By Vietnamese electric-vehicle company VinFast is taking a strategic step to enhance its competitive edge by absorbing its parent group’s battery maker.
Chairman of Vietnamese conglomerate Vingroup, Pham Nhat Vuong, has announced plans to transfer 99.8% ownership of VinES Energy to VinFast, a Nasdaq-listed company. This move comes after Vuong’s commitment in April, where he pledged $1 billion of his personal assets to the EV business. Additionally, Vingroup had previously stated its contribution of $500 million in grants and a guaranteed $1 billion loan for VinFast.
VinFast entered the public market in August through a merger with special-purpose acquisition company Black Spade. The company enjoyed an impressive debut, reaching a valuation of approximately $86 billion before experiencing a slight decline the following day. Since then, the EV maker’s shares have shown volatility, recording an 8.4% increase to $8.12 on Wednesday but having declined by 35% in the current month.
VinFast Expands its Capabilities with Merger of VinES
VinFast, the Vietnamese car manufacturing company, announced on Wednesday that it will be merging with VinES, a specialist in advanced lithium-ion batteries for vehicles and energy storage. This strategic move will grant VinFast access to valuable intellectual property on battery cells, packs, and manufacturing, as well as existing partnerships and supplier contracts.
By integrating VinES into its operations, VinFast aims to enhance its self-sufficiency and strengthen its position in the rapidly expanding electric vehicle (EV) market. The company’s global chief executive, Le Thi Thu Thuy, believes that gaining control over battery technology and supply will ultimately optimize operating expenses.
VinFast has reported an operating loss of approximately $1.22 billion for the nine months leading up to September. However, industry experts are optimistic about the potential benefits of this merger. Tyler Manh Dung Nguyen, head of institutional sales at Maybank Securities Vietnam, suggests that it will significantly enhance VinFast’s manufacturing capabilities and allow for the development of in-house technologies, including crucial EV components like batteries.
VinFast’s ambitious global expansion plans have also received a boost with this merger. Nguyen believes that the deal represents a significant step forward for the automaker and has positive implications for its future growth. This sentiment is reflected in the stock market, as investors have responded favorably to the news with an increase in the conglomerate’s shares by around 2.8%.
VinFast’s strategic merger with VinES solidifies its commitment to innovation and competitiveness in the EV industry. With the acquisition of advanced battery technology and increased manufacturing capabilities, VinFast is poised to make substantial strides in the global market.
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