The Asian Development Bank (ADB) has mobilized a $135 million climate financing package for Vietnamese automaker VinFast to manufacture the country’s first fully-electric public transport bus fleet and first national electric vehicle charging network.
The ADB assistance aims to support Vietnam’s efforts to achieve its net-zero greenhouse gas emissions by 2050 and expand high-tech manufacturing industries, the bank announced Monday.
The package comprises 7-year tenor financing, including a $20 million loan funded by ADB, parallel loans of $87 million facilitated by ADB as the mandated lead arranger, and concessional financing of $28 million, the bank said.
“This project delivers a high-impact, sustainable transport solution for Vietnam while helping it meet its climate goals and supporting the growth of climate finance in the region,” said Suzanne Gaboury, director general, ADB’s private sector operations department.
She added, “Asia and the Pacific is the frontline of the global fight against climate change, and private sector projects like this one with innovative partners such as VinFast are crucial to help its countries decarbonize their economies.”
VinFast’s Global CEO Thuy Le said, “We see this as a vote of confidence in our efforts to become a global smart mobility company that offers environmentally friendly public transportation, and to advance Vietnam’s transition to a low-carbon economy.”
This climate financing is certified by the Climate Bonds Initiative, a scientifically-based standard for labeling bonds, loans and other debt instruments which contribute to addressing climate change.
ADB said in the release that it has partially offset the project’s risks by utilizing concessional financing through its managed trust funds comprising loans from the Australian Climate Finance Partnership funded by the Australian Government (ACFP), the Clean Technology Fund (CTF) and a grant from the Climate Innovation and Development Fund, which is funded by Goldman Sachs and Bloomberg Philanthropies.
Parallel loans were also mobilized by ADB from Export Finance Australia, the Finnish Fund for Industrial Cooperation, Oesterreichische Entwicklungsbank AG, and Switzerland-based Responsibility Investments AG.
Additionally, the project includes a technical assistance of $950,000 from the ACFP and the CTF, focused on raising consumer awareness about e-mobility’s economic, environmental, and social impacts to help advance its market penetration. This assistance will also help promote the role of women studying for or working in fields related to science, technology, and mathematics, according to ADB.
Vietnam’s transport sector accounts for 18% of annual greenhouse gas emissions, and its decarbonization, through options like e-mobility, will directly impact the country’s ambition to achieve net zero emissions by 2050, ADB says.
Established in 2017, VinFast is Vietnam’s first full-fledged carmaker and electric passenger vehicle manufacturer.
A subsidiary of Vingroup, Vietnam’s largest private enterprise, VinFast develops electric cars for the domestic and international market, and is investing in a nationwide network of fast-charging units to support its electric vehicle expansion in Vietnam.