Vietnamese EV maker VinFast reported staggering third-quarter losses of $910.85 million, nearly double the $503 million lost in the same period last year, as the company’s premium pricing strategy crumbles under pressure from cost-efficient Chinese competitors. Despite achieving 47% revenue growth, VinFast’s gross margins deteriorated to negative 56.2%, meaning the company loses more than half the vehicle’s value on every sale.

The deepening losses expose fundamental flaws in VinFast’s expansion-focused business model at precisely the moment when global EV markets are consolidating around profitability rather than growth at any cost.

Burning Cash While Margins Crater

VinFast’s third-quarter loss widened to 24 trillion dong ($910.85 million) from 13.25 trillion dong a year earlier, according to the company’s Friday earnings report. The company’s shares dropped more than 5% in premarket trading following the announcement.

The quarter’s negative 56.2% gross margin represents a dramatic deterioration from the already-troubling negative 24% margin reported in Q3 2024. The company attributed the worsening economics to “higher warranty provision rates and cost of vehicle sold.”

Revenue reached 18.1 trillion dong (approximately $687 million), rising nearly 47% from the same period last year. But revenue growth means nothing when you’re losing money on every transaction.

Doubling Down With $250M in New Debt

VinFast signed two loan facilities during the quarter totaling $250 million, adding leverage to a balance sheet already dependent on continuous cash infusions from founder Pham Nhat Vuong, Vietnam’s richest person who has bankrolled the company since its 2017 inception.

The additional debt arrives as VinFast attempts to “ratchet up its ambitious growth strategy and expand internationally even amid tariff pressures and subdued demand in the United States,” according to Reuters.

Taking on more debt while posting negative 56% gross margins creates a precarious situation. The company is simultaneously trying to cut costs by shifting to a dealership-based model and optimizing its supply chain, but these measures haven’t yet stemmed the hemorrhaging.

Competition Reality Check

Third Bridge analyst Izabella Yan captured VinFast’s core problem succinctly:

“The company has shifted its focus from the U.S. and Europe to other Asian markets but faces similar challenges competing with Tesla and Chinese EVs, with its premium pricing a major hurdle.”

That premium pricing strategy looks increasingly untenable in markets where Chinese manufacturers like BYD are scaling profitably with vehicles priced 30-50% below VinFast’s offerings while delivering comparable or superior technology.

VinFast is essentially fighting a two-front war: against Tesla’s brand dominance and economies of scale, and against Chinese manufacturers’ cost advantages and rapid development cycles. The company’s worsening margins suggest it’s losing on both fronts.

Micro-Mobility Bright Spot

One genuine success story emerged from the quarter: e-scooter and e-bike deliveries soared more than six-fold after Hanoi announced plans to ban petrol-powered motorbikes in the city center starting mid-2026.

This micro-mobility surge demonstrates that VinFast can succeed when regulatory tailwinds align with affordable product offerings. The contrast with their struggling premium EV business couldn’t be starker.

EVXL’s Take

VinFast’s deteriorating financials perfectly illustrate why EVXL has consistently argued that premium-priced, subsidy-dependent EV strategies would collapse in the post-incentive landscape. The company is trapped in exactly the death spiral we’ve documented across multiple Western automakers: spending heavily on expansion while unit economics worsen with every vehicle sold.

The negative 56.2% gross margin isn’t just bad; it’s catastrophic. This means VinFast is losing $1.56 for every dollar of revenue before accounting for operating expenses, marketing, R&D, or debt service. No amount of scale fixes that fundamental problem when you’re competing against manufacturers who’ve already achieved positive margins at lower price points.

As we’ve covered extensively, Chinese EV manufacturers like BYD have proven that the winning formula combines affordable pricing, rapid iteration, and manufacturing efficiency. VinFast chose the opposite path: premium positioning, heavy capital expenditure, and Western market focus. The Q3 results show how that bet is playing out.

The company’s strategic pivot toward Asian markets makes sense geographically, but the analyst quote reveals the core issue: VinFast still thinks it can command premium prices in markets where consumers have access to capable Chinese EVs at half the cost. That’s not a strategy; it’s denial.

The micro-mobility success with e-scooters and e-bikes after Hanoi’s motorbike ban announcement demonstrates that VinFast can win when three conditions align: regulatory support, affordable pricing, and products suited to local needs. Their premium EV strategy fails on all three counts in most markets.

The $250 million in new debt raises serious questions about runway. Pham Nhat Vuong has deep pockets, but even billionaire founders eventually face limits when a company burns nearly $1 billion per quarter with worsening margins. The shift to a dealership model might reduce some capital intensity, but it doesn’t address the fundamental problem: the vehicles cost more to produce than customers will pay.

VinFast’s trajectory mirrors the broader industry pattern we’ve documented: companies that built strategies around government subsidies, premium pricing, and aggressive expansion are getting crushed by manufacturers who focused on cost efficiency and operational excellence. The September 30, 2025 U.S. federal tax credit expiration removed one of the last crutches supporting uncompetitive business models.

The Vietnamese EV maker faces an existential choice: radically restructure around affordable vehicles with sustainable margins, or continue burning through Pham Nhat Vuong’s fortune while hoping something changes. Based on Q3 results, they’re still choosing the latter. That’s unlikely to end well when competitors are profitable at price points VinFast can’t touch even while losing 56 cents on every dollar of revenue.