VinFast's Losses Widen as Gross Margins Remain Deeply Negative Amid Funding Dependence

What happened

A recent article notes that VinFast's losses have mounted into billions without narrowing, contrasting with progress by peers like Rivian and Lucid. The DeepValue report reveals that VinFast's gross margins deteriorated from -41.1% in Q2-2025 to -56.2% in Q3-2025, showing no inflection in unit economics despite record Vietnam deliveries. This is exacerbated by reliance on related-party sales, which made up ~26% of Q3-2025 deliveries, and a shift in subsidy costs from the founder to VinFast Vietnam starting in 2025, tightening reported economics. Funding risks are heightened due to Vingroup backstop arrangements with occasional covenant breaches, and cash burn persists with negative free cash flow of $4.6 billion VND as of Q3-2025. Consequently, the investment case remains precarious, hinging on imminent margin improvement that current data and external commentary do not support.

Implication

The persistent deep losses and negative gross margins indicate that VinFast's volume growth has not translated into profitability, challenging the scale narrative and increasing dilution risk. Related-party sales and shifting subsidies obscure true demand, making the business heavily dependent on ecosystem support that may not be sustainable long-term. Funding dependencies, with covenant breaches noted in filings, could force accelerated liquidity actions if economics do not inflect soon, as highlighted in the report's thesis breakers. Without visible improvement in the next 1-2 quarters, the equity is likely to face downward pressure, aligning with the 'POTENTIAL SELL' rating and bear scenario implied value of $1.80. Therefore, investors should monitor quarterly disclosures for gross margin trends and related-party mix, but current evidence warrants caution and potential exit if conditions worsen.

Thesis delta

The news article confirms the DeepValue report's assessment that VinFast's losses are not narrowing, reinforcing the existing thesis without material shift. Both sources highlight the same underlying issues: deeply negative gross margins, reliance on related-party sales, and elevated funding risks. Thus, the investment call of 'POTENTIAL SELL' remains valid, with increased emphasis on the need for gross margin inflection in upcoming quarters to avoid further downside.