Short-circuit investment risks: VinFast cites cash burn, competition, bad reviews & more

RALEIGH – VinFast recently updated its investment prospectus – including risks – for potential investors in the proposed merger worth as much as $23 billion with Black Spade and an ensuing stock offering. That’s not uncommon.  Companies do when discussing investments. But …

These risks include some issues the Vietnam-based company has already been dealing with – from critical reviews to financial losses, battery fires, a vehicle recall and more.

Black Spade shareholders could approve the merger at any time. VinFast has said the offering will come sometime in the coming months – before year’s end.

But let’s take a look at the risk list.

Beginning with the merger itself, VinFast laid out pages of risks numbering in the thousands of words just after the company broke ground for a huge manufacturing plant in Chatham County.

VinFast partner approves deal in key move for $23 billion merger

Here are the risks as VinFast indicated in bold face. The financial performance of the company is reprinted in whole.

The details with each other bulleted point can be found in the prospectus.

However, VinFast also says the “risks and uncertainties are not the only ones that VinFast faces.”

VinFast pours foundation on EV assembly plant to employ 7,500 in Chatham County

Here’s the list:

• VinFast will require significant additional capital to support business growth. VinFast expects to fund its capital requirements through additional debt and equity financing, including related party financing. Such capital might not be available on commercially reasonable terms, or at all, and could, among other things, be burdensome and lead to dilution of your shareholding in VinFast.
• VinFast faces risks associated with being a new entrant in the EV industry and the marketing and sale of its EVs in international markets where it only recently began delivering vehicles.
• VinFast’s brand, reputation, public credibility and consumer confidence in its business could be harmed by negative publicity, and VinFast may not succeed in growing its brand in markets outside Vietnam.
• VinFast’s long-term results depend upon its ability to successfully introduce and market new products and services, which may expose VinFast to new and increased challenges and risks.
• The automotive market is highly competitive, and VinFast may not be successful in competing in this industry.
• VinFast’s markets its EVs in multiple markets that use different driving range testing standards while its EVs are in different stages of development. In addition, the driving range and overall performance of VinFast’s EVs will depend on many factors beyond VinFast’s control, including driving habits and conditions. Therefore, the advertised driving range, certified driving range and actual driving performance of VinFast’s EVs may all differ. As a result, VinFast may be subject to negative publicity, and its business may be adversely affected even if such press is inaccurate.
• VinFast may be unable to adequately control the costs associated with its operations.
• VinFast’s historical results of operations are not, and its past growth may not, be indicative of its future performance or prospects.
• VinFast is dependent, directly and indirectly, on suppliers for component parts and raw materials. Suppliers may fail to deliver components and raw materials according to VinFast’s schedule and at prices, quality and volumes acceptable to it.
• VinFast’s success will be dependent upon its ability to maintain relationships with existing suppliers who are critical and necessary to the output and production of its vehicles and to create relationships with new suppliers.
• The process of establishing manufacturing facilities outside of Vietnam, and expanding VinFast’s capacity within Vietnam, may be subject to delays or cost overruns, may not produce expected benefits or may cause it to not meet its projections for future production capacity.
• VinFast’s reservations may not result in completed sales of its vehicles and its actual vehicle sales and revenue generated for their sales could differ materially from the number of reservations received.
• VinFast’s future growth is dependent on the demand for, and upon consumers’ willingness to adopt EVs, which may be affected by various factors, including developments in EV or alternative fuel technology.
• If there is inadequate access to EV charging stations or related infrastructure, VinFast’s business may be materially and adversely affected.
• The unavailability, reduction or elimination of government and economic incentives or government policies which are favorable for EV manufacturers and buyers could have a material adverse effect on VinFast’s business, financial condition, results of operations, cash flows and prospects.
• If VinFast fails to maintain an effective system of internal control over financial reporting in the future, it may not be able to accurately and timely report its financial condition, results of operations or cash flows, which may adversely affect investor confidence.
• VinFast has identified material weaknesses in its internal control over financial reporting. If VinFast’s remediation of such material weaknesses is not effective, or if it experiences additional material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, its ability to produce timely and accurate financial statements and comply with applicable laws and regulations could be impaired.
• VinFast’s vehicles currently make use of lithium-ion battery cells; lithium-ion battery cells have been observed to catch fire or vent smoke and flame.
• VinFast collaborate with a range of third parties, including for certain business partners for key aspects of its business, and any failure of these partners to deliver their services adequately will adversely impact its business, operations, reputation, results of operations and prospects.
• VinFast may experience issues with the recycling of its lithium-ion cells and battery modules, which may harm its business and reputation.
• VinFast’s research and development efforts may not yield expected results.
• VinFast’s vehicles rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design defects, or if VinFast is unsuccessful in addressing or mitigating technical limitations in its systems, or if it is unable to coordinate with vendor and suppliers in a timely and effective manner, its business could be adversely affected.
• VinFast’s warranty reserves may be insufficient to cover future warranty claims, which could adversely affect its business, financial condition, results of operations, cash flows and prospects.
• If VinFast’s vehicle owners customize its vehicles with aftermarket products, or attempt to modify its vehicles’ charging systems, the vehicles may not operate properly, which may create negative publicity and could harm VinFast’s brand and business.
• VinFast may be subject to risks associated with autonomous driving technologies.
• VinFast’s business depends on the continued efforts of its people and its ability to recruit new talent and its operations may be disrupted if it loses their services.
• VinFast may be compelled to undertake product recalls or other actions, which could adversely affect its reputation and brand, and its business, financial condition, results of operations, cash flows and prospects.
• Pandemics and epidemics, natural disasters, terrorist activities, political unrest and other geopolitical risks could disrupt VinFast’s production, delivery, and operations, which could materially and adversely affect its business, financial condition, results of operations, cash flows and prospects.
• VinFast will be subject to risks associated with foreign exchange rate fluctuations and interest rate changes.

The post Short-circuit investment risks: VinFast cites cash burn, competition, bad reviews & more first appeared on WRAL TechWire.

delivery
hardware