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. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, [indiscernible]. Please begin.

Thank you, operator, and good morning to everyone. My name is [indiscernible], IR manager at VinFast. Thank you for joining us for our 2024 first quarter earnings conference. Joining me on the call today are Chairwoman of the Board, Madame Thuy Le, and our CFO, Ms. Anh Nguyen. We will start the call with first quarter performance update and present our outlook for the year. We will reference a presentation today which is accessible on the IR website. After management presentation, we will have 30 minutes for Q&A. Before I turn it over to Madame Thuy Le, 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 and operating outlook, guidance, as well as macroeconomic, industry trends, company initiatives, and other future events. These statements are based on the predictions and expectations as of today. Actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC. In addition, management will make reference to non-GAAP financial during this call, a discussion of why we use non-GAAP and information regarding the reconciliation of our non-GAAP versus GAAP is available on the press release that we issued this morning or you can find it in the final page of our presentation. With that said, now I would like to invite Madame Thuy Le to start with 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 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 hybrid of 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 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 was domestic, we saw an uptick in the US, [followed by] (ph) 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…

Thank you, Madame Thuy. And hello, everyone. First, I'd like to address a housekeeping item. As mentioned in the previous call, following the completed acquisition of VinES in January, a significant step towards completing VinFast [fully-increased] (ph) production chain, We consolidated the two companies' financial statements in the first quarter of 2024 and we stated the full year 2023 incorporating VinES financials for comparison purposes. The impacts on the financial statement in the first quarter of 2024 include a $4.7 million increase in R&D and an $11.3 million increase in depreciation expense. We kicked off 2024 with $302.6 million in revenues for the first quarter. As a lowest season in the domestic market, this is a decline of 31% compared to the previous quarter, within an improvement on a year-over-year basis with revenue up by 269.7%. I'd like to remind you all that Q1 2023 recorded only about 6.8% of our full year's revenue or only 5% of our 2023 total delivery. Our Q1 2024, was in-line with our internal forecast on the expectation of increasing brand awareness and acceptance, positive impacts of our active sales and marketing campaigns, and the early contribution of our expanded dealership network. Our gross loss in the first quarter of 2024 was $150.8 million, equivalent to a gross margin of negative 49.8%, as compared to negative 172.9% in the first quarter of 2023 and negative 43% in the fourth quarter of 2023. The improvement of gross margin over the first quarter of 2023 was attributed to increased sales and improved costs. As Q1 sales was low -- seasonally gross profit margin declined compared to the Q4 last year, mostly due to depreciation. Our bill of materials has showed constant progress and will be one of the key drivers for lower cost and profitability. On…

Thank you, Madame Thuy. And hello, everyone. First, I'd like to address a housekeeping item. As mentioned in the previous call, following the completed acquisition of VinES in January, a significant step towards completing VinFast [fully-increased] (ph) production chain, We consolidated the two companies' financial statements in the first quarter of 2024 and we stated the full year 2023 incorporating VinES financials for comparison purposes. The impacts on the financial statement in the first quarter of 2024 include a $4.7 million increase in R&D and an $11.3 million increase in depreciation expense. We kicked off 2024 with $302.6 million in revenues for the first quarter. As a lowest season in the domestic market, this is a decline of 31% compared to the previous quarter, within an improvement on a year-over-year basis with revenue up by 269.7%. I'd like to remind you all that Q1 2023 recorded only about 6.8% of our full year's revenue or only 5% of our 2023 total delivery. Our Q1 2024, was in-line with our internal forecast on the expectation of increasing brand awareness and acceptance, positive impacts of our active sales and marketing campaigns, and the early contribution of our expanded dealership network. Our gross loss in the first quarter of 2024 was $150.8 million, equivalent to a gross margin of negative 49.8%, as compared to negative 172.9% in the first quarter of 2023 and negative 43% in the fourth quarter of 2023. The improvement of gross margin over the first quarter of 2023 was attributed to increased sales and improved costs. As Q1 sales was low -- seasonally gross profit margin declined compared to the Q4 last year, mostly due to depreciation. Our bill of materials has showed constant progress and will be one of the key drivers for lower cost and profitability. On…

Thank you, Lan Anh. Finally, I would like to conclude reaffirming our target of 100,000 deliveries of 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 to-do item, including bump costs, production costs, [general operational] (ph) 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. [Operator Instructions]

Thank you, operator. We already have the first two questions from [Tung Duc] (ph), the Capital Securities Company. The first question is, how do you plan to achieve 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 to the market will make our EV much more accessible to customers and have accelerated [enhance pull-out] (ph) and drive our sales growth in the second half of the year. As Lan Anh already mentioned earlier, so 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 focused on the foundation for growth in the second half, including signing with dealers in the US and globally, accelerating the opening of new showrooms with them, and at the same time continuing to complete the development of products and different variances 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 market overseas are underway to be sent out and delivered in the coming quarters. And for GSM, GSM in Q1 is about 52% of total delivery, less than last year.

Thank you, Ms. 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?

So e-scooters have been in the market longer than EVs, and so we have time to optimize on them. The profit on EVs picking electric motor. E-scooter is getting there in terms of -- like a breakeven. So, yeah.

Thank you, Madam Thuy. The second question is, when is your target going to reach gross profit breakeven? Has anything changed with recent EV pricing pressures?

We remain to target gross profit margin breakeven by 2025. Some models might return profit earlier than others because they've been on the market for longer, but overly 2025 is still the target for the whole portfolio. 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 make sure 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 the very affordable price point. So we are very diversified in our market target, which gives us room to be creative as well. The ultimate and the most important goal is to achieve our target and make sure that our offering is competitive and we take care of the total cost ownership throughout the life cycle for the customer, basically giving them high value for the purchase.

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

We continuously evaluate our entry into each of the markets. As you can see, we focus on a few markets -- few of the markets are actually important to us, and we focus our resources on those markets. However, we have the opportunity to play on a [global field] (ph) thanks to our unique benefits from the 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. Yeah, but you will see that certain markets are important to us and we focus more resources on those markets.

Thank you, Madame Thuy. We have the next question from [Thuc-Thanh] (ph). What is your refinancing plan for the domestic bond was [VND11.5 trillion] (ph) that will mature in December 2024.

So this is a tech-combined bond which is already in the refinancing plan agreed 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 2024 Q1 widened versus the Q4 2023, due to the low seasonal sales. Gross profit margin was higher compared to the Q4, mostly due to the depreciation allocated to the low volume. In fact, our bill of material has shown a constant progress and now will be one of the key drivers for a lower cost and [turns] (ph) 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 is Indonesia on 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, over – sorry 350 million people. It's the most populous country in the world, very low EV penetration. And so we start out in the market on the same footing as with other people. So it's a very, very important market. And it's part of ASEAN as well. And we've been focusing on this market from the beginning of the year.

Great, and then just to follow up, so Madame Thuy, when you think about the 100,000 for the year -- here it is, we're seeing in April, I mean, does it feel like everything is sort of tracking, you know, relative to expect -- I mean, if you think about where we were even three, four months ago, can you just talk about that just from a trajectory perspective, in terms of as much as you could talk about it.

Sure. Q1 lastly check our internal plan for the year. So we also -- we're confident about the guidance of 100,000 vehicles. As I mentioned from the last earning call, most of the deliveries will happen in the second year. We still rely a lot on the domestic market. However, we also started expanding into international markets. And as the products are available for international markets And dealership agreements are signed, the showrooms are open, markets enter. We will start seeing more volume coming in next [month] (ph). 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. So I guess first 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 with the addition of the six agreements that we already announced. So we have 16 dealership agreement signed in the US. We are still evaluating I think 82 different applications for about close to 150 locations in the US. So very robust pipeline of showrooms for consideration in the US. The feedback that we receive is pretty positive. As you could see that two of the dealership points already opened and started selling in Q1. The feedback from the customers is good about the products. We received lot of also 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 and happy with us.

Yeah, thank you for that color. You know, As you're thinking about sales through the balance of the year, there have been many recent reports that have pointed 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? And furthermore, do you believe that potential relative softer demand in the near-term in those markets could be offset by potential sales in Asia and the rest of the world, other markets that you're selling into?

Yeah, we believe that the sales for EV is still growing. Maybe it's not growing as fast as growth rate as before, but it's still growing and that's clearly show in the statistics [or] (ph) all the regions, even in the US and European markets. Actually you brought up a very interesting point that maybe is different between US and European and other markets because I think in US and European more developed markets, we will start having to -- after the initial adoption, then you have to start dealing with the -- adopting the mass market right, with people that use the EVs for their daily use versus in a more nascent markets like Indonesia, India, like ASEAN for us where easy adoption is still very low and we will start by enabling the adoption with various strategies. So our approaches to more developed markets versus nascent markets are slightly different as well, and the potential are also different in those markets.

Yeah, thanks. I think that's an important point to distinguish there. And then I guess just 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. As you're thinking about sales cadence in 2Q, 3Q, and 4Q, I suppose, right now, do you think that the lion's share of sales will be coming in the back half of the year? Can you give us any additional color on cadence?

Yes, so we -- as we -- if you look at some major -- I mean, Vietnam will continue growing as we adding more vehicles, right? So VF 7 just started, so we -- especially when the VF 3 come in toward the end of the year, we will start seeing more volume from the affordable models. Because in Q1, you could see that about half of our sales from the VF 5. And people are very excited about the upcoming more affordable model VF 3. So Vietnam will continue growing, the other markets in a while, as we start delivering in end of Q2, early Q3, and then in Q4. You start seeing the volume in those markets as well. And in the US and North America in general, as we add more and more dealership points to our mix and as they start selling in the whole North America, you will also start seeing more volume coming in. So we are still confident about the guidance of 100,000 vehicles per year for this year. But most of it will start coming in -- more in Q3 and Q4 this year.

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

Thanks a lot Brian.

Thank you. One moment for our next question, please. 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 by now, but maybe just following up on Brian's questions. Similarly, how should we think about gross margins throughout this year and maybe early into next year, understanding that the higher volume vehicle deliveries will come in the second half? So presumably -- that's when we'll see the big improvement in margins. But just curious if you could perhaps give us some color on how should we think about margins for next quarter and maybe for the second half of this year. Thank you.

Hi, Andres. So as I mentioned in the last earning call and we are tracking similarly to previously where we believe that we should be getting close to the gross margin breakeven for the whole portfolio by the end of this year, early next year. Different products are different. The products that are more mature, like in VF e34, VF 5 in Vietnam for example, we're getting there faster. And the newer products in newer markets with smaller volume will get there a little bit slower. But as a whole portfolio, we're heading into a gross profit margin positive early next year. So that's the plan.

Got it. Thanks, Thuy Le. 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 still and any color there that you can provide. Thank you.

So as Lan Anh mentioned before, we still have the same pool of liquidity that we had at the beginning of the year. So we haven't tapped into it yet. The cash -- the grant from our shareholders, the [indiscernible], they're all still intact. And we've been continuing the operations. We have multiple fundraising in the pipeline as well for various projects. So as they materialize, we will be able to discuss more. But we also plan our investment spending accordingly as well. Otherwise, we still have the liquidity reserve, we still have our operations and we're pushing according to the plan.

Got it. That's very helpful. Thank you. And maybe just one last one, if I could. Just wondering any updates on the North Carolina facility and is that still on track for middle of next year? Thank you.

North Carolina is still ongoing. We're still on track to start the operation by the end of next year, start hiring in a lot of workers and putting in operations by the end of next year. But probably the full operation will take 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 there. I wanted to just talk a little bit about India here and the recent news from the government trying to incentivize EVs and a lot of global auto OEMs potentially looking to enter the market. I mean, 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, you know, the construction is ongoing at the facility today. Just any broad strokes on that. Thank you.

Thanks, Tyler. We also benefit similarly from the EV policy in India with our factory. So we also get significant -- we get the benefit before we -- tax benefit before we open the factory as well as the incentives from the government for investing in India. So the factory is – we cleared the land. I [was] (ph) there last week. We cleared the land. We started the construction. It's -- so we implement a very frugal CapEx plan with that factory. So we're building -- what we're building is 50,000 CKD factory, simple, effective to start with, and we can scale it up as and when needed. But right now the total investment is not major. There's a lot of benefits coming from the government as well for building the EV factory in India. So we see a lot of benefits out of that. And also India markets, since you brought it up, is a very important market for us. However, the consumers are quite price sensitive and sensitive to the warranties and other -- the service of the company. So we believe that our wide range of products and our warranty, our market -- the industry leading warranty will have further comfort to the consumer in India. So huge market again, and we have a lot of confidence in the market.

Okay, great. And then in terms of the margin break-even target, I'm curious, you know, how much of the incremental benefit of reaching that target do you expect to kind of just 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 look to roll out the different products here and increase prices in the market.

So last year -- in the last year-and-a-half, when we started building the vehicles factory here in Vietnam. As you know, at the beginning, there's a lot more wastage, we have a lot more fine-tuning to do. So we did a lot in terms of optimizing the production in the past year, year-and-a-half already. And we achieved a lot of optimization from the production cost per unit. However, as we ramp up the volume, then a lot of the fixed cost can be spread over the higher volume and then as a result of that unit cost will be lower. So we expect that this year as well. However, most of the savings, most of the optimisation, we believe will come from the optimisation of the bill of material and all the initiatives, like hundreds of initiatives that we are taking this year in order to bring down the [BOM] (ph) cost. The other cost optimization initiatives as well, like operational costs in general, but we think that the BOM cost when optimization and the volume scale will bring the most saving for unit.

Okay, great. Thank you. Really appreciate the time. We'll turn it back 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 [indiscernible] for closing remarks.

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

With the PVOIL, VinFast maintains a cooperation with PVOIL to set up a charging station throughout PVOIL gas station. Then most parties can share mutual revenue sharing.

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

So, Let me talk about the terms first. I think our terms, we have basically the same terms for dealership in different markets. We have different set of terms, like for example in Vietnam market, in US market, Canada, Europe, and the Middle East, for example. So we have basically similar terms for those dealers, because each of the markets have the – have different – they have specific characters to them. In each of the markets we take applications from the dealers and we evaluate various criteria for the dealers starting from their performance, their history with other brands, their financial situation, 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 need to get to know our partners. So it's a very detailed process in order to get to know the dealers before we sign the dealership agreement with them.

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, first delivery date?

The current plan is to start delivering VF 7 in the US in Q3 or Q4 this year. We will announce the starting price later when we -- right before the launch of the market.

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 ir@vinfastauto.com. 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, everyone have a wonderful day.