Vietnamese electric vehicle maker VinFast will merge with battery maker VinES under private conglomerate VinGroup in a move that will involve VinGroup chairman Pham Nhat Vuong donating 99.8% of VinES shares to the automaker.
In a Wednesday announcement, VinFast said the acquisition of VinES will come at no consideration other than the former assuming the latter’s debt of $462 million, which VinES used to finance its operations and construction facilities.
To support the growth of VinES until its operations stabilize, Pham Nhat Vuong will provide grants to VinFast for all interest payments related to VinES’s existing loans until 2027, VinFast added.
As of September 30, VinES, established in 2021 with legal capital of $270 million, had consolidated total assets of $711 million. The company operates in the fields of research, development and production of high-quality lithium-ion batteries for electric vehicles, energy storage systems, and other commercial applications.
After the acquisition, VinFast will acquire all rights and obligations of VinES’s assets, including intellectual property related to battery cells and battery packs, together with VinES’s manufacturing facilities, technology, partnerships, and contracts with suppliers.
The acquisition of VinES with its battery technology and modern manufacturing facilities is an important milestone for VinFast in achieving the full integration of its manufacturing capabilities and is expected to promote its competitiveness in the global electric vehicle market, VinFast highlighted in a release.
In particular, the move is expected to help VinFast in the long term, including securing battery supplies, optimizing battery costs by saving at least 5-7%, and accessing research & development on battery technologies.
The acquisition is “an important step towards developing and controlling an integrated supply chain as well as comprehensive manufacturing system to further strengthen our competitiveness,” said Le Thi Thu Thuy, vice chairwoman of Vingroup and Global CEO of VinFast.
In April, VinFast entered into a capital funding agreement with Pham Nhat Vuong, in which the latter and some shareholders would provide grants of $1 billion to VinFast. Besides, Vingroup committed to provide a non-refundable grant of $500 million and a loan of $1 billion to VinFast to support the latter’s growth and global expansion plans.
VinFast had recorded about 10,000 reservations in the U.S. for its VF 8 and VF 9 electric vehicles from the VF8 debut in late 2021 to August 31, 2023, according to the company.