VinFast Auto Ltd.

Good day, and thank you for standing by. Welcome to VINFAST's second quarter 2023 financial results webcast conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. To ask a question via the webcast, please use the Q&A box available on the webcast link anytime during the conference webcast. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Ms. Carol Yuan, head of IR. Please go ahead.

Thank you, everyone, for joining our first earnings call as a public company. Before I turn it over to 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 performance of the company, delivery volumes, financial and operating outlook and guidance, macroeconomic and industry trends, company initiatives, and other future events. These statements are based on the predictions and expectations as of today, and actual events or results may differ due to 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 measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this morning, as well as in the investor deck.

We are excited to welcome everyone to VinFast's first earning call. Thank you for joining us. Before I detail some of our recent milestones, I wanted to reiterate our business and mission. VinFast was founded in 2017 with the goal of emerging as a leader in the future of smart mobility through our intelligent, thoughtful, and inclusive full-scale mobility platform focused primarily on designing and manufacturing premium EVs, electric scooters, and electric buses. I'm proud to have spearheaded the formation of VinFast and lead the execution of our strategy from the outset, delivering our first vehicle less than two years later. We are excited by what we see as a tremendous global opportunity, especially in the EV space, and believe we are uniquely able to differentiate ourselves by our premium quality products at an inclusive price, as well as what we call a seamless ownership experience. We have established our operational facilities, including sales network in Vietnam, North America, and Europe. And moving forward, we plan to expand our coverage to Asia Pacific, Middle East, and other potential markets globally. We benefit from highly automated manufacturing capabilities and an integrated supply chain. We are backed by the support and resources of Vingroup, Vietnam's largest private conglomerate and our chairman . And our public listing in the U.S. provides VinFast with additional sources of capital and better position us to achieve our mission of creating a greener future for everyone. In August, VinFast became a US listed company on the NASDAQ Stock Exchange, following the completion of our business combination with Blackspace Acquisition Company. This was a proud moment for me and for the entire VinFast team, marking a significant milestone in the company's global expansion and reflecting a powerful vote of confidence in our vision. We broke ground on a new manufacturing site in North Carolina, signifying our commitment to global expansion and developing our diversified supply chain in North America. The project is the single largest investment by a Vietnamese company into America. It also marks the largest economic development initiative in North Carolina's history. The facility is targeted for commissioning in 2025 with an expected annual capacity of 150,000 vehicles per year in Phase 1. We enter into a capital funding agreement with Vingroup and its founder, Chairman Pham Nhat Vuong, who committed another $2.5 billion in funding to help accelerate VinFast's growth. We continue to deliver our sophisticated vehicles to markets around the world, most notably continuing to bring VF8 models to the U.S. We have worked with our globally recognized design partners, primarily Pininfarina, to ensure each of our vehicles offer distinctive style while providing a unique blend of advanced technology and hand craftsmanship. During the 75 days of electric mobility exhibition we held throughout Vietnam, we introduced the VF3, a two-door mini electric car model designed specifically for the Vietnam market. Boasting a compact and contemporary design, the VF3 drew significant interest as it offers numerous benefits, making it suitable for a wide range of application and operating environment. GSAM, the first Vietnamese EV taxi operator and an affiliate of VinFast, officially launched in Hanoi and Ho Chi Minh City. VinFast entered into vehicle sales agreement with GSAM for up to 200,000 e-scooters and 30,000 EVs, including the VF8. We have E34 and VSI. We continue to expand our global footprint. By the end of second quarter, VinFast had 245 showrooms and workshops for e-scooters and 122 showrooms globally for electric vehicles. I would like also to spend some time providing an overview of our near-term priorities. We have ambitious plans to deliver seven models in Vietnam, North America, Europe, and Asia over 2023 and 2024, such as delivering the VF9 in North America by the end of the year, as well as targeting first delivery of the VF6 later this year and the VF7 and VF3 in 2024. We are focused on building our production capabilities in North Carolina to better position us to serve the North American market. At VinFast, we strive for continuous improvement in the quality, functionality, and performance of its vehicles. And we remain committed to bring further innovation and technological enhancements to our lineup. Over the long term, we are focused on several strategic priorities to grow and enhance the business. We will expand our global footprint into 10 market clusters where we expect high EV demand growth, Vietnam, North America, Europe, Indonesia, India, and the Middle East. We have also identified between 40 and 50 potential markets globally to engage high quality distributors to import and distribute VinFast cars into local markets starting from 2024. We will further expand our global manufacturing capability through investment in technology, infrastructure, and equipment to add volume within our existing facility in Haiphong, as well as opening an additional factory in the US, Indonesia, and other potential markets to utilize our global supply chain. We will continue to focus on automotive technology through our in-house R&D and external partnerships, continuously providing over-the-air software updates and improvements to make our vehicles smarter and more reliable for our customers. We will build our customer-centric mindset through our extensive services. We intend to rapidly expand our sales network globally We are partnering with dealers and distributors while simultaneously driving cooperation with international ride-hailing companies, including GSM. In conclusion, we are proud of our accomplishments this quarter and look forward to a bright and greener future together. With that, I would like to turn the call over to David, who will discuss our financial performance for the quarter. David.

Thank you, Madame Thuy. I also want to express how excited I am to be speaking with everyone in our inaugural earnings call. And now our second quarter 2023 results by the numbers. We delivered 9,535 EV vehicles, reflecting a staggering fivefold increase from Q1 2023. The significant growth of EV sales was driven by deliveries of VFE34, VF8, and VF9, and the launch of the VF5. We recorded revenue of $334 million, translating to over fourfold increase quarter-on-quarter, predominantly through sales in Vietnam. The second quarter of 2022 does not include revenue from the VF8 and VF9, and the first quarter of 2023 does not include VF5 sales since we commenced delivery of those models in Vietnam in September of 2022. March 2023 and April 2023, respectively. This increase was partially offset by a decrease in the number of ICE vehicle sales volume as a result of our phasing out of production of ICE vehicles in furtherance of our plan to fully transform into a pure EV player, and also a decrease in sales of e-scooters, which was attributable to a decline in the sales volume of our older e-scooter models. We had a considerable improvement in profitability. We realized a gross profit of negative $114 million and EBITDA of negative $350 million, translating to a 22% and 18% improvement quarter on quarter, respectively. Our operating expenses decreased by $43 million quarter over quarter, thanks to lower R&D expense. following an extensive period of investment to SOP and product launches. CapEx was flat as spending normalized after a period of investment in our production facilities. We had a period of much stronger cash flow. Cash flow from operating activities was negative $85 million, a substantial improvement from negative $800 million in Q1. On the operations side, we added 10 new showrooms, primarily in Europe, and 21,000 charging points while having ongoing discussions with other North American charging network operators. In terms of guidance, Q2 results met our expectations. And for the year, we are still targeting 40,000 to 50,000 overall deliveries. We expect CapEx to remain at the current level for 2023 to 2024. Proceeds from the D-SPAC and the strategic investor, coupled with funding support from the chairman and Vint Group, gives us sufficient runway to grow in the coming years. We also continue to look for opportunities to strengthen our balance sheet. We remain on track to deliver the VF9 in North America and the VF6 in Vietnam by the end of this year. and we are excited for the VF7 and VF3 to begin deliveries in 2024. With that, I will turn it over to Thuy for closing remarks and the operator to open our Q&A session.

As mentioned earlier, we are excited by the tremendous opportunity in front of us. We are driven by execution excellence in everything we do and combine passion, speed, and forward thinking to our organization to achieve our mission of providing everyone with easy access to smart, safe, and environmentally friendly electric vehicles to achieve sustainable mobility at the global scale. We have accomplished a great deal in our short history and believe we are well positioned to deliver on our strategic goals through several key business strengths and initiatives. We look forward to keeping you updated on our progress and maintaining regular dialogue. Thank you again for all your ongoing support so far. Now I would like to turn over to the operator for the Q&A session.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. To ask a question via the webcast, please use the Q&A box available on the webcast link. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brian Dobson from Chardon Capital Markets. Please ask your question, Brian.

Hi, good morning. Thanks for taking my question. Hi. Do you think you could vibrate on the long-term? We can't hear you, Brian. Can you hear me now?

Yes, better. Hello. Yes, it's better.

Oh, good. So thanks for taking my question. You've identified Indonesia as a key potential market. Do you think that you could elaborate on some of the long-term economic trends you're seeing that have led you to that decision?

Let me take that question. So if you look at the demographics of Indonesia, there are 280 million people in Indonesia. Each year, there's about 2 million passenger vehicles produced, and half of it is for consumption in Indonesia, and the other half is for export. Each year, there's about 5 to 7 million motorbikes that are being consumed. So the consumption in the country alone is a lot. Also, we... Going into Indonesia, the government is open and there are some tax benefits that we can take advantage of that will allow us to be competitive in Indonesia. And finally, we are going into Indonesia together with our battery company as well to take advantage of the battery ecosystem that is coming up. together in Indonesia right now. So we see a lot of potential in Indonesia.

Excellent. Thank you. And then as a follow-up, in light of the recent UAW strike and the potential for rising labor costs, how do you view manufacturing in the United States? Do you believe that positioning your factory in North Carolina gives you a competitive advantage? And how did you decide to locate your factory there?

So we started looking for manufacturing sites in the U.S. from end of 2021, before IIA. And there's a lot of criteria. There's a long list of criteria, and we're looking for a big site for expansion, not only for VinFast, but also for VinAS for the battery, as well as the supplier pack. We shortlisted the list, and there were three sites, and North Carolina is one of them.

All right. And I guess to expand upon that, would you expect labor costs to rise in the United States over the next few years?

Right now, I think it looks higher than what we had in our model before. However, with the IRA, and the tax benefits that we can benefit from, you know, that our customer can benefit if they make sense to manufacture in the US.

Yes, very good. Thank you very much. And congratulations on your first quarter out of the gate.

Thank you. Hi, our next call is from our web, our web, online webcast from Justin. How many B2B units in the 26,000 EV unit reservations as of end of Q2 2023? How many cars have you delivered as of the end of August 2023, of which how many to the U.S.? What is your guidance on car delivery in the first half of 2023? Excuse me. What is your guidance on car delivery in the second half of 2023 and 2024? Which models are the main drivers?

Hi, Carl. Yeah, let me take those questions. It's Dave here. So, I think we've already provided guidance on the earnings release for the entirety of 2023, between 40,000 and 50,000 units. So, if you take the first half deliveries of 9,500, you can apply a significant uptick in deliveries and production numbers for the Q3 and Q4 of this year. We obviously have the capacity to manage and deliver those numbers, so we're very excited about prospects for the business. Now, we aren't providing a breakdown on those deliveries at a model or a country level. That's not unusual, and we're copying and following our peer guidance in terms of the level of detail that we will provide and the cadence over which we provide it. Of the reservation numbers quoted up until the end of Q2, actually all of those reservation numbers are related to individuals, so retail reservations. Our B2B discussions are separate from that and would be in addition to those numbers based on different discussions that we're having with hire car companies, fleet operators and other kinds of shared mobility operators in different jurisdictions. What we have obviously disclosed is our commitments and our arrangements with Green Smart Mobility, the Vietnamese e-taxi operator. We're very excited about expecting to deliver up to 30,000 EVs and up to 200,000 e-scooters to GSM over the course of 2024 and to 2025. I hope that addresses that question. Thank you, David. The next question is,

How many car sales do you need to EBITDA break even for the current Haiphong factory and upcoming U.S. factory? At that break-even level, how many percent is that from Vietnamese domestic car sales? More further reason why to build a TKD facility in the Indonesian market in terms of labor costs and tax incentives?

Sure, let me take that question as well. Now, again, we're not providing exact numbers on what we need to produce in order to break even in either location. And again, that's not unusual for a company in our position. Obviously, break even from both a top line and an EBITDA basis is really a function of so many different variables that we can't predict at the moment that it's not possible to project that number. But as a ballpark, we think that the company can be breakeven profitable when we're producing north of 200,000 vehicles for sale, depending on the composition of those vehicles. We've obviously opened the dialogue and outlined our investment plans in Indonesia as an additional ideal source for a manufacturing facility, a CKD manufacturing facility in that part of the world. I think Manitouise already outlined the rationale for that, which includes the items such as, you know, the total market opportunity there, labor cost is indeed a factor and an attractive one, as are access to underlying raw materials and key EV raw material sources and other government incentives to produce locally that would encourage us to open that facility.

Thank you.

We have a question from the telephone line. Next question comes from George from Connecticut. Please ask your question.

Hi, everyone. And thank you for taking my question. And congrats on your first quarter out. My question is more long-term oriented. I'm curious as to whether you could share your thoughts on the proper level of vertical integration at VinFast when you're balancing things like margins, supply chains, internal employee counts? What are the things that you think over time you want to bring, you want to insource versus those that you think are better left to the merchant market? Thank you.

Hey, let me take that question. So if we look at VinFast right now, we're quite vertically integrated at our factory. A lot of it has to do with strategically, we wanted to develop and manufacture components that are important to EVs, like the e-motor, like, you know, even battery or, you know, a lot of other components like the MHU in the vehicle. So that was a strategy. Some of the reason was because of, you know, of the COVID time and the disruption in the supply chain. So we ended up making those components. But all in all, VinFast is quite vertically integrated right now. I think that the decision is driven by the cost and the long-term strategy of the company. So we might be a little bit different when you come to the US plant as well as Indonesia plant.

Do you have any follow-up, George?

Thank you for your time. That'll be all. Congrats.

Thank you. We'll be taking our next question from the line of Laura Lee from Deutsche Bank. Please ask your question, Laura.

Hi. Congratulations on the success we've gained in the first quarter. And what we can see is engaging, such as exciting but competitive industry, especially in the United States. So my first question will be, what's your thoughts on the competitive landscape and what's the unique advantages that enables you to stand out? And my second question is about your sales model in the States. Are you considering partnering with the dealers and are there any updates you would like to share?

Thank you. I'm sorry, can you repeat the second question about the sales model?

Yeah, are you considering partnering with dealers?

OK, I got it. Let me take this question then. About the competitive landscape and how we stand out, I think we, first of all, we're the only one, I think, that has the whole lineup of of vehicles, of EVs, from the Mini, the VF3, all the way to full-size three-wheel SUV, the VF9. And four of them are already on the market. Two are coming pretty soon, and the VF3 coming toward the end of next year. So having the vehicle, I mean, our mission is to make EV accessible to everyone, meaning to all different segments. So having the vehicle in all different segments is powerful. Our cost base is very low compared to other OEMs in Vietnam, compared to other OEMs in other locations. So that's another advantage in the long run. And another thing is we do have support from our parent company, BING Group, and our chairman. So not only the financial support, but all the other types of support from a big group that had three listed companies and very familiar with running a listed company. So all in all, we think that we have a lot of advantages, and especially the whole market is moving to electrification. So we're not fighting for a shrinking pie per se, but we are just following the trends. Only a second question about the sales model. As announced earlier, we are pivoting into the dealership model as well. So right now we're talking with multiple dealers in all different states in the U.S. right now, and we should be able to announce pretty soon. Thank you.

Okay. Well, thank you for the cover.

Thanks. Thanks, Laura. Hi. Our next question is from the webcast. Of the 40 to 50,000 targeted deliveries for this year, how many of these EVs will be sold to GSM in Vietnam? Can you also break down the expected deliveries across Vietnam, the U.S., Canada, and Europe? What's driving the demand for VinFast cards outside of the GSM delivery, which is an affiliate of VinFast? Is there any indication whether the recall then may have impacted demand in the U.S. market? Thank you, Jonathan.

So, let me take some of those questions. Thank you, Carol. So, I guess firstly, in terms of the GSM delivery, the numbers that we have disclosed are of the 11,300 vehicle deliveries throughout the first half, about 7,100 have been delivered to GSM. That's a mixture of VF8, VFD34. And this is part of our strategy to really expand the experience of EVs in Vietnam for the Vietnamese people who haven't got the experience of direct EV ownership. It's important for us to make sure that We're getting as many people driving the e-taxis and passengers and experiencing the EVs as possible. So it's a core part of our strategy and will continue to be for the next several quarters until we've completed the GSM deliveries. As with some of the other guidance, we will not provide detail in terms of avenues and channels of sale or model, and that is normal for a company in our position. We're just following our peers in that regard. In terms of some of the international markets and the deliveries, I think really we're just getting started so I think that we outlined the timeframe around delivery of vehicles to the European markets later this year so that's very exciting that we begin deliveries to Europe and we're also just really getting started on the delivery of vehicles into Canada and the US as well and you'll start to see an uptick in of deliveries in Q3 substantial uptick in Q3 numbers versus the prior Q1 and Q2 numbers. I think there was a part of the question that asked about recalls and its impact and really out of an abundance of caution what we did was we identified issues with some of the software in the car and proactively engaged and recalled those vehicles to make sure that they were the highest quality as we were delivering the vehicles to customers. So we haven't had a large number of deliveries to date, but that will significantly ramp up in Q3 and Q4 for that reason. I think it's worth highlighting, of course, that the substantial number of vehicles that We have demonstrated the ability to deliver in Vietnam and the strong customer following and customer brand loyalty we do have there that we expect to continue to drive ongoing brand acquisition in Vietnam. So we're very excited about prospects in Vietnam and all of the other market opportunities that we're opening up and sales channels that we're opening up as well.

Thanks, David. Our next question is also from the website. What is your view on the current price war in the U.S.? For example, the current price of Tesla Model X is lower than the VF9, let alone now the Model X is eligible for federal tax credit of $7,500. How do you decide when it is appropriate to reduce prices or add other sales incentives to increase demand or make BinFast models more competitive in the U.S.? What is the competitive advantage of BinFast EVs versus other EV companies in terms of features, price strategy, and quality? What is the customer group target in the U.S. and Europe?

Let me take this question. So we have been watching the market very carefully in each of the markets that we are in, and we've been evaluating and adjusting our pricing accordingly. I think about the federal tax credit of $7,500. Now that we're not manufacturing in the US, our customers are not benefiting it if they buy it outright or they get loan financing for it. However, if the customers have a lease from the bank, they can still benefit from $7,900 tax benefits. Most of our customers lease the vehicles anyway, so they can still benefit from the tax benefits. We, about pricing, we evaluate all the time. Our vehicle, I mean, our philosophy about our product is always a premium quality product, affordable pricing, and excellent after-sales service. So those are the three pillars that we follow in any product within VinFast. Thank you.

Thank you. Next telephone question comes from the line of Dan Eyes from Wetbush. Please ask your question, Dan.

Yeah, thank you. My question is, how are you balancing geographically your build-out? You know, U.S., Europe, obviously across Asia. I mean, is there like a prioritization? I mean, that obviously becomes a high-class problem. But can you just walk through that strategically? How do you make sure that you're building out your geographic footprint?

So we met, we always take pictures into different markets. We met all the countries in the world into different markets. Pretty much two models, two kinds. So there's certain markets in the model, the first model, where we will control the distribution. So like, you know, Vietnam, obviously, US, Indonesia, for example. So we will control the distribution in the country and we might open some of our showrooms. We definitely develop the dealership network And we might, depending on the requirements, open a factory as well. So there's certain markets that belong to this category. And then the rest of the markets, there are a bigger number of the markets that follow model two, where we select a capable distributor in the markets. And the distributor will be responsible for developing such markets and having the dealers open the showrooms and servicing the vehicles. We have a roadmap of which markets to enter first and why and balance it with the resource availability within the organization as well. As you see from the history, we started out in Vietnam. and very clear direction to North America and selected countries in Europe. And then earlier this year, we started going into ASEAN, which is almost like our home market, and some of the markets in the Middle East.

Thank you. Great. Thank you.

Thank you. Our next question is from the webcast. Can you please update on the capital raising plan post-BINFAST listing? Any potential divestment or capital injection from pipe investors? David, do you want to take it?

Oh, I think we lost it before we got kicked out. Okay, let me take that question. We have been working on capital raising plan for BINFAST because the opportunity ahead of us is enormous. So we've been working on various plans. Right now we, I mean, you've seen the F1 for the resale of about 46 million shares of our chairman who will contribute 100% of the proceeds to the company. And there are a few other plans and hopefully we can make the announcement at the appropriate time.

Thank you, Thuy. The next question is, which year do you expect BSS to make a profit?

We are not allowed to provide guidance that way, but I guess we've said many times that in the next couple of years, we should be able to be profitable.

The next question is regarding manufacturing in the U.S. Since mid-fast cars aren't manufactured in the U.S., does that mean that BFS cannot get the tax benefit from the government? Is that statement true?

I think I answered that question before. First of all, starting from 2025, we're going to start manufacturing in our North Carolina plant, and then our customer will be fully manufactured. can fully benefit from the tax credit. Right now, our customer, if they buy the car outright or get the loan financing on the vehicle, they won't be able to get the tax credit. But if they take a lease on the vehicle, then they can still benefit from the tax credit. Most of our customers lease the vehicle, so most of our customers still benefit from the tax credit right now.

Our next question is, can you provide an update regarding the strategic investment on Goshen of $150 million? Thank you. Go ahead.

That commitment, which was done in parallel with the merger with Black Spade, was up to a $150 million commitment and was subject to the approvals by Goshen to be able to make that foreign direct investment. They've been going through that process and have substantially completed the capital investment at the moment. Yeah, very, very positive and glad to have them as a strategic investor in the company.

Thank you, David. The next question is from Igor. What is your take on the competition from Chinese EVs, which are very competitive and also already present in Indonesia or Asian or SEAN?

Let me take that question because I look at that market. I think, needless to say, the Chinese EV companies are pursuing all the markets aggressively, and you see them in a lot of the markets. However, the EV market is expanding, so we think that there's enough room for a lot of players, not just one or two players. And the markets that we penetrate are slightly different from the markets of some Chinese players. And I think that even in the markets like Indonesia or other Asian markets, there's room for us and for other players as well.

Thank you. Carol? Yep. The next question is, Does your vehicle guidance of $40,000 to $50,000 for 2023 include e-scooters?

No, it does not. So that's just pure EVs across all markets. The e-scooter business, we're not providing a specific guidance number on it, but we're very comfortable with that business. It continues to grow domestically. And we're looking at opportunities to expand it internationally as well.

Thank you, David. The next question is from, oh, go ahead.

As a reminder, to ask questions, please press star 11 to ask a question via the webcast. Please use the Q&A box available on the webcast link.

Hi, we just got another question. You have filed a registration document to lift lockups on some of your investors. Can you explain the reasons for this and how it would affect your funding? When do you expect the lockups to lift?

Yeah, thanks, Charles. So we have indeed made that filing and the objective here is, as most people on this call are aware, the liquidity currently in the stock as it was post-merger with Black Spade was quite low. And that was principally due to the large redemptions that were received from investors in the Black Spade SPAC. So the net free float and liquidity in the shares post-listing was quite low. We've obviously seen a reasonable amount of volatility in the stock. Our objectives in the short and medium term are to increase liquidity in the stock and to raise capital for the funds and the operations of the company. So the objective is to where sales of stock are from the insiders in the company, principally from the majority shareholders, The objective is to take funds that are raised from those sales and to reinvest them back into the company, to operations of the company, and that will continue to fund the growth over the course of this year and next year.

Thank you, David. The next questions are, what's the burn rate for VinFast? At this burn rate, until when will the $2.5 billion funding support from Vingroup and Chairman last, considering the group's plans to build factories in the U.S. and Indonesia?

Sure, so our CAPEX runs at the moment at about $350 million per quarter and that's principally CAPEX that's devoted to the expansion of our manufacturing facilities in different locations and the development and finalization of the vehicle models. So the capex on that is expected to taper off as we finalize the production and the development of the models. We've already given a timeframe around the delivery of the models into U.S. and European markets, and we'll have finalized the delivery of the full model portfolio to Vietnam in the first and second quarter of next year. So the CAPEX will taper off. It'll give a substantial runway with the funding commitments, but I won't give a specific timeframe. It'll be a function of other funding sources that we are tapping into for the ongoing construction and expansion of our facilities.

Thank you, David. Next question is related to our e-scooter business. Can I ask about the financials of your e-scooters? Is it profitable yet? And what is the strategy going forward?

So the e-scooter business is slightly profitable and we still continue to invest in it in developing new models and obviously as we expand capacity for the operations and manufacturing overseas the inclusion of e-scooter operations is part of what we consider in that expansion but the strategy we very much like the business it's very efficient and We have great ambitions for growing the business in Vietnam and elsewhere. And as we scale it up, operations and operating margins will improve throughout the course of next year and beyond.

Thank you, David. The next question is, can you explain why related party liabilities increased from $600 million from Q1 to Q2? Is the $2.5 billion of related party liabilities different from the funding agreement with the chairmen?

So the related party liabilities are primarily related to borrowings from Vingroup. So that increase is related to ongoing company borrowings from Vingroup. Vingroup obviously provides a substantial amount of support for VinFast and has done over the course of its development and will continue to do so until VinFast is able to operate on a standalone basis. So, yeah, I think it's explicable in the context of that ongoing funding support from Vingroup.

Carol, any more questions? I believe those are all the questions that we have on our line right now.

All right. Thank you very much for all your questions. I'd now like to turn the conference back to Carol for any additional closing comments.

Thank you again for everyone joining our call this morning. If anyone has any further questions that come up, please reach out to our investor relations email and we'll answer them. Have a great day.

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.