EV maker VinFast to Acquire its Battery Maker Sibling

Published On: 12 October 2023
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Reuters- EV maker VinFast on Wednesday commented about acquiring a 99.8% stake in VinES battery maker from its founder Pham Nhat Vuong as the EV maker is looking to hustle the integration process in the production value chain and overall competitive benefit.

EV maker VinFast to Acquire its Battery Maker Sibling

VinFast Auto, an electric vehicle manufacturer, made an official announcement on Wednesday that it would buy a 99.8% stake in VinES, a battery manufacturer, from Pham Nhat Vuong in order to strengthen its position as a market leader and increase its integration into the production value chain.

As an EV manufacturer looking to save 5% to 7% on battery costs, VinFast, which was backed by Vietnam's largest conglomerate Vingroup, claimed that the strategic acquisition of VinES, another company within the Vingroup ecosystem, would help it secure the supply of batteries.

inFast was founded in 2017 and will begin producing EVs in 2021. It has received ongoing monetary assistance from its founder, who is also the richest man in Vietnam.

VinFast stated in a filing with the U.S. Securities and Exchange Commission that it would acquire VinES for nothing more than the assumption of debt totaling about $462 million, with Vuong prepared to grant the EV manufacturer grants for all interest payments related to continuing VinES borrowings up to 2027.

According to Thuy Le, VinFast's global CEO, "the purchase of VinES will assist VinFast regulate our battery technology and supply chain, thereby optimizing operating expenses and enhancing technology content in our electric vehicles."

However, the automaker predicted that VinFast's costs for battery R&D and factory operations would rise in the near future. VinFast will take over all of VinES' rights and obligations following the acquisition.

According to Thuy Le, VinFast, which listed on the Nasdaq in August, intends to build kit assembly facilities in Indonesia's nickel-rich nation and to partner with VinES to use the metal to make batteries.

For the three consecutive months that ended on September 30, the automaker's revenue increased by 159% to $343 million. Its $623 million net loss increased by 33.7%. More than half of the 13,000 units it sold in the second and third quarters of this year went to its affiliate.

Shares in VinFast were up 0.53% at $7.53 each by 1411 GMT.

($1 = 24,440.0000 dong)

(Reporting by Akash Sriram in Bengaluru and Phuong Nguyen in Hanoi; Editing by Sriraj Kalluvila and Jonathan Oatis)