Revenue: USD 357 million, up 9% year-over-year and 33% quarter-over-quarter.
Gross Loss: USD 224 million, with a gross margin of -62.7%.
Vehicle Deliveries: 13,172 EVs in Q2, up 44% quarter-over-quarter and 43% year-over-year.
Total Deliveries for H1 2024: 22,348 vehicles, representing a 101% year-over-year growth.
Product Mix: VF 5 accounted for 62% of total deliveries; VF 8, VF e34, and VF 6 accounted for 30%.
E-Scooter Deliveries: 13,076 units in Q2, up 67% quarter-over-quarter and 28% year-over-year.
Operating Expenses: Increased 28% quarter-over-quarter and 24% year-over-year.
R&D Expenses: USD 110 million, flat compared to Q1 and down 23.3% year-over-year.
CapEx: USD 108 million in Q2, down from USD 197 million in Q1.
Cash on Hand: USD 98 million as of June 30, 2024.
Showrooms: 155 showrooms across all markets as of August 31, with approximately 70% being dealer stores.
Release Date: September 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
VinFast Auto Ltd (NASDAQ:VFS) delivered 13,172 EVs in Q2 2024, marking a 44% increase quarter over quarter and a 43% increase year over year.
The VF 5 model has been a significant volume driver, with a ninefold increase in sales since its launch in Q2 2023.
VinFast Auto Ltd (NASDAQ:VFS) has established a strong market presence in Vietnam, with a 108% year-over-year growth in B2C deliveries in the first half of 2024.
The company has successfully expanded its global distribution network, with 155 showrooms across all markets as of August 31, 2024.
VinFast Auto Ltd (NASDAQ:VFS) has made significant progress in cost optimization, with a 16% decline in average build-up material costs and a 43% decline in average production costs for owned models in Q2 2024.
VinFast Auto Ltd (NASDAQ:VFS) reported a gross loss of USD224 million for Q2 2024, with a gross margin of minus 62.7%, worsening from Q1 2024 and Q2 2023.
The company faced a higher net realizable value (NRV) write-down of USD104 million in Q2 2024, significantly impacting gross margins.
Operating expenses rose 28% quarter over quarter and 24% year over year due to international market expansion.
The decision to delay the North Carolina plant has led to a reallocation of capital, potentially affecting long-term strategic plans.
VinFast Auto Ltd (NASDAQ:VFS) has only delivered 25% of its 80,000 vehicle target for 2024 in the first half of the year, raising concerns about meeting the full-year goal.
Q: Have you seen any changes in the competitive landscape in Vietnam, given that new players are entering into the market? A: The Vietnam EV market still has a lot of headroom to grow, and this is evident in the interest that other foreign OEMs have expressed in entering Vietnam recently. We believe that potential new market entrants can help quicken the pace of EV adoption in our home market. However, given our dominant green mobility ecosystem, including the vGreen charging infrastructure, we are confident in maintaining our leading position. Brand loyalty to Vingroup and the benefits offered to VinFast owners within our ecosystem also strengthen our position.
Q: CFO mentioned that bill of material and production cost went down by 16% and 43% per unit. Can you provide more color on that? How should we think about the bill of material cost reduction and production cost reduction for the second half of 2024? A: During the quarter, we took several initiatives to improve material costs, including lower battery costs, design optimization around ADAS, introduction of customer-paid upgrades for certain features, and supply chain optimization around key components. While the cost of materials is trending down, it will take some time for these savings to be visible in our P&L once the vehicles made with these materials are delivered. We expect this material cost optimization effort to continue into the foreseeable future.
Q: What kind of gross margins trajectory should we expect for later this year, and what does the path towards break-even gross margins look like? A: If you look at the gross margin after taking out the one-off charges for the NRV, we’re actually trending more positively than last quarter. However, because we took about $104 million of one-off impact to NRV, it appears that margins have worsened. We believe that margins will trend better in the coming quarters. We are still targeting positive gross margins by next year and a positive EBITDA margin by 2026.
Q: Can you remind us where total liquidity stands as of Q2? A: As of the end of Q2, we had around $98 million in cash. Including the e-log facilities and grants, our total liquidity stands at approximately $2 billion. This includes an additional $1 billion announced by our chairman at the Vingroup’s general shareholders meeting.
Q: What is the expectation for the product mix going forward, especially with new vehicles hitting the market next quarter and throughout the rest of this year? A: We provided guidance of 80,000 units this year. Starting from Q3 and Q4, you will see a lot more deliveries of the VF 3. The VF 5 was the leading revenue driver in previous quarters, and we still expect significant contributions from both VF 3 and VF 5, which are more affordable models.
Q: Can you provide more color on your marketing efforts to boost brand awareness globally and by region? A: In markets like Vietnam, our brand is already well-known, so we don’t need to spend much on brand awareness. In international markets like the US, where our brand is still new, we need to spend more on brand awareness. We rely on the quality of our products and our commitment to customer satisfaction to spread the word. This year, we are also relying on our dealers and dealership partners to increase brand awareness.
Q: What is the impact of the typhoon Yagi on your Haiphong factory? A: The aftermath of typhoon Yagi was very devastating for Vietnam. There were some damages to surrounding infrastructures and a lot of trees were blown away. However, we quickly resumed operations within a few days and are still assessing the impact of the typhoon. So far, we are back in operation.
Q: How is the funding progress for the CapEx and construction progress of the two CKD facilities in India and Indonesia? What will be the main funding channels to fund the CapEx? A: The decision to delay the start of production at the North Carolina plant allowed us to reallocate capital to invest in the plants in Indonesia and India. In Q2, our CapEx was only $108 million, mainly for upgrades to the Vietnam factory. The savings from not investing in the North Carolina plant this year will go towards the Indonesia and India plants.
Q: How do you think the development of 1,000 charging stations by PV Power in Vietnam might impact VinFast’s competitive advantage in the long run? A: We currently have about 75,000 to 80,000 charging stations across Vietnam, and we continue to invest in more. The development of additional charging stations by other players will help with EV adoption and is great for the market. We see it as a positive development for the transition to green mobility in Vietnam.
Q: Do you still target to achieve 80,000 deliveries this year, given that the first half only accounted for 25% of the target? A: Yes, we are still committed to the 80,000 vehicle delivery target this year. The main volume drivers will be the VF 3 and VF 5 models. We have more pre-orders for the VF 3 than we can deliver this year, and the VF 5 continues to lead the market. These two models will significantly contribute to achieving our delivery target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
