Hello and welcome to the VinFast Q4 and Full Year 2023 Earnings Call. All participants will be in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to hand the call over to Brook Taylor, Vice President for Government Relations and Strategic Partnership. Please go ahead.

Thank you, operator, and good morning or afternoon to everyone. My name is Brook Taylor, I'm the Vice President of Government Relations and Strategic Partnerships at VinFast. Thank you for joining us for our 2023 fourth quarter and full year earnings call. We will reference the slide presentation today which is accessible on our website. Joining me on the call today are Madame Thuy and Ahn Nguyen, our recently appointed CFO. Both have prepared remarks summarizing the fourth-quarter and full-year 2023 results as well as our expectations for 2024. Then we'll take your questions. Before I turn it over to Madame Thuy, let me remind you that some of the statements on this call include forward-looking statements under Federal Securities Law. These include, without limitation, statements regarding the future financial performance of the company, delivery volumes, financial and operating outlook and guidance, macroeconomic and industry trends, company initiatives and other future events. These statements are based on the predictions and expectations as of today and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and risk factors in our most recent filings with the SEC. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this morning, as well as in our Investor Day. And with that, I would like to turn it over to Madame Thuy.

Thanks, Brook. Good morning, everyone, and thank you for joining us today. After what could only be categorized as a year of firsts for VinFast, we ended 2023 with a strong public debut marked by a diverse product mix and strategic channel growth that reinforces our position as a formidable competitor. Our lean operation, capital-light channel model, and agile execution will lead to margin resiliency through our sleek and modern product design, advanced technology, competitive offering with our unique battery leasing model and best-in-class warranty, enabling us to continue gaining market share. I wanted to talk about the key achievements in Q4 and in 2023. In the fourth quarter, we delivered on our commitment to make our EVs more accessible to our customers globally. We delivered a record number of 13,513 EVs globally in the fourth quarter, up 35% quarter-on-quarter. Our total EV deliveries for the full year were 34,855, representing an increase of 374% from 2022. Our e-scooter business also experienced significant growth, rising 21% year-over-year for a total of 72,468 units in 2023. In terms of product launches, we proudly introduced four new SUV models in Vietnam across several segments, including our flagship VF 9, VF 5, VF 6, and the VF 7. In particular, we are pleased that the VF 6, which launched in our domestic market last October, recorded initial sales far above our expectations. We will gradually bring all these SUV models to our overseas markets this year. I would like to spend some time on the market update. First, North America, mostly the US. 2023 was a strong year for us and we were pleased with our progress in the US and Canadian markets. The US remains one of our strategic markets and we are earning our right to compete for market share with our lineup. Although we initially received some critical, but important product feedback, we listened to our US customers, and I'm really proud of our team for rapidly implementing a number of important improvements and updates across all aspects of our vehicles. We will continue to deploy resources and act decisively to meet and exceed customers' expectations. In the fourth quarter of 2023, we also made an important pivot from the capital-heavy direct-to-consumer distribution model to a capital-light hybrid model with a strong focus on leveraging existing distribution infrastructure by building a diligent network in the US and globally. Our growth is highly dependent on a strong dealer network that represents the brand well and gives consumers a highly personalized experience. Here are some recent highlights. We just signed our first dealer in the US in the fourth quarter and we already have 75 dealers under application by the end of last week, including leadership agreements that we have previously announced. Importantly, we increased our ability footprint across the US, improved dealer inventory levels, and removed any barriers to product availability for our US customers. We will continue to do so with a target of 130 points of sale in the next phase. We are excited to have 13 showrooms in California and six new dealers in five states: New York, Texas, Kansas, Florida, and North Carolina. This dealer model, starting in the US, has quickly proven itself with recent sales improving significantly. We plan to do the same for Canada and many other markets. We also remain committed to building our plant in North Carolina and manufacturing EVs in North America, though we still remain in the early stages of construction. Regarding the new market highlights on Indonesia and India: Building awareness and success in high-profile markets like the US strengthens our ability to compete for efficiency in other markets to build scale, especially in the untapped volume-driven Asian market. For example, we have discussed our plans for Indonesia, increasing our previously announced investment in the first-phase construction of a CKD plant, with an annual capacity of up to 50,000 electric vehicles. Let me underscore our excitement about the opportunity we see and why Indonesia is the first choice in our growth plan for Asia. Not only is Indonesia the largest economy in Southeast Asia, with a population of 280 million people, but it has the right policy in place to support rapid EV adoption. The government is increasingly focusing on electrifying transportation, and we are witnessing good growing support for the EV industry. Yet, there are relatively few competitors already in place. Given its location and availability of mineral resources, Indonesia is also a strategic link to our global EV supply chain. We recently marked our launch in the country during the Indonesia International Motor Show 2024, and signed a preliminary agreement with five dealers. The feedback was overwhelmingly positive, especially regarding the look and feel of the car and the unique battery leasing option. We have not yet released pricing for the market, but we have already received a significant number of deposits for our vehicles and thousands of leads of interest. We also announced yesterday an MOU with three Indonesian companies for our fleet of the first 600 EVs for taxi purposes in Indonesia. We expect additional fleet announcements in the coming months, underscoring our vehicle pipeline potential in the region. In India, we aim to seize the growth opportunities and market potential of the world's most populous nation, as well as the country's rapidly expanding EV market and favorable regulatory environment for the transportation industry, including government initiatives to reduce carbon emissions. In the fourth quarter, we signed an MOU with the Tamil Nadu state in India on the establishment of a CKD facility, and we will hold a groundbreaking ceremony in the next couple of days. The lower-priced products combined with our unique battery leasing policies are expected to prove effective in such emerging markets and differentiate us from competitors. Just to reiterate the benefit of battery leasing: Buyers pay one price for the vehicle and lease the battery for a monthly fee. This mechanism brings the upfront price of our vehicles and the monthly costs in line or even more competitive than many gas-powered vehicles on the market today. This battery leasing model also provides convenience to customers with a lifetime battery warranty and a replacement if the battery falls below 30%. The monthly battery leasing fee covers all repairs, maintenance, and replacement costs, including swapping out the battery for newer ones, so customers would have peace of mind. Interestingly, the battery leasing fee is even lower than the cost of gasoline for equivalent vehicles. Now I would like to take a few minutes and discuss some important new vehicle launches and highlight our recent technology achievements. First of all, about the VF 3 and VF Wild. At CES 2024, we announced the global launch of the VF 3, a four-seater dynamic mini SUV whose price is expected to be very attractive. We also unveiled the concept of a mid-sized pickup truck called the VF Wild, highlighting VinFast's innovative efforts with exceptional performance. Both of these vehicles signify our commitment to broadening our product range and promoting sustainable mobility by making smart, safe, exciting electric vehicles accessible to everyone. Next about the VF 7. The futuristic-looking VF 7 was also showcased at CES this year, confirming its appeal thanks to its spacious interior, smart dashboard, safety features, and outstanding performance for the price point, with available trims featuring a range of modern and smart technology that set it apart from other vehicles in the segment. In addition to this new product announcement, our presence at CES highlighted how VinFast continues to develop technology-enabled features that make our customers' driving experience safer, more convenient, and more enjoyable. We were honored to receive the Innovation Award this year for our MirrorSense technology. This is just one of many mechanisms integrating our cutting-edge AI solutions to implement the latest battery technology and incorporate modern cybersecurity and functional safety features into our electric vehicles. We are actively shaping the future of intelligent vehicles and setting new benchmarks in safety standards across all our products. Let me talk about the outlook for 2024 for VinFast. As we look at 2024, we will remain focused on two global priorities: first, putting more VinFast vehicles on the road globally, and secondly, continual cost optimization. Regarding our first priority, we are excited to broaden our distribution channels by leveraging the local network and expertise of third-party dealerships and distributors. We expect to reach approximately 400 points of sales globally by the end of 2024, including 103 in North America, with dealerships contributing a meaningful portion in the second half of the year. We also expect shipments of the VF 9 to the US and VF 8 to Europe to increase market share. We are already starting to see a strong order book in January from the US. In Indonesia, as the first step of cooperating with local dealers, VinFast is expected to announce pricing and sales policy in the first half of 2024 and start distributing our first model in this market within this year. On to our second goal, cost optimization efforts. We are working on initiatives targeting to reduce approximately 40% of our costs within two years from the launch of each vehicle model. This comprises approximately half of the cost saving from engineering, including redesigning new parts and enhancing our platform strategy, while the other half of the cost savings come from sourcing and purchasing, including insourcing and engaging ship suppliers. Our CEO has been directly spearheading this effort, and some of the initiatives have already yielded positive results, which our CFO will share more about later. In closing, our team is executing well and remains focused on driver-centric benefits for our customers and dealers through an expanding product line-up, innovative technology, and improved product quality. I will now turn it over to our CFO, Lan Anh, who will summarize the fourth-quarter and 2023 performance. Lan Anh?

Thank you, Madame Thuy, and my pleasure to speak to everyone on the call today. First of all, I'd like to take the opportunity to share my excitement in taking this new role as CFO of VinFast. I will do my best to contribute to the success of the company, especially through focused activities to improve profitability, strengthen our balance sheet, and meet our growth targets. VinFast is in a unique position to capture the tremendous growth opportunities as a global pure EV player. I'm incredibly proud of the efforts and commitment of our executive team, and I'm pleased to say that this hard work has already led to tangible improvements. For financial results, we recorded revenue of USD 437 million in Q4, representing an increase of 26% from the first quarter of 2023 and an increase of 133% year-over-year. For the full year 2023, our revenue reached approximately USD 1.2 billion, marking a significant 91% growth compared to the previous year. Growth was driven by sales volumes and new products. The average selling price of EVs is also 36% higher than last year. In addition, we recorded USD 552 million in gross profit, and we are proud to have realized a significant improvement in gross margin on a full-year basis from negative 83% in Q4 last year to negative 40% this quarter, and from negative 82% in 2022 to negative 46% in 2023, driven by lower production costs. Regarding operating loss, we recorded an improvement quarter-over-quarter, with an 18% decrease, and year-over-year, a 106% decrease in R&D and SG&A spending as a percentage of revenue, thanks to a jump in sales volume and stable operating expenses. Turning now to CapEx, we spent around USD 218 million during Q4, in line with our previous guidance. This was driven by our investments in the launch of VF 6 and VF 7, the North Carolina plant, and the development of charging stations and distribution network. In conclusion, I want to share again that we have started to see a lot of improvements across the board in Q4 and fiscal year 2022. I'm very excited about the coming quarter, as we expect the continuation of positive change and the result of our continuous focus on growing top-line and optimizing costs. With that, I will turn it over to Madame Thuy for closing remarks.

Thank you, Lan Anh. To summarize, we will complete the full EV line-up in 2024 for global markets, including the right-hand-drive versions for relevant markets. For North America, we plan to ship the VF 9 to the US and the VF 8 to the EU, and the remaining models will follow as well for other markets, which would help drive our sales significantly, especially towards the latter half of the year. We are excited about new markets and traction so far and how the dealership model will help accelerate market entry and boost sales. We expect to reach approximately 400,000 sales globally by the end of 2024, including 130 in North America. Improved cost and quality remain major focuses for us, which are directly managed by our new CEO. We currently have the capacity to manufacture up to 300,000 EVs annually and expect to deliver 400,000 EVs globally in 2024. I believe our team is well aligned to drive operational improvements in 2024, while delivering share gains across our product segments. With the new leadership team announced earlier this year, we believe the company is strongly positioned in 2024 as it enters the next phase of its development and accelerates its global expansion. We thank you for your continued support. And with that, I turn it over to the operator to open the line up for questions.

Thank you. Our first question comes from Andres Sheppard with Cantor Fitzgerald. Your line is open.

Hi, good evening, everyone, or good morning. Congratulations on the quarter and all of the recent developments. Thank you so much for taking our questions. Maybe the first question is I am wondering if it's possible to get some direction on the delivery target that you put out. I'm wondering should we expect perhaps maybe a bigger concentration in the second half of the year? Just trying to get a sense of what may be seasonality or how that guidance will look like throughout the year. Thank you.

You can hear me right?

Yes.

Okay, thank you. Thank you for the question. Still, we think that most of the sales will come in the second half of the year. We have several markets with the right-hand drive vehicles that we have been going through the amortization procedure and we plan to start delivering at the end of Q2 and in Q3. We also have a few other markets that we need to start or expect to sell in. So we anticipate that a lot of the volume will come in the second half of the year.

Got it. That's very helpful. Thanks for that, Thuy. And maybe as a quick follow-up. How should we be thinking about growth margins throughout this year and into next year? What does the path to maybe breakeven gross margins look like at a high level? Thank you.

Thank you. At a high level, we plan to get very close to positive gross margin by the end of the year, and definitely in 2025, and the gross margin will continue improving over the year.

Got it. That's very helpful. Thank you again and congratulations on the quarter. I'll pass it on. Thank you.

Thanks, Andres.

Thank you. Our next question comes from Brian Dobson with Chardan Capital. Your line is open.

Hi, good evening. Thanks very much for taking my question. That was a positive update you gave on the 75 US dealers going through the contracting process. I believe your goal is 130 dealership locations for this year in North America. Does that goal include multiple location dealerships? And if so, how many dealers would you need to sign to get to that 130 locations in North America?

Hi, Brian. So the 75 dealership groups that we're talking to include some with multiple locations. We have been working with the multiple independent dealer groups, and some of them will have more than one dealership location. We are prioritizing dealers that have locations available right away. We believe that we should be able to reach 130 points of sales in North America by the end of the year.

Great. Thanks very much. And just to revisit my colleague's earlier question, when you're thinking about that 100,000 vehicle target for this year, what would the geographic mix on those sales look like?

So right now the mix will still be mainly supported by our home market in Vietnam. About half of the number would come from Vietnam, and the rest would be split between North America, Europe, and the Middle East, and closer to home Asian markets.

Thanks very much. And just a final question from me. What could we expect from the average selling price for 2024?

The mix we have right now is quite dependent on the market because the product mix in different markets varies significantly. If you're talking about Asia, you will see more VF 5, for example. But in Europe or the US, there will be a bigger representation of VF 8, VF 6, and VF 7. So, we are maintaining a balanced mix across all products globally.

Excellent. Thanks, Madame Thuy and congratulations on a good quarter.

Thank you.

There are no further questions on the phones. Please proceed with any web questions.

Thank you, operator. We will now turn to questions from the web. The first question we have is can you please provide some more detail on the gross margin loss of 40%? What are the reasons for this? And what is the path to profitability?

Okay. Let me take that question. If you compare Q4 to Q2, and take out the one-off adjustments for the net realizable value, you will see an upward trend in profit margin from 37% in Q3 to approximately 27% in Q4. So the profit margin is improving. However, due to the one-off adjustment for the inventory at the end of the year, we have a gross margin of 40%.

Madame Thuy, I have a question here if you would like to take this next one.

Oh, okay. Yes, I can't see all the questions, but go ahead.

So the next question is can you please provide some additional detail on the strategy for India and Indonesia?

India and Indonesia are two important new markets for us this year. They are closer to us. The vehicles sold in these markets are closely aligned with the vehicles that have been tested and delivered in the Vietnam market. India, with a population of 1.5 billion, is the world's most populous country, with very supportive government policies and a strong drive towards green transportation. We believe that we should be able to capture some market share there. Indonesia is part of ASEAN, and we started launching in the Indonesian market last Thursday; the initial results have been very positive. The support received from the market, the government policy, and from private sectors and customers has been very encouraging. With 280 million people, Indonesia is the third most populous country in the world, and we believe we are uniquely positioned to capture market share as EV adoption continues to increase.

Thank you. Our next question comes from Greg Lewis with BTIG. Your line is open.

Thank you, operator. While waiting for Greg, we have additional questions from the webcast here. The next question is why are gross margins decreasing as you grow revenue? Are you discounting your vehicles, or are you experiencing an increase in your production costs?

Let me take that question. As I provided an answer before, the reality is that while the gross margins decreased, there was a one-off adjustment for inventory at the end of the year. The profit margin has actually improved from Q4 to Q3. This improvement in gross margin was primarily due to better production costs and cost optimization in Q4 compared to Q3.

Thank you, Madame Thuy. The next question, what was the total use of cash during the quarter? Could you provide an update on the funding efforts moving forward?

In Q4?

That is correct.

So basically, if you look at VinFast every quarter, inform operations – and this is looking into 2024 as well. Each quarter, we roughly burn about $250 million from operations, and we spend probably around $100 million to $150 million in R&D each quarter. This amount will be reduced going forward as we have nearly completed vehicle R&D. Then, we spend a little on CapEx for manufacturing. In the last quarter, I think it was about $40 million to $50 million.

Thank you. The next question from the webcast. Can we get a sense of your expectation of margin profile trajectory going forward?

We expect that margins will continue improving. If you look at the trend, it has been trending better quarter by quarter. As I said earlier, we expect that by the end of the year 2024, we will be very close to 0% gross profit margin and moving into positive territory next year.

Thank you, Madame Thuy. The next question from the webcast: How many more charging points have been added to the VinFast network over the quarter?

I believe we've added nearly 100,000 charging ports to our network, bringing the total to about 800,000 charging ports worldwide. As I've mentioned in previous quarters, our approach varies from market to market. In Vietnam, we have developed a charging network with up to 250,000 charging points due to the absence of a public charging network, so we own this network to support our sales. In developed markets like the US and EU, we integrate our vehicles with existing charging networks. As we add more Charging Point Operators and as they expand their networks, our total charging network will continue to grow. In newer markets like India and Indonesia, where charging infrastructure is less developed, we may collaborate with partners to build charging networks. It varies by market, but our charging network will keep expanding.

Thank you, Madame Thuy. Next question from the webcast: How many of the 100,000 projected cars are expected to be sold to GSM?

We believe that as GSM is expanding in different markets, in Vietnam alone, GSM is already active in 19 different cities and continues to grow. So the demand from Vietnam will remain significant but not at the same level as last year. However, as GSM expands internationally to markets like Laos, Indonesia, and the Philippines, there will still be demand for our products.

Thank you. Next question from the webcast: Can you share the expected CapEx for fiscal year 2024, and how the company plans to fund that?

Our estimate for 2024 is a CapEx running around $1 billion to $1.5 billion. Some of that is mandatory; others can be postponed. But roughly that's the number we have right now. Regarding the development timeline for the US factory, we are still maintaining the current timeline for the US factory, aiming for completion by the end of 2025.

We anticipate that the CapEx for this year will be between $1 billion and $1.5 billion, with $1 billion invested in the U.S. factory over the next two years and the remainder allocated to facilities in India, Indonesia, and Vietnam. We are exploring avenues to support our CapEx needs through local and international financing, and we have a strong commitment from Vingroup and our Chairman to support our CapEx needs for long-term growth. Thank you.

Thank you. Next question from the webcast: How would you characterize your BOM and battery costs over the quarters? Were you able to realize the benefits from falling metal and lithium prices?

Like other OEMs, our material costs are adjusted on a quarterly basis supplier by supplier, but generally, it varies across the industry based on the fluctuation in commodities. We follow the same practices as the industry.

Thank you. Next question from the webcast: Could you please provide an update on funding sources moving forward?

I think I heard many questions regarding our liquidity plan, so let me address that to avoid repetition. Right now, our current liquidity is about $1.8 billion, which includes approximately $2 billion in cash on our balance sheet at the end of the year, plus the remaining grants from our Chairman in Vingroup, and the equity line of credit. That roughly sums up our available liquidity. After the listing of VinFast, we gained access to various funding avenues from both public and private sectors. We expect that after the blackout period, we should be able to raise funds based on our pipeline. As I mentioned earlier, we have plans to increase our free float by at least 10% to 20%. This plan is still in progress.

Thank you, Madame Thuy. Next question: Have you shipped more cars to the US yet? How are sales going?

Sales in the US have shown very positive signs this year. Last year, after receiving critical yet valuable feedback from the market, we improved our vehicles and started making deliveries. I think in January, we saw a huge uptick in deliveries. We had only one dealer open in January. There was a complete competition between the direct-to-consumer and dealership models. However, in January, our sales from our store in California also increased significantly. In February, we also recorded a lot of orders already. As I mentioned, we had one dealer open in January, and as we add more dealers, we expect sales across multiple markets to increase, along with access to our vehicles for customers. It's worth noting that we still have around 9,000 pending orders in the US where deposits have been collected. Many of these orders are not concentrated in California but across various states. Therefore, as we add dealers in multiple states, we should be able to fulfill some of the order books we have accumulated over the past few years.

Thank you. Next question: From the webcast from John Murphy of Bank of America. How much capital would be saved in efficiency gains by leveraging dealers in the US?

Initially, based on preliminary calculations, it appears to be more beneficial to sell through dealers, particularly in this high-interest-rate environment, rather than following the capital-intensive direct-to-consumer model. However, cost savings are only one of the benefits. The principal advantage of launching a third-party dealership network is to access the entire US market. With the direct-to-consumer approach, we could only engage with about half of the states in the US. However, the dealership network will allow us to leverage existing dealerships and offer our products across all states.

Thank you. Next question: What is the expected timing for positive EBITDA and FCF?

We expect to achieve positive EBITDA in 2025, and anticipate becoming cash flow positive in 2027. Thank you.

Thank you very much. Next question coming in from the webcast: Can you please disclose how much cash was raised under the Yorkville agreement during the quarter?

We utilized that facility gently. So over $30 million is what we drew from the facility in Q4.

Thank you. That is all the questions we have from the webcast.

Please proceed with any closing remarks.

Thank you very much for attending the first full-year earnings call for VinFast. Again, thank you very much for your continued support. As you have seen, we have gathered a lot of momentum in the past years, especially in 2023, the year of firsts: the first time we listed, the first time we went international, the first time we had a full line-up of vehicles. We believe that we've accomplished many unprecedented feats in the industry and are ready for this year. We believe that this year will be pivotal for us, and we hope you will continue to support us. Thank you very much. Happy New Year. Happy Lunar New Year.

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.