share Acquisition P-Note assigned to VinFast Vietnam, VND100.3 billion is expected to be offset against the advance payment from VIG and the remainder is required to be paid within 24 months from the completion of the transfer. VIG intends to pay the remaining amount in cash no later than 15 business days after the completion of the offering. Accordingly, the amount to be settled by P-notes and advance payment is represented as a deduction to the “Amounts due to related parties”, whereas the remainder has not been reflected in pro forma consolidated balance sheet. Subject to the completion of the offering, we will reflect the remaining balance in the “cash and cash equivalents” account.

[b] Reflects the presumed disposal of the ICE Assets under the scope of the ICE Assets Disposal Agreements, which is based on the carrying amount of the assets as reported in the U.S. GAAP-based historical unaudited interim condensed balance sheet of the Company as of September 30, 2022.

[c] Reflects the presumed write-off of certain ICE Assets related to the ICE Production Phase-out event but not included under the ICE Assets Disposal Agreements (which comprise our rights, interests and obligations under various license agreements with international car manufacturers related to licenses used in the production of our ICE vehicles) with corresponding adjustment to “Accumulated loss” and “Non-controlling interests” account in the pro forma consolidated balance sheet, which is based on the carrying amount of the assets as reported in the US GAAP-based unaudited interim historical condensed financial statements of the Company as of September 30, 2022.

[d] As of September 30, 2022, VAT payable and deductible have been incurred based on local tax regulation (i.e., invoice declaration). Accordingly, no pro forma adjustments related to tax payable are necessary.

[e] Reflects the deemed contribution from the shareholders and non-controlling shareholders interests, which is the assumed differences between the carrying amount of assets transferred and the assumed consideration received under the scope of the ICE Assets Disposal Agreements. The difference between the total consideration (excluding VAT) and the carrying amount of assets transferred would be recorded as an equity transaction (specifically, a contribution), with corresponding adjustments to “Additional Paid-in Capital” and “Non-controlling interests” accounts in the unaudited pro forma consolidated balance sheet).

 

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2.2.

Offering Adjustments

The impacts from the Offering adjustments have been included in the unaudited pro forma consolidated statement of financial position as follows:

[f] We estimate net proceeds of approximately $                million from the offering, assuming an initial public offering price of $                per ordinary share, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

[g] Reflects the reinvestment of Reinvestment Investors into DPS issued by VinFast Vietnam, using the proceeds from Share Acquisition P-Notes (after netting off the consideration for the ICE Assets Disposal and subscription consideration paid by Vingroup for the dividend preference shares of VinFast Vietnam in the amount of VND6.0 trillion in March 2022), which will be recognized as a non-controlling interest in the consolidated financial statements of the Company and its subsidiaries.

 

3.

Notes to Unaudited Pro Forma Consolidated Statements of Operations

The impacts from the ICE Production Phase-out event have been included in the unaudited pro forma consolidated statement of operation for the nine months ended September 30, 2022 as follows:

[h] Reflects the exclusion of revenue and direct cost of goods sold associated with of the sale of ICE vehicles and related spare part and components as reported in the unaudited interim historical condensed financial statements of the Company and its subsidiaries for the nine months ended September 30, 2022 under the assumption that the ICE Production Phase-out event occurred on January 1, 2021 and all ICE production activities ceased from that date.

[i] Reflects the exclusion of R&D expenses related to ICE vehicles as reported in the unaudited interim historical condensed financial statements of the Company and its subsidiaries for the nine months ended September 30, 2022 under the assumption that the ICE Production Phase-out event has occurred on January 1, 2021 and the corresponding research and development would not be recurring after the transfer date. The ICE Production Phase-out accounting adjustments are made to exclude: (1) the R&D expenses specifically related to ICE vehicles and (2) the specific ED&D parts/contracts related only to ICE vehicles. No adjustments are made for recurring R&D expenses such as laboratory expense (including payroll) and ED&D parts/contracts which were incurred for ICE vehicles and where these resources can be repurposed/reallocated for EV production after the cessation of ICE vehicle production activities.

[j] Reflects the exclusion of VND408.5 billion in selling and distribution costs directly incurred with respect to sales of ICE vehicles (e.g. direct logistic expenses, promotion and advertisement for ICE vehicles, warranty expenses relating to the extension of the ICE warranty policy for all ICE cars sold since 2019 to the end of 2021 to the earlier of 10 years or the first 200,000 kilometers) as reported in the unaudited interim historical condensed financial statements of the Company and its subsidiaries for the nine months ended September 30, 2022 under the assumption that the ICE Production Phase-out event has occurred on January 1, 2021 and corresponding selling and distribution costs will not be recurring after the transfer date. No adjustments are made for recurring selling and distribution costs such as salary expenses and rental fees which were incurred for ICE vehicles and where these resources can be repurposed/reallocated for EV production after the cessation of ICE vehicle production activities.

[k] Reflects the exclusion of the subsequent foreign exchange gain of amount payables to supplier relating to compensation for the cessation of ICE vehicle production for the nine months ended September 30, 2022, which is considered a material non-recurring item affected by the ICE Production Phase-out event. Under the assumption that the ICE Production Phase-out event occurred on January 1, 2021 and these payables will be settled within 12 months, we do not expect such expense to be recurring. The compensation costs of settlement

 

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with suppliers of $181.6 million in relation to the cessation of ICE vehicle production have been excluded in adjustment [k] in the pro forma consolidated statement of operation for the year ended December 31, 2021.

[l] Reflects the impact of excluding income and expense related to the cessation of ICE activities as mentioned above to net loss attributable to non-controlling interest.

[m] Pro forma basic net loss per ordinary share is computed by dividing the pro forma net loss available to ordinary shareholders by the pro forma weighted-average ordinary shares outstanding during the period. Pro forma diluted net loss per ordinary share is calculated by adjusting the pro forma net loss available to ordinary shareholders and the pro forma weighted-average ordinary shares outstanding to give effect to potentially dilutive securities using the if-converted method, as applicable.

 

(in million, except share and per share amounts)

   Nine months ended
September 30, 2022
 

Basic and diluted net loss per share

  

Numerator:

                                                

Net loss attributable to ordinary shares

  

Denominator:

  

Weighted-average ordinary shares prior to this offering

  

Ordinary shares of common stock sold in this Offering

  
  

 

 

 

Pro forma weighted-average ordinary shares outstanding—basic

  
  

 

 

 

Pro forma basic and diluted net loss per share attributable to ordinary shares

  
  

 

 

 

The impacts from the ICE Production Phase-out event have been included in the pro forma consolidated statement of operation for the year ended December 31, 2021 as follows:

[h] Reflects the exclusion of revenue and direct cost of goods sold associated with of the sale of ICE vehicles and related spare part and components as reported in the historical financial statements of the Company and its subsidiaries for the year ended December 31, 2021 under the assumption that the ICE Production Phase-out event has occurred on January 1, 2021 and all ICE production activities has ceased from that date.

[i] Reflects the exclusion of R&D expenses related to ICE vehicles as reported in the historical financial statements of the Company and its subsidiaries for the year ended December 31, 2021 under the assumption that the ICE Production Phase-out event has occurred on January 1, 2021 and the corresponding R&D would not be recurring after the transfer date. The ICE Production Phase-out accounting adjustments are made to exclude: (1) the R&D expenses specifically related to ICE vehicles and (2) the specific ED&D parts/contracts related only to ICE vehicles. No adjustments are made for recurring R&D expenses such as laboratory expense (including payroll) and ED&D parts/contracts which were incurred for ICE vehicles and where these resources can be repurposed/reallocated for EV production after the cessation of ICE vehicle production activities.

[j] Reflects the exclusion of VND345.0 billion in selling and distribution costs directly incurred for the sales of ICE vehicles (e.g. direct logistic expenses, promotion and advertisement for ICE vehicles) as reported in the historical financial statements of the Company and its subsidiaries for the year ended December 31, 2021 under the assumption that the ICE Production Phase-out event has occurred on January 1, 2021 and corresponding selling and distribution costs will not be recurring after the transfer date. No adjustments are made for recurring selling and distribution costs such as salary expenses and rental fees which were incurred for ICE vehicles and where these resources can be repurposed/reallocated for EV production after the cessation of ICE vehicle production activities.

[k] Reflects the exclusion of the compensation costs of settlement with suppliers in relation to the cessation of ICE vehicle production, which is considered a material non-recurring item affected by the ICE Production Phase-out event. Under the assumption that the ICE Production Phase-out event occurred on January 1, 2021, we do not expect such costs to recurring.

 

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[l] Reflects the impact of excluding income and expense related to cessation of ICE activities as aforementioned to net loss attributable to non-controlling interest.

[m] Pro forma basic net loss per ordinary share is computed by dividing the pro forma net loss available to ordinary shareholders by the pro forma weighted-average ordinary shares outstanding during the period. Pro forma diluted net loss per ordinary share is calculated by adjusting the pro forma net loss available to ordinary shareholders and the pro forma weighted-average ordinary shares outstanding to give effect to potentially dilutive securities using the if-converted method, as applicable.

 

(in million, except share and per share amounts)

   Year ended December 31, 2021  

Basic and diluted net loss per share

  

Numerator:

                                                

Net loss attributable to ordinary shares

  

Denominator:

  

Weighted-average ordinary shares prior to this offering

  

Ordinary shares of common stock sold in this Offering

  
  

 

 

 

Pro forma weighted-average ordinary shares outstanding—basic

  
  

 

 

 
Pro forma basic and diluted net loss per share attributable to ordinary shares   
  

 

 

 

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under “Risk Factors” and elsewhere in this prospectus. See “Special Note Regarding Forward-Looking Statements.”

Overview

We are an innovative, full-scale mobility platform focused primarily on designing and manufacturing premium EVs, e-scooters and e-buses. Our initial EV product line is an all-new range of fully-electric A- through E-segment SUVs, the first of which began production in December 2021. We focus strategically and exclusively on EVs and have phased out all remaining ICE product lines over the course of 2022, in order to execute on our vision of creating an e-mobility ecosystem built around customers, community and connectivity, alongside our new vehicle roll-out.

Deliveries of our first fully-electric SUV, the VF e34, began in Vietnam in December 2021. The VF 8 and VF 9, which are now available for reservation in North America and Europe and will be the first fully-electric VinFast SUVs available for purchase in the North American and European markets, were introduced globally at the Los Angeles Auto Show in November 2021, displayed along with our full suite of vehicles at CES in January 2022 the New York Auto Show in April 2022 and the Paris Motor Show in October 2022. Our VF 8 and VF 9 models are fully-electric D-segment and E-segment SUVs, respectively, designed for the global consumer market. We had reservations for approximately 58,000 VF 8 and VF 9 EVs globally as of September 30, 2022, of which approximately 20% were reservations with non-refundable reservation fees and the remainder are cancellable reservations with small refundable reservation fees. We began delivering the VF 8 in September 2022 in Vietnam and shipped the first batch of the VF 8 to the U.S. in November 2022. We expect first deliveries of the VF 8 to be made in the U.S. in December 2022 and in Europe in early 2023 and first deliveries of the VF 9 to be made in the U.S. and Europe in early 2023. We currently offer two trims of the VF 8 and VF 9: Eco and Plus. We plan to introduce new trims for the VF 8 and VF 9 in the next two years to provide a comprehensive and higher-end product offering, focusing on sustainable materials and adding more premium features such as higher-end interior materials, elevated smart features and enhanced ADAS. In addition, we expect to launch the VF 5, VF 6 and VF 7, our A- through C-segment vehicles in 2023. The VF 5 is an A-segment EV SUV for the Vietnam market that offers dynamic youthful styling, targeting first time, budget conscious buyers. The VF 6 is a B-segment EV SUV for the family-oriented driver. The VF 7 is characterized as a driver centric C-segment EV SUV, accentuated by its futuristic styling. For the VF 6 and VF 7, we plan to offer Eco and Plus trims in both Left Hand Drive and Right Hand Drive versions to target international markets.

Key Factors Affecting Our Results of Operations

The key factors that have affected and that we expect will continue to affect our results of operations as we strive to develop a comprehensive full-scale smart mobility platform comprising electric vehicles, e-scooters and e-buses are set out below. The growth and future success of our business will depend on many factors beyond those discussed below, including those in the section of this prospectus titled “Risk Factors.”

 

   

Ability to Develop and Launch New Offerings. Our growth is dependent on our ability to achieve our vehicle delivery targets, including an ability to attract orders from customers, most of whom will be purchasing a VinFast vehicle for the first time. We were able to start the production of our initial line of ICE vehicles within 21 months from our inception. In order to successfully grow our EV production and sales as we phase out the production of all remaining ICE product lines in the second half of 2022, we must continue to design and produce new and quality EV models that are safe, reliable and incorporate new EV technologies and advanced technological capabilities, such as ADAS and smart

 

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infotainment. Our future success will also depend on our ability to further develop and leverage our technology platform through research and development by us, our Vingroup affiliates and our other partnerships in order to deliver driver-friendly applications in our vehicles and ecosystem. It is critical for us to successfully manage production ramp-up and quality control so as to deliver vehicles to customers in adequate volume and quality.

 

   

Ability to Execute Effective Marketing. The growth of our orders will largely depend on our ability to execute effective marketing initiatives, which in turn depends on prospective customers’ perception of our brand. We plan to raise brand awareness with a significant social media presence, and through traditional advertisements and in-person showrooms that drive customer engagement. Effective marketing can help amplify our efforts in boosting vehicle sales with efficient costs. Our ability to expand our sales network across the globe, price our EVs competitively and adjust our prices effectively are also essential for us in attracting customer orders. We review our pricing strategies and customer incentives based on various factors, including demand for our vehicles. We expect average prices for our vehicles to increase over the long term, based on our assumptions regarding market opportunity, demand for our vehicles, more premium trims, input costs, inflation and other factors. As part of our competitive sales policy, we offer customers the ability to reserve a vehicle by placing a small reservation fee, while offering a free cancelation and full refund policy, which encourages customers to submit orders. In addition, our Battery Subscription Program is intended to supplement our primary model of outright sale of the full chassis and battery and to provide a flexible alternative that makes our EVs accessible at a lower, inclusive price point. However, we currently expect a majority of our sales going forward to be for EVs with batteries included.

 

   

Ability to Maintain and Improve Operating Efficiency. Our results of operations are affected by our ability to maintain and improve our operating efficiency, as measured by our total operating expenses as a percentage of our revenues. We have been able to realize certain competitive advantages by locating our manufacturing facility in Vietnam, which has favorable export treaties under several free trade agreements that allow us to export EVs with minimal duties. We also exercise direct control over production costs, time to market and product quality at our manufacturing facility. By scaling our business and increasing our sales volumes while controlling our costs, we can improve our margins and achieve profitability as our business matures. We expect our selling and distribution costs and administrative expenses to increase for the foreseeable future as we continue to scale as a company, build out our service and sales operations as well as our showrooms globally. At the same time, we expect our selling and distribution costs and administrative expenses as percentage of revenue to decrease over time due to economies of scale and improving operational efficiency. We believe that expected economies of scale will also enable savings on bills of materials cost to improve over time, which would facilitate our cost of goods sold decreasing as a percentage of revenue, and based on current production volume growth expectations, subject to market opportunities and demand, we expect this would translate to improving margins over time. We currently expect gross profit to improve over time due to, among other things, optimization of bills of materials cost and efficiencies, as we ramp up total production.

 

   

Ability to Control Production, Distribution and Construction Costs. Our profitability significantly depends on our ability to control our costs of sales, mainly comprised of cost of vehicles sold, which is affected by fluctuations in raw material prices, labor costs, foreign exchange rates and energy costs. As we expand outside of Vietnam, we will also incur significant capital expenditure to fund the expansion of our sales and distribution infrastructure, including the opening of new direct stores across major markets, the construction of a new manufacturing facility in the U.S., and global marketing campaigns to market our products and enhance our brand reputation. We expect our depreciation and amortization expenses to increase (relative to current levels after taking into account the ICE Assets Disposal) for the foreseeable future as our base of depreciable assets increase as we expand our operations, while we will likely incur higher operating and labor costs in connection with the operation of our new manufacturing facility in the U.S. and we expect to continue to incur significant operating expenses for

 

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the foreseeable future. To keep pace with ever evolving technologies and maintain the competitiveness of our products, we will incur substantial R&D expenses in the near term to conduct research on and continue developing our ADAS technology, smart services and other EV technologies in addition to improving and upgrading our existing vehicles and developing new models, and we expect our R&D expenses to decrease after the completion of the planned new vehicle introductions.

 

   

Ability to Develop and Manage a Resilient Supply Chain. Our ability to manufacture vehicles and develop future solutions is dependent on the continued supply of input materials, including metals, battery cells and semiconductors. Fluctuations in the cost of materials, supply interruptions, or material shortages could materially impact our business. We have experienced and may continue to experience cost fluctuations or disruptions in supply of input materials that could impact our financial performance. For example, the recent global semiconductor supply shortage is having wide-ranging effects across the automotive industry, and has impacted our operations and financial performance, along with those of many automotive suppliers and manufacturers that incorporate semiconductors into their products. In addition, following the launch of a military action in Ukraine by Russia in February 2022, commodity prices, including the price of oil, gas, nickel, copper and aluminum, increased. The ongoing military action between Russia and Ukraine, sanctions and other measures imposed against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic by the U.S. and other countries and bodies around the world, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could result in further significant volatility in commodity prices and supply of raw materials and energy resources.

Key Components of Results of Operations

Revenues

We generate revenues from (i) sales of vehicles, (ii) sales of merchandise, (iii) sales of spare parts and components, (iv) rendering of services and (v) leasing activities. In 2020 and 2021, substantially all of our revenue was generated from our operations in Vietnam.

Sales of vehicles. We began generating revenue from the sale of EVs in December 2021 when we began delivering our first EV model, the VF e34. We have also generated revenue in 2021 from the sale of e-buses.

We have generated revenues from the sale of e-scooters since 2018 and from sales of ICE vehicles since 2019. Notwithstanding our cessation of ICE vehicle production in 2022, our results of operations in 2022 will continue to include the results of our ICE vehicle manufacturing business because we delivered ICE vehicles during the year. For more information, see “Corporate History and Structure — Phase-out of ICE Vehicle Production.”

Our affiliate, Vinhomes, from time to time provides vouchers to Vinhomes’ new customers which may be used towards payment for the purchase of our vehicles as part of certain co-marketing programs that we conduct exclusively in Vietnam. The VinFast vouchers have a face value ranging from VND10 million to VND200 million. When a vehicle is sold and a voucher is applied, we recognize revenue from the sale (including the value of the voucher) and receive a payment from the customer equivalent to the selling price of the vehicle, minus the value of the voucher. Until the time that a voucher is used or expires, it is recorded as a short-term payable to a related party. As of December 31, 2021 and September 30, 2022, we had VND1,502.5 billion ($62.9 million) and VND4,089.9 billion ($171.1 million) in short-term payables to a related party relating to vouchers, respectively. If vouchers expire without being used, certain co-marketing programs require us to refund the value of the unused vouchers to our affiliate, while under other co-marketing programs voucher payments are non-refundable, in which case we recognize other income in respect of the unused and expired voucher. In 2021 and the nine months ended September 30, 2022, we had VND197.8 billion ($8.3 million) and VND48.0 billion ($2.0 million) of other income from unused and expired vouchers that were nonrefundable as most vouchers were used to pay for the purchase of our vehicles.

 

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Sales of merchandise. Revenues from our automobile trading business, whereby we purchased new and used automobiles manufactured by third parties as inventory and resold as a distributor, as well as smartphones. While we expect to continue generating revenue from the sale of used automobiles, we ceased the sale of new automobiles manufactured by third parties in the first quarter of 2021 and the sale of smartphones in fourth quarter of 2021.

Sales of spare parts and components. Revenues from sales of spare parts and components consist of revenue from sales of automobile spare parts and components to other car distributors and end customers, revenue from sales of battery packs installed in our EVs sold in Vietnam and revenue from sales of battery components to VinES. The majority of our EV sales through September 30, 2022 has been sales of VF e34 vehicles in Vietnam. In the first quarter of 2022, we sold all of the battery packs installed in our EVs to VinES, who in turn leased the batteries to the VF e34 purchasers under a battery subscription program that was available up until October 31, 2022 through VinES for the EVs that we sold in Vietnam.

Rendering of services. We generate revenue from providing after-sales services to end customers and other services, including maintenance services for the ICE vehicles that we manufacture and sell and other services.

Leasing activities. We generate revenue from leasing activities, comprising revenue from the leasing of automobiles and e-scooters to our customers and fees generated from the leasing of e-scooter batteries. For our automobile and e-scooter rental program, we charge customers a fixed daily or monthly fee, which varies by the type of vehicle rented.

We also generate revenue from leasing portions of our manufacturing park to captive suppliers that produce vehicle components or parts for our vehicles manufactured on-site. We enter into operating leases with such suppliers which are required to pay three months’ rent upfront as well as a deposit equal to three months’ rent that is maintained throughout the term. We do not expect to generate any revenue from leasing activities following completion of the project transfer to VHIZ JSC as discussed in “Related Party Transactions.”

Cost of Sales

Our cost of sales comprises costs of (i) vehicles sold, (ii) merchandise sold, (iii) spare parts and components sold, (iv) rendering services and (v) leasing activities.

Cost of vehicles sold. Cost of vehicles sold consists of costs of purchasing direct parts and materials, labor costs processing fees related to labor costs, manufacturing overhead (including depreciation of assets associated with the production), reserves for estimated warranty expenses and other production-related expenses. Cost of vehicles sold also includes material price adjustments, compensation due to volume shortfalls, which is compensation for purchasing below our agreed commitment volume, charges to write-down the carrying value of the inventory when it exceeds its estimated net realizable value and reserves for obsolete inventories.

Cost of merchandise sold. Cost of merchandise sold consists of costs of acquiring automobiles and smartphones that we subsequently resell, including transportation costs (inbound cost), and reserves for estimated warranty expenses.

Cost of spare parts and components sold. Cost of spare parts and components consists of costs of purchasing spare parts that we subsequently resell to customers, and related goods, including transportation costs (inbound cost). It also includes the cost of the battery components sold to VinES and the battery packs installed in our VF e34 vehicles sold in Vietnam which were sold to VinES. VinES in turn leased the batteries to VF e34 purchasers under a battery subscription program that was available up until October 31, 2022 through VinES for the EVs that we sold in Vietnam.

Cost of rendering services. Cost of rendering services consists of materials and labor costs related to maintenance and other services that we provide, charging station costs and the depreciation expenses of the assets used in providing these services.

 

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Cost of leasing activities. Cost of leasing activities consists of the depreciation cost of leased assets, including vehicles, e-scooters, batteries and facilities, such as manufacturing parks. As we have completed the transfer of the Transfer Assets (as defined therein) to VHIZ JSC, we do not expect to generate significant costs from the leasing of manufacturing parks in the future. For more information, see “Related Party Transactions — Asset Transfer to VHIZ JSC.”

Operating Expenses

Our operating expenses consist of (i) research and development costs, (ii) selling and distribution costs, (iii) administrative expenses, (iv) compensation expenses and (v) net other operating (expenses)/income.

Research and development costs. Research and development, or R&D, costs primarily consist of charges for R&D and consulting work performed by third parties; salaries, bonuses and benefits for employees engaged in research, design and development activities; license expenses related to intellectual property for designing and developing cars; and allocated costs, including depreciation and amortization costs and utility fees.

Selling and distribution costs. Selling and distribution costs consist primarily of labor costs for marketing personnel, marketing and advertising expenses, warehouse and showroom rental fees, transportation fees and salaries and other expenses related to sales and marketing personnel, as well as extended warranty expenses for ICE vehicles sold from 2019 up to December 31, 2021. Advertising expenses consist primarily of the cost of our promotional and product marketing activities.

Administrative expenses. Administrative expenses consist primarily of wages and salaries for employees responsible for general corporate functions, including accounting, finance, tax, legal and human relations; costs associated with these functions, such as rental fees, transportation fees and internet, phone and electricity fees; technology-related fees, including software subscription and license fees; depreciation and amortization of fixed assets used for administration purpose, such as our office building and office equipment; and expenses for external services such as consulting services.

Compensation expenses. Compensation expenses consist of compensation costs derived from early termination of contracts with suppliers in connection with the planned phase-out of our ICE business. We are currently in the process of negotiation with some of our suppliers to finalize the total amount of compensation. For more information, see “Corporate History and Structure — Phase-out of ICE Vehicle Production.”

Net other operating (expenses)/income. Net other operating expenses consist primarily of gains and losses on disposals of assets, break fees paid to suppliers and other third parties and net foreign exchange gains and losses.

Tax expense

Our tax expense consists primarily of current and deferred portions of income taxes on our taxable revenues from operations, taking into account the effect of preferential tax rates, foreign tax rates differentials, non-deductible interest expenses and other non-deductible expenses, changes in valuation allowance, lease back transactions with VHIZ JSC and revaluations gains or losses on financial instruments to fair value and amortized cost. In the future, we expect to incur tax expenses in jurisdictions outside Vietnam where we expand our operations.

We have benefitted from more favorable tax concessions and benefits in certain jurisdictions. For example, in Vietnam, we are entitled to corporate income tax incentives for investment projects in certain economic zones under Vietnam’s Law on Investment and the Law on Corporate Income Taxes (and its implementing regulation), pursuant to which we are subject to a tax rate of 10% until 2032 (15 years from the date on which we began generating revenue from our manufacturing operations in 2018), in addition to receiving four years of tax holiday starting from the fourth year of operation (2021-2024) and a 50% tax reduction for the following nine years from 2025 to 2033.

 

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Finance income

Our finance income consists primarily of interest income on loan receivables. These loans relate to arrangements between our subsidiaries and our affiliates within Vingroup. A small portion of our finance income is also derived from interest income on sales-type leases that we enter into in the ordinary course of business.

Finance costs

Our finance costs consist primarily of contractual coupons on loans and borrowings, as well as changes in amortized costs of financial instruments measured at amortized cost other than nominal interest.

Investment gain

Our investment gain consists primarily of fair value gain from equity instruments measured at fair value through profit and loss. These equity instruments primarily relate to our investments in Vinhomes and Vingroup.

Share of losses from equity investees

Our share of losses from equity investees relates to (i) a previous car plastic manufacturing joint venture that we fully acquired the remaining equity interest in and converted into a subsidiary which was subsequently merged into VinFast Vietnam in 2021 and (ii) our previous investment in VinFast Lithium Battery Pack Limited Liability Company (“VinFast Lithium”), which we divested in 2021.

Impact of COVID-19

Our business demonstrated resilience and continued growth in 2020 and 2021 despite temporary disruptions during periods of short-term spikes in COVID-19 cases. In 2021, sales of vehicles increased 18% against the preceding year. The resilience of our business over the past two years reflects our successful adoption of new sales methods that prioritize consumer safety, such as our online consultations, offline-to-online shift in sales strategy, test drive at home program and home delivery service. These new sales methods resulted in operational expenses savings in 2021. We have also benefitted from various government support initiatives, including extensions for tax payments (special consumption tax resulting in a lower tax rate in Vietnam), and lower interest rates from commercial banks.

Vietnam has experienced five major waves of COVID-19 infections over 2020 and 2021 across the country: the first in March and April 2020, the second in July and August 2020, the third from January to March 2021, the fourth from May to June 2021, and the fifth in July and August 2021. Each wave resulted in containment, social distancing, lockdown measures, border closures, cancelations of gatherings and events and closures of schools, universities, restaurants, stores and other businesses, nationally or regionally. In turn, these measures caused short-term operational disruptions to our business. For example, during the height of the lockdown, we experienced difficulties hiring foreign workers due to more restrictive government-imposed regulations and policies related to expatriate and foreign worker permitting, and the resulting reluctance on the part of potential or existing employees to travel across borders. In addition, due to government-imposed lockdowns that created work permit issuance and renewal delays at relevant authorities, a small number of our foreign workers located in Vietnam were not able to timely obtain or renew their necessary work permits. We have since obtained or renewed all requisite work permits for these employees. The fourth wave of infection in 2021 also led to delays in planned showroom rollouts and showroom closures in the third quarter of 2021. Nevertheless, 2021 third quarter sales of our three most popular ICE vehicle models, the Fadil, Lux A and Lux SA, were approximately four times higher than our monthly sales average for the year 2020.

As a result, we have experienced disruptions to and delays in our operations, including shortages and delays in the supply of certain parts, including semiconductors and other materials and equipment instrumental to the production of our vehicles. In response, we have adapted various internal designs and processes to mitigate the

 

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impact of such disruptions and delays on our production timeline, which has resulted in higher operating costs. For example, we have implemented COVID-19 prevention measures and ensure that all of our employees are fully vaccinated. We have also increasingly adopted automation technologies in our facilities to reduce our reliance on manpower and the risk of production stoppages and delays. Furthermore, in order to prevent supply shortages, we worked closely with our partners to place advance orders for certain key components in 2020 and 2021.

As Vietnam emerged from the pandemic in 2022, re-opened its economy and removed most of its COVID-related restrictions, the pandemic did not have a significant impact on our business or results of operations for the nine months ended September 30, 2022.

Comparability of Results

In January 2022, we announced our strategic decision to cease ICE vehicle production to transform

into a pure-play manufacturer of EVs. In early November 2022, we ceased all production of ICE vehicles and

completed the ICE Assets Disposal to our affiliate, VIG. Our results of operations for the nine months ended

September 30, 2021 primarily reflect the results of our legacy ICE vehicle manufacturing operations, whereas

our results of operations for the nine months ended September 30, 2022 reflect the phasing-out of our legacy

ICE vehicle manufacturing operations, our R&D investment for new EV models and our initial deliveries of

the VF e34 and VF 8 in Vietnam. During that period, we also grew our footprint outside of Vietnam and began accepting reservations for the VF 8 and VF 9 in North America and Europe. Accordingly, we believe that our results of operations during these two nine-month periods are not comparable.

Results of Operations

The following table sets forth a summary of our consolidated statements of operations for the periods presented, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of our future trends.

 

    For the Year Ended December 31,     For the Nine Months Ended September 30,  
    2020     2021     2021     2022  
    (VND in
billions)
    %     (VND in
billions)
    (USD in
millions)
    %     (VND in
billions)
    %     (VND in
billions)
    (USD in
millions)
    %  

Revenues

                   

Sales of vehicles

    11,771.7       86.0       13,898.6       581.5       86.7       9,550.0       85.4       8,779.7       367.3       83.6  

Sales of merchandise

    1,436.1       10.5       1,405.4       58.8       8.8       1,122.7       10.0       46.4       1.9       0.4  

Sales of spare parts and components

    343.0       2.5       538.2       22.5       3.4       356.7       3.2       1,463.6       61.2       13.9  

Rendering of services

    22.0       0.2       96.6       4.0       0.6       74.5       0.7       159.8       6.7       1.5  

Rental income

                   

Revenue from leasing activities

    117.5       0.8       89.4       3.7       0.5       74.0       0.7       51.0       2.1       0.5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenues

    13,690.3       100.0       16,028.2       670.6       100.0       11,177.9       100.0       10,500.5       439.4       100.0  

Cost of vehicles sold

    (18,618.8     (136.0     (23,327.0 )      (976.0     (145.5     (16,166.9     (144.6     (17,485.1     (731.6     (166.5

Cost of merchandise sold

    (1,388.8     (10.1     (1,398.3 )      (58.5     (8.7     (1,115.4     (10.0     (46.2     (1.9     (0.4

Cost of spare parts and components sold

    (234.0     (1.7     (437.2 )      (18.3     (2.7     (292.7     (2.6     (1,310.1     (54.8     (12.5

Cost of rendering services

    (11.2     (0.1     (65.4 )      (2.7     (0.4     (51.0     (0.5     (193.5     (8.1     (1.8

Cost of leasing activities

    (132.6     (1.0     (56.1 )      (2.3     (0.4     (40.9     (0.4     (42.8     (1.8     (0.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales

    (20,385.5 )      (148.9 )      (25,284.0 )      (1,057.9 )      (157.7 )      (17,666.8 )      (158.1 )      (19,077.8 )      (798.2 )      (181.7 ) 

Gross loss

    (6,695.1 )      (48.9 )      (9,255.8 )      (387.3 )      (57.7 )      (6,489.0 )      (58.1 )      (8,577.3 )      (358.9 )      (81.7 ) 

Operating expenses:

                   

Research and development costs

    (3,929.8     (28.7     (9,255.4     (387.3     (57.7     (5,266.5     (47.1     (14,041.6     (587.5     (133.7

Selling and distribution costs

    (1,346.6     (9.8     (2,203.8     (92.2     (13.7     (1,268.4     (11.3     (3,361.2     (140.6     (32.0

Administrative expenses

    (1,206.5     (8.8     (2,424.6     (101.4     (15.1     (1,702.7     (15.2     (1,981.2     (82.9     (18.9

Compensation expenses

    —         —         (4,340.3     (181.6     (27.1     —         —         —         —         —    

Net other operating (expenses)/income

    (67.5     (0.5     412.5       17.3       2.6       714.0       6.4       (1,475.3     (61.7     (14.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

91


Table of Contents
    For the Year Ended December 31,     For the Nine Months Ended September 30,  
    2020     2021     2021     2022  
    (VND in
billions)
    %     (VND in
billions)
    (USD in
millions)
    %     (VND in
billions)
    %     (VND in
billions)
    (USD in
millions)
    %  

Operating loss

    (13,245.5 )      (96.8 )      (27,067.4 )      (1,132.5 )      (168.9 )      (14,012.5 )      (125.4 )      (29,436.5 )      (1,231.7 )      (280.3 ) 

Finance income

    248.7       1.8       446.1       18.7       2.8       376.9       3.4       91.9       3.8       0.9  

Finance costs

    (4,553.9     (33.3     (4,598.2     (192.4     (28.7     (3,182.6     (28.5     (5,454.8     (228.2     (51.9

Net (loss)/gain on financial instruments at fair value through profit or loss

    (1,494.6     (10.9     (1,710.0     (71.5     (10.7     (1,858.3     (16.6     1,277.3       53.4       12.2  

Investment gain

    224.8       1.6       956.6       40.0       6.0       909.5       8.1       —         —         —    

Share of losses from equity investees

    (42.0     (0.3     (36.8     (1.5     (0.2     (35.1     (0.3     —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax expense

    (18,862.5 )      (137.8 )      (32,009.7 )      (1,339.3 )      (199.7 )      (17,802.2 )      (159.3 )      (33,522.2 )      (1,402.6 )      (319.2 ) 

Tax expense

    (87.8     (0.6     (209.2     (8.8     (1.3