Good day and thank you for standing by. Welcome to VinFast Auto's First Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker.

Thank you, everyone, for joining us for our 2024 first quarter earnings conference. I am the IR manager at VinFast, and with me today are our Chairwoman of the Board, Madame Thuy Le, and our CFO, Ms. Anh Nguyen. We will begin with an update on our first quarter performance and our outlook for the year. A presentation is available on the IR website for reference. After the management presentation, we will have 30 minutes for Q&A. Before I hand it over to Madame Thuy Le, I want to remind you that some statements made during this call may include forward-looking statements, which involve risks and uncertainties that could cause actual results to differ. We encourage you to review the cautionary language and risk factors in our latest SEC filings. Additionally, we will discuss non-GAAP financial information during this call, and further details on why we use non-GAAP, as well as reconciliations to GAAP, can be found in our press release or at the end of our presentation. Now, I would like to invite Madame Thuy Le to begin the management presentation.

Thank you, Ni. I'd like to start by addressing the broader EV industry context. It is important to acknowledge that macroeconomics and geopolitical uncertainties continue to impact businesses and consumers globally. As a global company, we operate in a diverse range of strategic markets, including North America, Europe, Middle East, Southeast Asia, and South Asia. While we are currently observing a certain level of weaknesses in some of our markets, we view this as temporary challenges. Our confidence in the EV industry's medium and long-term prospects remains strong. This confidence stems from several factors, including supportive government initiatives and the EV markets' anticipated transition from early to mass adoption, and the exponential growth projected in Ex-China markets. I also would like to re-emphasize our focus on EV over plug-in hybrids or gasoline cars. This strategy allows us to leverage our low-cost manufacturing base, mature supply chain, share platform, and to stay true to our mission to play an impactful role in the push for the transition to green mobility and carbon neutrality. EV is a better choice to make it happen. Now let's turn to our progress in the first quarter. We entered a number of new markets and increased vehicle deliveries across our global markets. We delivered 9,689 vehicles during the first quarter, representing a year-over-year increase of 444%. While the majority of our sales this quarter were domestic, we saw an uptick in the US, supported by a special leasing deal of $249 per month on VF 8. We remain confident of our full-year delivery target of 100,000 vehicles, supported by the robust ramp-up of showrooms and the availability of new models targeting a wider customer base in multiple new markets during the second half of this year. For the first quarter, our best-selling models were the A-segment VF 5, our current most affordable option that was launched last year, which accounted for about half of our deliveries, followed by the VF 8 and the VF 6. Our VF 6 model has been well received in the local market since its launch in late December of last year, and we are excited for the addition of this model to overseas markets where options for affordable and good-quality EVs are still limited. Now I would like to share some updates on three fronts: dealership distribution, new market entrances, and new product deliveries. Since we pivoted to the hybrid distribution strategy in the fourth quarter of 2023, we have made steady progress in developing our dealership network. Our capital-light model is steadily accelerating our global go-to-market strategy and will support both our sales growth and cash position. At the end of the first quarter, in North America, our active distribution network includes 15 VinFast-owned showrooms in California, two showrooms owned by Leith and Castor USA in North Carolina and Kansas, and other VinFast-owned showrooms in Canada. In the US alone, we completed the signing of another 10 dealership agreements besides the pre-existing six agreements. We are working to continue growing our dealership coverage in this region and will share more progress in our future announcements. We are already seeing our hybrid distribution strategy deliver promising results in the US, with sales starting to be generated from our dealers. We have also seen promising growth in the US market following the launch of VF 8 and its continuous improvements and software updates. We expect further growth in 2024 as the VF 9 will be available for delivery in the US market starting in late Q2, early Q3 and the VF 7 after that. Notably, we saw a pickup in consumer interest on the back of attractive offers amidst macroeconomic headwinds, confirming our belief in consumer demand for EV in this market. Our dealers have been receiving positive feedback from US customers. Most were surprised how well equipped the VF 8 is as the first product from a new EV brand. Customers have particularly praised the smooth acceleration, spacious interior with comfortable seats and well-thought-out layout. In addition to the US, Canadian, and European markets, we are also exploring dealership partnerships with other parts of the world while the EV revolution is still in the early stages in places like South and Southeast Asia. At the same time, we are capturing opportunities in new markets, such as the Middle East and Africa. As discussed in the last quarter, Asia will remain one of our key strategic markets. We believe that it represents the future of the automotive and electric vehicle market, driven by demographics and governmental incentives for EV adoption. Let's take a closer look at our performance in three key markets in Asia. We will start with Thailand. Last month, we announced our official launch in Thailand, one of Southeast Asia's most vibrant electric vehicle markets with a relatively established charging station infrastructure compared to other ASEAN countries. To showcase our commitment to sustainable mobility, we unveiled a diverse range of green solutions during the Bangkok International Motor Show and signed letters of intent with 15 initial dealers in Thailand. Many of those are already discussing with us regarding optimal showroom locations. At the event, we displayed right-hand drive versions of six of our models, including the VF 5, VF e34, VF 6, VF 7, VF 8, and VF 9, along with our complete lineup of electric scooters and our electric pickup concept, the VF Wild. Now I would like to turn to India. India's rapidly growing market has great potential and is a key component of our global multifaceted expansion strategy. During February, we broke ground on our EV manufacturing facility in the state of Tamil Nadu and by the middle of March, construction was already underway. We take a realistic capital allocation approach with the initial CKD phase of 50,000 EVs per year and we would be able to rapidly increase capacity as conditions require. And finally, let's turn to Indonesia. Following our successful debut at the 2024 Indonesia International Motor Show in February, we started opening orders for the VF e34 in Indonesia last month, marking another milestone in our expansion in Southeast Asia. With the introduction of this model at a very competitive price, our aim is to support Indonesian consumers as they embark on the journey towards a sustainable transportation future. Also, the first dealer store was opened in Greater Jakarta, which will start selling the VF 5 and VF e34. During 2024, we plan to expand our EV distribution network across major cities in Indonesia. With regards to our expanding product lineup, the much-awaited VF 3 is under development and is well on track for launch locally in Vietnam within 2024, and then overseas from 2025 onwards. VF Wild, our highly anticipated pickup truck, is at an early stage of study and we plan to share a target launch soon. Other milestones achieved in the first quarter of 2024 include closing our merger with VinES Energy Solutions. This is an important step in completing VinFast's integrated supply chain and will help to build a competitive advantage for us in the global EV market. We started building our own charging network in Vietnam that is exclusive to VinFast in addition to working with partners overseas, allowing VinFast access to over 850,000 charge points globally. Our Founder recently established an independent charging infrastructure company, V-Green, to focus on developing charging stations. This will aid VinFast's global expansion, especially in markets where infrastructure is still at an early stage. V-Green shall act as a partner of VinFast and will provide charging access to VinFast EVs in many markets, which shall translate into a reduction in CapEx for VinFast, helping VinFast stay focused on our EV business growth. Looking ahead, we remain committed to executing our strategic priorities to strengthen and grow our business globally. With regards to our product lineup, our focus during 2024 includes first delivering the new highly anticipated and very affordable VF 3 model in the domestic market. Secondly, delivering the new products VF 9 and VF 7 in North America. And finally, completing our full EV lineup for global markets in both left-hand drive and right-hand drive versions, along with the worldwide launch of all models. With regards to our global footprint, we expect to start delivering our EVs in markets with high EV-demand growth, including key focus on Indonesia, Thailand, the Philippines, and India this year. Our team in these markets is proactively working with dealers to accelerate the readiness of their showrooms. Our distribution partners in other parts of the world are also progressing to the next phase of discussions needed to import EVs and commence local sales. In closing, we expect the majority of sales to come in the second half of the year with the first half dedicated to setting up the foundation, including production ramp-up, new product launches, and finalizing dealership agreements. With that, I would like to hand over to Lan Anh, our CFO, to present our financial results for the quarter.

Thank you, Madame Thuy. Hello, everyone. I want to start with an important update. Following our acquisition of VinES in January, which is a critical step in completing VinFast's integrated production chain, we combined the financial statements of both companies for the first quarter of 2024. For comparison, we also incorporated VinES financials into our full year 2023 results. The financial statements for the first quarter of 2024 show a $4.7 million increase in research and development and an $11.3 million rise in depreciation expense. We began 2024 with revenues of $302.6 million for the first quarter. Given that this is the lowest season in the domestic market, that represents a 31% decline compared to the previous quarter, although revenue improved year-over-year by 269.7%. It's important to note that Q1 2023 only accounted for about 6.8% of our total revenue for the year and about 5% of our total deliveries for 2023. Our Q1 2024 performance aligned with our internal forecasts, thanks to increasing brand recognition and acceptance, effective sales and marketing initiatives, and early contributions from our expanded dealership network. We experienced a gross loss of $150.8 million in the first quarter of 2024, translating to a gross margin of negative 49.8%, compared to negative 172.9% in the first quarter of 2023 and negative 43% in the fourth quarter of 2023. The improvement in gross margin over Q1 2023 was mainly due to higher sales and reduced costs. However, due to seasonal low sales, our gross profit margin declined compared to Q4 of last year, primarily because of depreciation. The progress in our bill of materials will be a key factor in lowering costs and enhancing profitability. On the operational side, we made significant improvements in our profitability. Our operating loss for Q1 2024 was $421.8 million, which is a 7.8% decrease from Q1 2023 and a 15.4% decrease from Q4 2023. This improvement mainly stemmed from a reduction in our R&D expenses, most of which were intentionally concentrated in the early stages of product development. As we achieve greater product readiness, expand our dealership network, and build brand recognition, we anticipate our operating margins will enhance in the future. Regarding our liquidity position, as of March 31, 2024, we have not tapped into our reserves of $1.8 billion, which includes cash and grants from various facilities. These reserves will continue to support our operational cash needs and necessary capital expenditures linked to our growth plan this year. We project capital expenditures to be between $1 billion and $1.5 billion in 2024, primarily to fund the construction of VinFast manufacturing facilities in the US, India, and Indonesia. We plan to finance this through our liquidity reserves mentioned earlier and, if necessary, from new funding options, including equity and equity-linked instruments. We are dedicated to our manufacturing expansion plans while also recognizing our ability to achieve our top-line goals for 2024 independently, as our product ramp-up in Vietnam and expanding global distribution network can facilitate this growth. Our debt service strategies are backed by refinanced or extended facilities that we have tentatively agreed upon with our partners, along with support from our self-generated cash flows. In summary, our financial performance in the first quarter of 2024 is consistent with our internal forecasts. We are fast-tracking the foundational work necessary to meet our 2024 targets in the upcoming quarters. The executive team is flexible and adaptive in responding swiftly to current market conditions. As Madame Thuy highlighted earlier, we have strong anticipation for the second half of the year and the long-term prospects for VinFast.

Thank you, Lan Anh. Finally, I would like to conclude reaffirming our target of 100,000 deliveries in 2024. We stay focused on launching new products and entering new markets to support this target. Cost control is a priority for us, and we have shown progress quarter-over-quarter since last year and continue to be our daily responsibility, including managing costs, production costs, general operational costs, and always screening and opting for the most cost-effective options available. We maintain our target of breakeven by the end of 2025. I would like to hand over to the operator for the Q&A section.

Thank you. I would like to hand over to the operator for the Q&A section.

Thank you, operator. We already have the first two questions. The first question is, how do you plan to achieve the 100,000 EV guidance while Q1 is only slightly more than 9.3%?

Thank you. We maintain our guidance of 100,000 EVs in 2024. Low price products to be added in the coming quarters, targeting a broader customer base combined with a growing dealership network and expansion into new markets will make our EVs much more accessible to customers and accelerate sales growth in the second half of the year. As Lan Anh mentioned earlier, the Q1 performance is in line with our internal forecast, reflecting a low season for Vietnam and delivery based on the existing models mostly. Overall, the first half of 2024 is the time where we focus on establishing the foundation for growth in the second half, including signing deals with dealers in the US and globally, accelerating the opening of new showrooms with them, and simultaneously completing the development of products and different variants to be added to the market.

Thank you, Madame Thuy Le. We have the second question. How many of your deliveries in Q1 came from GSM?

Thank you. Vietnam remains the key market in Q1, and products for the overseas market are underway to be sent out and delivered in the coming quarters. For GSM, GSM in Q1 is about 52% of total deliveries, which is less than last year.

Thank you, Madame Thuy. We have the next question from John Murphy, Bank of America. Can you disclose the profit from e-scooters versus EVs, maybe even just directionally?

E-scooters have been in the market longer than EVs, and so we have had time to optimize them. The profit on EVs is gaining momentum. E-scooter is getting there in terms of breakeven.

Thank you, Madame Thuy. The second question is, when is your target for reaching gross profit breakeven? Has anything changed with recent EV pricing pressures?

We remain targeting gross profit margin breakeven by 2025. Some models might return profit earlier than others because they've been on the market for longer, but overall, 2025 is still the target for the entire portfolio. Regarding pricing pressure, we are assessing and we continue to study the impacts of the market conditions. We adopt, as you can see, a very flexible approach in our go-to-market execution to ensure that it fits the market conditions that we enter, and we are able to do so thanks to the wide range of products, especially those at very affordable price points. So we are very diversified in our market targets, which gives us room to be creative as well. The ultimate and most important goal is to achieve our targets and ensure our offerings are competitive while taking care of the total cost of ownership throughout the life cycle for the customer, thereby providing them great value.

Thank you, Madame Thuy. And the third question from John is, would it make sense to focus on growing in fewer markets to focus on volume growth, and expand markets later?

We continuously evaluate our entry into each of the markets. As you can see, we focus on a few important markets, and we direct most of our resources there. However, we have the opportunity to operate on a global scale thanks to our unique benefits from trade agreements with many countries, and we are not restricted by geopolitical constraints. So we would like to roll out to multiple markets where we can. However, you will see that certain markets are important to us, and we focus more resources on those.

Thank you, Madame Thuy. We have the next question from Thuc-Thanh. What is your refinancing plan for the domestic bond that will mature in December 2024?

So this is a tech-combined bond which is already in the refinancing plan agreed upon with our partner.

Thank you, Ms. Anh Nguyen. We have the next question from Thuc. Why did the loss in Q1 2024 gross margin widen versus Q4 2023?

The gross margin in Q1 2024 widened versus Q4 2023 due to the low seasonal sales. Gross profit margin was higher compared to Q4, mostly due to depreciation allocated to the low volume. In fact, our bill of material has shown constant progress and will be one of the key drivers for lower costs and turns profitability as mentioned.

Dan Ives from Wedbush, your line is now open. Please ask your question.

Yeah, thanks. So, can you talk about how important Indonesia is to the growth plan, especially this year?

Hi, Dan. Nice to hear your voice. Indonesia is one of the key important markets for us. It's a large market with over 350 million people; it's the most populous country in the world, and it has very low EV penetration. Therefore, we start out in the market on the same footing as with other competitors. So it's a very, very important market. And it's part of ASEAN as well, and we have been focusing on this market from the beginning of the year.

Great, just to follow up, Madame Thuy, regarding the 100,000 deliveries for the year, which is currently in April, do you feel that everything is tracking as expected? Could you discuss that from a trajectory perspective as much as possible?

Sure. Q1 aligns with our internal plan for the year. So we are confident about the guidance of 100,000 vehicles. As I mentioned in the last earnings call, most of the deliveries will occur in the second half of the year. We still rely a lot on the domestic market. However, we also started expanding into international markets. As the products are available for those markets and dealership agreements are signed, the showrooms open and markets enter, we will start seeing more volume coming in next month. We're still confident about the numbers.

Okay. Awesome. Thanks.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Brian Dobson with Chardan Capital Markets. Your line is now open.

Hi. Good morning. Thanks very much for taking my call. You provided some good color on the expansion of your hybrid dealership network in the United States. Do you think you could speak to some of the feedback you're hearing from those dealers, what the new potential dealers are excited about, what some of their hesitancies might be, and the overall tone of those conversations?

Sure. We signed 10 more dealership agreements in Q1, for a total of 16 dealership agreements signed in the US. We are still evaluating about 82 different applications for close to 150 locations in the US, so we have a very robust pipeline of showrooms for consideration in the US. The feedback that we receive is pretty positive. Many of the dealership points have already opened and started selling in Q1. The feedback from customers has been good regarding the products. We received a lot of constructive feedback from the dealers as well in order to improve our own service and product offerings. But so far, the dealers are very excited and very cooperative.

Yeah, thank you for that. As you're thinking about sales through the balance of the year, there have been many recent reports pointing to weaker near-term electric vehicle demand and rising production of hybrid vehicles. Do you think that that's a very US and European focused viewpoint? Furthermore, do you believe that potential relative softer demand in those markets could be offset by sales in Asia and the rest of the world, other markets that you're selling into?

Yes, we believe that sales for EVs are still growing. Maybe it's not growing as fast as before, but it's still growing, and statistics support that in all regions, even in the US and European markets. You bring up a very interesting point regarding differences between the US and European markets and others because I think in the US and Europe, more developed markets will start having to deal with the transition from initial adoption to adopting EVs for daily use versus in more nascent markets like Indonesia and India, where EV adoption is still very low. We will start by enabling the adoption with various strategies. So our approaches to more developed markets versus nascent markets are slightly different, and the potential in those markets is also different.

Yeah, thanks. I think that's an important point to distinguish there. Then, thinking about the balance of the year, I suppose EV sales were roughly sub 10% in the first quarter, which was pretty close to our expectations. How do you expect the sales cadence to be in 2Q, 3Q, and 4Q? Do you think that the lion's share of sales will come in the back half of the year? Can you provide additional color on cadence?

Yes, as we look ahead, Vietnam will continue growing as we add more vehicles. The VF 7 just started, and especially when the VF 3 comes in toward the end of the year, we will start seeing more volume from the affordable models. In Q1, about half of our sales came from the VF 5. People are very excited about the impending arrival of the more affordable model, VF 3. Vietnam will continue growing, and other markets will start delivering in Q2, early Q3, and then in Q4. You will also begin to see more volume coming from those markets. In the US and North America, as we add more dealership points to our mix and as they start selling across the continent, you will also see an uptick in volume. So we remain confident about our guidance of 100,000 vehicles for this year. However, most of it will come in Q3 and Q4.

Excellent. That's very encouraging. Thanks so much.

Thanks a lot, Brian.

Thank you. One moment for our next question. Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald. Your line is now open.

Hi. Good morning, everyone, or good evening, and congratulations on the quarter, and thanks for taking our questions. I think a lot of our questions have been asked, but maybe just following up on Brian's questions. Similarly, how should we think about gross margins throughout this year and maybe early next year, understanding that the higher volume vehicle deliveries will come in the second half? So presumably, that's when we'll see significant improvements in margins. But just curious if you could provide some color on how we should view margins for next quarter and maybe for the second half of this year.

Hi, Andres. As I mentioned in the last earnings call, we are tracking similarly to previously where we believe that we should get close to gross margin breakeven for the whole portfolio by the end of this year or early next year. Different products will have different trajectories; the products that are more mature, like the VF e34 and VF 5 in Vietnam, for example, are getting closer to breakeven faster. The newer products in newer markets with smaller volumes will take a bit longer. However, as a whole portfolio, we anticipate moving into a gross profit margin positive territory early next year. So that's the plan.

Got it. Thanks, Thuy. That's helpful. And maybe to follow up there, how should we think about liquidity and potential capital raising opportunities throughout the year? I'm wondering how you're thinking about that and any color there that you can provide.

As Lan Anh mentioned before, our liquidity pool remains unchanged from the beginning of the year. We haven't tapped into it yet. Both cash reserves and grants from our shareholders are still intact. We have been continuing operations. We also have multiple fundraising opportunities in the pipeline for various projects. As they materialize, we will be able to discuss more. But we also plan our investment spending accordingly. Otherwise, we still have our liquidity reserve, operational stability, and are pushing according to the plan.

Got it. That's very helpful. Thank you. And maybe just one last one, if I could. Any updates on the North Carolina facility? Is it still on track for completion by the middle of next year?

North Carolina is still ongoing. We're still on track to start operations by the end of next year, with hiring and full operations likely taking a couple of months.

Wonderful. Great. Thank you so much. I'll pass it on. Thanks again. Bye-bye.

Thank you. One moment for our next question. Our next question comes from the line of Tyler DiMatteo with BTIG. Your line is now open.

Yeah, hi, good morning everyone. Thanks for taking the question. I wanted to just talk a little bit about India here and the recent news from the government trying to incentivize EVs, with a lot of global auto OEMs potentially looking to enter the market. Could we see you guys try and pull that factory forward? I guess just broadly speaking as well, how are you thinking about the strategy for that market, given that construction is ongoing at the facility today?

Thanks, Tyler. We also benefit similarly from the EV policy in India with our factory. So we also receive significant benefits even before we open the factory, such as tax benefits and incentives from the government for investing in India. The factory is cleared; I was there last week. We started the construction. We are implementing a very frugal CapEx plan with that factory. We're building a 50,000 CKD factory, which is simple yet effective to start with, and we can scale it up as needed. The total investment is not significant, and there are a lot of benefits coming from the government for establishing an EV factory in India, giving us a lot of confidence in the market.

Okay, great. And then in terms of the margin break-even target, I'm curious how much of the incremental benefit of reaching that target you expect to come from overall fixed cost absorption as you scale up the factory versus benefits of component sourcing and bill of materials. Just curious how you're thinking about squeezing out some incremental efficiencies there as you roll out different products and increase prices in the market.

In the last year-and-a-half, when we started building the vehicle factory here in Vietnam, there was a lot of wastage, and we had much fine-tuning to do. We have already made a lot of optimization on production costs per unit. As we ramp up volume, we expect to spread the fixed costs over the higher volumes, and that will result in lower unit costs. However, most savings will come from BOM optimization and the numerous initiatives we are implementing this year to reduce BOM costs. The other cost optimization initiatives, such as operational efficiencies, will also contribute, but we believe BOM cost optimization and scaling will provide the most savings per unit.

Okay, great. Thank you. Really appreciate the time. I'll turn it back over to the queue.

Thank you. I'm currently showing no further questions on the phone lines. I'd like to turn the call back over to the unidentified representative for closing remarks.

Thank you, operator. We have the next question from Huyen Feng. How is your negotiation with PVOIL to establish charging points in the gas station?

With the PVOIL, VinFast maintains cooperation with PVOIL to set up charging stations throughout their gas stations. Then, both parties can share mutual revenue.

Thank you, Ms. Anh Nguyen. We have the next question from Thanh Le, VCBF. Please share your criteria for choosing to cooperate with a dealership. What are the typical terms in the cooperation between VinFast and a dealership?

Let me talk about the terms first. We have basically the same terms for dealerships in different markets. However, we do have different sets of terms, for example in Vietnam, the US, Canada, Europe, and the Middle East. In essence, we establish similar terms for those dealers because each of the markets has unique characteristics. We take applications from the dealers and evaluate various criteria for the dealers starting from their past performance, their history with other brands, their financial situation, and especially the location and the showroom that they want to open with us. We get to know the dealers intimately because it's a long-term partnership, so we follow a very detailed process in getting to understand the dealers before signing the dealership agreement.

Thank you, Madame Thuy. We have another question from Mike Novak. Can you confirm details of the VF 7 launch in North America such as starting price and first delivery date?

The current plan is to start delivering the VF 7 in the US in Q3 or Q4 this year. We will announce the starting price later when we are closer to the launch date.

Thank you, Madame Thuy. We have now concluded the Q&A section. Thank you everyone again for joining us today. Should you need any clarification, please let us know by sending an email to [email protected]. We look forward to speaking with you again soon. Take care and goodbye.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Have a wonderful day.