Good day, and thank you for standing by. Welcome to VinFast Q1 2025 Financial Results and Q&A Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Amandae Baey, VP of Investor Relations. Thank you. Please go ahead.

Thank you, operator, and good morning, everyone. This is Amandae Baey, Vice President of Investor Relations. Welcome to VinFast First Quarter 2025 Earnings Conference Call. Joining me today are Chairwoman of the Board, Madam Thuy Le; and our CFO, Ms. Lan Anh Nguyen. Before I turn the call over to Madam Thuy, 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, macroeconomics, 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 U.S. Securities and Exchange Commission. In addition, management will refer to non-GAAP financials during this call. A discussion of why we use non-GAAP and the information regarding the reconciliation of our non-GAAP versus GAAP financials is available in the press release that we issued this morning. With that, I would like to invite Madam Thuy to start with the management remarks.

Thank you, Amandae, and hello, everyone. I appreciate you joining us today. I am pleased with the progress made over the past year. Given that the first quarter is typically the slowest seasonally, it is encouraging to see signs of improved operating leverage driven by economies of scale. Compared to the same period last year, our volume growth and streamlined operational footprint are increasingly reflected in a more efficient cost structure and subsequently, the narrowing of our profit margins year-over-year. Today, I'll be sharing updates on 3 key fronts: one, deliveries performance; two, the pace of EV adoption and performance in our key markets; and lastly, our future R&D road map that we mentioned last quarter. On the deliveries front, I'm pleased to share that Q1 '25 deliveries alone have already exceeded our total for the first half of last year. Achieving this in the typically slowest quarter of the year marks an encouraging start to 2025, especially given ongoing global macroeconomic and trade uncertainties. In Q1 2025, VinFast delivered 36,330 electric vehicles, representing a 296% increase year-over-year and a 32% decline quarter-over-quarter. It's important to remember that Q1 is typically our seasonally slowest quarter, primarily due to the extended Lunar New Year holiday in Vietnam. On the 2-wheeler front, we delivered 44,904 units, marking a 473% year-over-year increase and a 44% rise quarter-over-quarter. This strong growth was driven by the expansion of our dealer network in Vietnam and a sharpened product focus following the discontinuation of older models in favor of more competitive offerings. Deliveries to related parties, which include GSM, the EV taxi platform owned by our founder, accounted for 21% of Q1 deliveries. With this, our B2C deliveries have consistently accounted for over 70% of total sales for 3 consecutive quarters through Q1 '25. As GSM expands…

Thank you, Madam Thuy. Good morning, everyone. I'm pleased to walk you through our financial results for the first quarter of 2025. Our business is now at an inflection point where we expect economies of scale to drive greater operating leverage going forward. We've made meaningful progress in optimizing our cost base, both in terms of cost of goods sold and operating expenses. As we continue to grow our top line while streamlining our operational footprint, we remain focused on identifying additional cost-saving opportunities. As Madam Thuy noted, our new vehicle platforms and our new zonal E/E architecture would serve as a foundation for longer-term cost savings. These changes not only reduce complexity and component redundancy, but also enable us to secure more favorable supply contracts supported by our growth scale. Our view of material optimization program is ongoing, and we expect to see a more material impact once the new platforms are fully commercialized over the next 18 months. Now let me walk you through our results in more detail. Net revenue for Q1 2025 was USD 657 million, an increase of 150% year-over-year and largely in line with Q4 2024. Cost of goods sold for the quarter was USD 888 million, an increase of 113% year-over-year and down 25% quarter-over-quarter, reflecting the continued ramp-up in deliveries. Cost of goods sold as a percentage of revenue was 135% for the quarter, compared to 179% in Q4 and 159% from the year prior. Q1 2025 gross margin was minus 35%, a notable improvement from minus 59% in the same period last year, driven by increased scale and ongoing cost optimization efforts. Excluding the impact of NRV and one-off items, gross margin was minus 28% compared to minus 57% during the same period last year. Moving on to operating expenses. SG&A…

[Operator Instructions] The first question comes from Andres Sheppard from Cantor Fitzgerald.

Congratulations on the quarter and all of the vehicle delivery ramp-up, very exciting. Madam Thuy, just wondering if you could maybe remind us just the timeline on the new factories, the one in Vietnam, the one in India, the one in Indonesia. When do you expect them to be operational exactly? I know you touched on it briefly. And what do they do to the total production capacity?

Thank you, Andres, Okay. So as announced before, all our facilities [indiscernible] (24:36)is expected to start operations this year. So the majority of the vehicles, about 90% will still be manufactured out of -- in Vietnam with a better production concentration with the existing facility. [indiscernible] businesses focuses on more like high-end models. VF 6 VF e34, Limo Green, VF 7, VF 8 and VF 9. And our new facilities, I think, will make more affordable models like Nerio Green, and VF 3 and VF 5. In terms of timings, the India factory will open in July this year and the [indiscernible] one before that and the India -- Indonesia after that but all of them will be opened this year.

Got it. Very helpful. And maybe just as a quick follow-up. I'm wondering if you can maybe remind us, what are some of the key catalysts you think investors should be looking at either for remaining of this year or into next year? Just making sure we're capturing all the major big highlights, that catalyst that you want us to be aware of.

Okay. Thank you. The catalyst for the growth. So actually, VinFast is entering a very critical inflection point across 3 strategic pillars: scaling operations, accelerating product development and executing on cost optimization, which all lay the groundwork for a clear path to profitability. So first of all, on the scaling for growth. We're targeting the double vehicle deliveries in 2025, at least double delivery in 2025 and maintain a strong momentum into 2026. This growth will be driven by deeper market penetration in key international markets, particularly across Asia and enabled by our new CKD manufacturing facilities. About the next generation products, our upcoming EC lineup will deliver enhanced technology offerings while being more cost effective to produce. So this will position us to stay competitive and aligned with evolving consumer preference. And finally, on cost optimization. As mentioned before, 2025 is a foundational investment year in our [indiscernible] and zonal architecture. This advancement of our design could significantly improve the manufacturing efficiency and reduce -- significantly reduce the [ lost ] costs of vehicles, making VinFast more agile and cost-competitive OEM. Like I mentioned in my presentation before, the first model will be released in October this year.

Congratulations again.

Our next question comes from the line of Greg Lewis from BTIG.

I appreciate the comments around the CapEx and I guess, the expected ramp. I was hoping just as we think about the remainder of 2025 and obviously, there's a lot happening with the expansions for the CKD, the continuing R&D. Just kind of hoping you could maybe provide some color around the timing of this CapEx and really as kind of you're thinking about them whole year, when could we see CapEx kind of peak out on -- is that a Q2 or Q3 type of thing we're thinking about?

Thank you for your question. We -- for the CapEx, we plan to spend a total of [indiscernible] billion in 2025. Over 50% of this will go towards research and development, including both R&D expenses and capitalized R&D investments for developing new models and refreshing our current product line. The remaining amount under 50% will primarily be allocated to build our CKD facilities across Asia like [indiscernible].

Okay. Great. And then one other question for me is on the decision to kind of pivot into the bus market. You clearly highlighted Europe and I guess, the core market is around Asia. Kind of curious, as you think about rolling out the bus expansion, where are we in that process? Maybe strategically, how you thought about moving into that sector? And do we kind of have any realizing, I think you just announced this, realizing it's early days and these things don't happen overnight. When could we potentially see VinFast start delivering buses?

Thank you for the question. So we already started delivering buses in big volume in Vietnam, but after testing our [indiscernible] fleet. I think this year, we expect to deliver about -- probably around 1,000 in Vietnam to other operators. We also started the process of selling e-buses in other markets. So we set up the team in Indonesia, in the Europe already, very soon in the Middle East and the U.S. So gradually, we're expanding market-by-market to capture the growth in electric bus penetration.

One moment for the next question. Our next question. [indiscernible] Please go ahead and introduce yourself, please.

Yes. It's Jim McIlree at Chardan Capital. It looks like the average selling price for the vehicles was flat quarter-to-quarter. Can you project what you think the trajectory of ASPs are going to be for the rest of the year?

Thank you for your question. For the Q1 2025, the ASP was largely in line with the Q4 2024, at around USD 15,000. And compared to the USD 19,000 for the full year of 2022 -- 2024. For full year 2025 ASP, it's likely to remain under USD 20,000. We see our smaller model like VF 3 and V 5 effectively contribute around 50% of the delivery. We also expect increasing contribution from the new Green series.

That's very helpful. And then secondly, the adjusted gross margin this quarter was if my data is correct, a little bit higher than -- no, excuse me, it was about even to Q4, even though volumes were much lower this quarter. Can you comment on the variable margin versus fixed costs and your production and when it might be reasonable to expect variable margins to be -- to cross over and then when you would get -- then when you would get the full gross margin to cross over?

Thank you for your question. For this year gross margin, as you know that this quarter, we have the selling -- the delivery is quite like relatively lower than the volume of Q4 last year. For -- to remind that in Q4 of last year, we delivered about 53,000 vehicles compared to the 36,000 in Q1 this year. And especially for the Q1 is typically like the lowest season in the year in Vietnam, primarily due to the Lunar New Year holiday. And also to remind that for last quarter, our gross margin, if we -- excluding the onetime recharging program in inventory write-down charges, that was minus 26%. But if we then, of course, like we're excluding the onetime recharging and inventory write-down charges for this quarter also. So the margin is going to be like minus 20%. So that means it's better than the Q4 2024. This is also the illustration for our effort to improving in terms of the BOM optimization and the production cost, even that for this quarter, that the delivery is relatively lower than the Q4 2024. So the whole company we put the effort to reduce the BOM optimization. I mean, initiatives for the BOM optimization as well as the for the ideas to improve the production cost. That means we improved the variable cost to like, I told, was for the target of the breakeven in terms of the gross margin in 2026, like our guidance previously.

There are no more questions from the phone line. I'll hand it back to the management to continue.

It seems, we have a question on the line. Can you share more details on the new vehicle platform and E/E architecture? What changes are being made to the key modules?

So our next generation vehicle platform is a significant step forward in terms of cost efficiency, commonality, modularity and vertical integration, This is something that we've been planning for the last few years. The new platform will integrate various inhouse development through the [indiscernible]improving energy efficiency [indiscernible] Secondly, electric drive unit or EDU, we are deploying a powerful internal design [indiscernible] providing improved performance while optimizing scalability across all the product lines. And finally, very important is the new E/E architecture. Our zonal Electrical and Electronic architecture is designed internally, reducing wiring complexity and it has our software product capability, which support long-term cost reductions and future profitability as well as sales. In addition to the new platform, we also improved the architecture. The [ top head ] architecture. The [ top head ] have been redesigned from the ground up that lies within the platform [indiscernible] critical opportunity to [indiscernible] Standardized interface and improve manufacturing efficiency without compromising the brand or design flexibility.

Thank you, Madam Thuy. The next question on the line, as we look ahead to expected improvement in profitability, how do you assess the relative contribution of volume growth versus cost optimization?

ThThank you for your question. We expect meaningful contributions from both vertical integration and supplier optimization, but the greater impact will likely come from the BOM optimization and given that our current cost structure, variable cost improvements will have a stronger effect on operating leverage. VinFast is at a unique point where we can pull both levers effectively. Demand and adoption are growing in our core markets, which give us momentum. And also at the same time, our current generation of the vehicles carries a relative high BOM cost. We acknowledge there were only inefficiencies and costly material choices that gives us a significant room for improvement. As volume increase, we also gain more bargaining power with suppliers with clear [ flywheel ], lower costs lead to the better pricing for our customers, which in turn supports further growth in volume.

Our next question, can you elaborate on the rationale and timing of closing VinFast D2C showrooms in North America and Europe?

We are closing the DTC showrooms in North America and Europe [indiscernible] dealership model that we've been pursuing for a while. This will further enhance efficiency and scale of VinFast globally. Our dealers remain strategic partners and continue to play a pivotal role in our growth and market execution. North America and Europe remain our key markets, which we have [indiscernible] longterm. Regarding marketing, VinFast will still engage in direct marketing and branding activities in general and also coordinate with our dealers to execute any sales promotion activities in markets. Regarding aftersales and warranty [indiscernible], VinFast is currently working with[indiscernible] third party service providers [Technical Difficulty]

Madam Thuy, there is a followup question on that. How much do you expect Europe and North America to contribute to volume deliveries in 2025 and '26? And do you plan to continue selling in the U.S. after you run out of it?

We expect Europe and North America [indiscernible] To monitor development [Technical Difficulty] That said, the long-term commitment to this market remains to be seen. Our plan to commence operations in our North [indiscernible].

Thank you, Madam Thuy. The next question on the line, what steps are you taking with key suppliers to further reduce BOM costs?

We've shifted away from turnkey development through a more collaborative engineering model with key suppliers. For example, interior seating, common seat structures are being core developed for reuse across models. Purchases, body and wide and exterior closures. We've simplified design across these models, working with suppliers to lower complexity and cost with sourcing optimized for scale. And with demand that we expect for the economy of scale for the sourcing for this year with the higher volume. Thank you.

Next question on the line. Can you remind us of the liquidity status of VinFast?

As of the 31st of May, Vingroup has disbursed USD 1.2 billion in loans. And our founder disbursed USD 825 million in grants to VinFast. Besides cash and cash equivalents, our liquidity stands approximately USD 2.4 billion, including USD 968 million ELOC facility and the remaining USD 1.4 billion from Vingroup loans and our founder grant. The use of proceeds from the capital injection is for operation and investment activities to support the next growth phase. Our capital development strategy balances near-term growth investments with the long-term sustainability. In 2025, this year, we expect our total cash burn, including OpEx and CapEx to be around USD 2 billion to USD 2.5 billion of which the majority of the OpEx has incurred during the Q1 2025, as we stock up inventories to get ready for sales rampup in the remaining quarter of the year. For the capital expenditure, makes up less than 50% of the total USD 1.6 billion that I mentioned in the early questions that we allocated for the CapEx and R&D combined. The majority of this CapEx is dedicated to develop our CKD activities across the year.

There's a follow up question on profitability. It was reported in local media that VinFast sells [indiscernible] [ 200,000 ] EVs in Vietnam to reach breakeven point. Can you elaborate more on this comment?

Back to the guidance that Madam Thuy already shared that we remain committed to our full year target of at least doubling the 97,000 deliveries in 2024, and continue to emphasize execution, particularly in key Asian markets. Maintaining and strengthening our market leadership in Vietnam is our priority. However, consistent with our disclosure practice, we do not provide guidance or financial breakdown by individual markets. When evaluating profitability, if we adjust for items such as [ NRV ] provisions, depreciation and amortization and one-off expenses from our complementary charging program, we see that certain vehicle models, with sufficient scale are already gross profit positive.

So now we have the final question from the webcast. [indiscernible] refresh rate is like a fundamentally different product philosophy, go-to market strategy [indiscernible].

[Technical Difficulty] And once the product line [indiscernible], we increased a little bit. Given our authentic approach in product development combined with our engineering focus on cost efficiency, [indiscernible] consumer preferences and trends. So long story short [indiscernible] shorter than the industry norm.

Madam Thuy, it looks like we have another question on the line regarding VinFast's commitment to the current and future North American customers in U.S. and Canada. What's the future of VinFast in the U.S.?

The U.S. remains our -- like one of our key markets, and we are committed to it for the long term. This is reflected in the fact that we have made no changes in our plans to have North Carolina facility by 2028. We thank our dealers for their cooperation and support and continue to have the meaningful dialogue as we work together through macro uncertainties. As we close our D2C showrooms in North America, we are also focused on fostering dealer performance and also expanding our dealer pipeline, both in California and across North America. The current market backdrop has provided us with an appropriate window to adjust our execution focus which is why we are flexing the highest priority in Asia in the near term, given this is a reason of where the trajectory for EV adoption is clearer.

Thank you, Ms. Lan Anh, and that concludes today's conference call. Thank you, everyone.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect your lines.