VinFast Auto Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 26, 2024

There are 6 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Vinsas Auto Limited Third Quarter 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I'd now like to hand the conference over to your first speaker today, Ning Yun. Please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. This is Mi Nguyen from VinFast Investor Relations. Welcome to our Q3 earnings conference call. Joining me today are Chairwoman of the Board, Madam Pei Yue and our CFO, Ms. Langh An Nguyen.

Speaker 1

During the call, we will discuss our Q3 performance, business update and present our outlook for the remainder of 2024. After management remarks, we will have 30 minutes for Q and A. We will also reference a slide deck today, which is accessible on the IR website. Before I turn the call over to Madame Tuy, 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 and operating outlook, guidance, macroeconomics, industry trends, company initiatives and other future events.

Speaker 1

These statements are based on the prediction and expectations as of today. Actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the U. S. Securities and Exchange Commission.

Speaker 1

In addition, management will refer to non GAAP financial during this call. A discussion of why we use non GAAP and information regarding the reconciliation of our non GAAP versus GAAP is available in the PR that we issued this morning. You can also find it on our presentation. With that, I would like to invite Madam Pui to start with the management remarks.

Speaker 2

Thank you, Yi, and welcome everyone. It's great to speak with you again and to share the exciting developments at WinFast. Q3 2024 was underpinned by a robust September as we recorded our highest monthly delivery ever in our home market. For the first time, a Vietnamese OEM, which has been around for only 7 years and only pivoted to a pure EV strategy only about 2 years ago, has outperformed international competitors to become the market leader. This marks a historic milestone for Vietnam's automotive industry as it now enter a very short list of countries in which a domestic pure EV player leads the sales chart.

Speaker 2

It also demonstrates that maintaining flexibility and certainly responding to a near term market opportunity is an effective strategy during the early stages of EV transition. Meanwhile, the celebrations that we made to our international strategy has started to pay off as well. September was also the best month in the history of VinFast North American market. Thanks to our growing dealer networks and continuous improvement of our EVs. With 9 month 2024 accounting for 55% of the full year target, we expect to finish 2024 on a strong note and reiterate our 80,000 vehicle delivery target.

Speaker 2

As always, FinFas remains committed to balancing growth and profitability, while being nimble to respond to market opportunities. Now let me discuss our Q3 deliveries in more details. During the quarter, we delivered 21,912 EVs, representing 66% quarter over quarter and 115% year over year increase. E scooter delivery in Q3 were 18,894, representing a 44% sequential increase and a 33% year on year decrease if you count the last delivery of GSM last year or 118% increase excluding delivery of GSM. We also observed Q3 2024 B2C electric car sales grew at a robust 163% quarter over quarter and 4 97% year over year.

Speaker 2

Now let's turn to the drivers of each of our markets. Let's start with Vietnam. With the right product and sales strategy, WinFast successfully set a trend and created a new demand in our domestic markets, where retail sales grew 159% quarter over quarter and 504% year over year in Q3, 2024. Thanks to our VF3 and VF5, For the first time, Vietnamese customers realized that they could have decent, cool looking, strong built EVs at a very reasonable price. VF3 deliveries began during the Q3 and rapidly gained popularity in Vietnam for its unique personality and practical features, including a 10 inches entertainment screen, spacious storage and backup sensors.

Speaker 2

Combined with low running cost and a sturdy built, customers see it as an ideal fun to drive urban care and the excitement continues to build as eager buyers await their turn to receive their VF3. VF5 appealing to both personal and business users is also helping us drive the green mobility shift beyond being a top choice for retail customers. A unique trend is the growing adoption of EVs by traditional taxi operators. This shift is driven by the economic benefits of reduced maintenance and stable electricity cost compared to the volatile gasoline prices. Transitioning to EVs also allow many transportation businesses to lower expenses and improve profitability.

Speaker 2

We view this as a major step forward in developing sustainable transportation options in Vietnam. We believe our whole market holds significant potential beyond the success that you already have seen and we have observed many positive trends that bring us confidence on its long term EV adoption. According to the International Organization of Motor Vehicle Manufacturers, car ownership in Vietnam remains low, with only 55 cars per every 1,000 people as compared to 82 in Indonesia. At the same time, 35,000,000 people are expected to enter Vietnam's middle class by 2,030, significantly boosting the number of consumers with the purchasing power to consider EVs. During the same period, the Vietnam Automobile Manufacturers Association forecast that EV ownership in the country will rise to 1,000,000 units.

Speaker 2

Our home winning strategy in Vietnam give us a solid foundation for our overseas expansion and allow us to develop our strategy expertise to drive long term excellence. Let's turn now into our international markets, where we have quickly adapted our strategy and utilized our unique position to capitalize on favorable changes in our target markets. During Q3, twenty twenty four, approximately 9% of deliveries were to international markets versus a year ago when international markets only accounted for 3% of delivery. In North America, we are now managing some owned showrooms and have pursued a dealership model as well with 42 showrooms. This has enabled us to gather valuable feedback and market our products to wider base of customers.

Speaker 2

Our adaptive enhancement sales offer and industry leading 10 years warranty made owning a wind fast electric car more practical and accessible option for those seeking good value solutions. In Canada, we observed 3 consecutive months of growth in July, August September with sales up 70% quarter over quarter. With increasingly positive response from this market, we have decided to officially add the stunning 7 passenger, 3 row electric vehicle, VF9, recently on November 2019, and we are planning to introduce VF6 and VF7 at the right time next year. Many local dealers have indicated that 2025 present a promising opportunity to launch our new beautifully designed and strong performance vehicles. This should position us to complete more effectively with industry peers in North America market and address the gap in the market for reliable, reasonably priced EVs.

Speaker 2

In late October, we launched our brand in the Middle East and opened our 1st UAE dealership in Downtown Dubai, offering a full range of electric vehicles with an integrated service workshop for complete customer support. Let's move back to markets closer to us. I'm excited to talk about the new kits on the block. In Q3, Indonesia became official with the first deliveries of VF E34 to customers. VF V has also been delivered recently, while VF III is planned for next year.

Speaker 2

VF V and VF III are our responses to the local market appetite for affordable products, which accounted for about 2 thirds of the overall market vehicles in 2023. As of October 31, we had successfully opened 17 showrooms with numerous plans in progress to further expand our brand presence and enhance options for retail customers. Dealers who visited our plant and test drove our car have shown nice surprises and positiveness about our product design and quality. We've been working closely with our prestigious dealership group and other partners to provide customers with attractive purchase options. A strong after sales support is key to keeping customers satisfied.

Speaker 2

We have established a 3rd party partnership to provide a 20 fourseven hotline for roadside assistance to our customers and set up a part distribution center warehouse under DSV, a logistics solutions provider. Indonesia is an interestingly unique market for us. It is a market with large potential and with many EV players. We have identified 2 key pillars for our Indonesia strategy. First of all is battery leasing.

Speaker 2

As anticipated, customer response to battery leasing has mirrored what we observed in Vietnam when we first launched EV. This one of a kind offering in Indonesia will remain a key differentiator for our tailored go to market strategy, driving a growing wave of early adopters. The second pillar to our Indonesia strategy is our ecosystem. GSM is set to launch in Indonesia soon with anticipated impact expected to be substantial, very much like in Vietnam. Potential customer will have unique opportunity to experience our products in real life before making their purchase decision.

Speaker 2

This not only enhance VinFast brand and product presence, but also integrates the VinFast experience seamlessly into daily life. In addition, the CKD factory is progressing as planned and our commitment to this market remains unchanged and strong. A quick update on the Philippines. Drawing from success in our home market and similar to the approach in Indonesia, we understand that building a comprehensive ecosystem is key to earning customer loyalty. We have set up a part supply warehouse, established logistic partnership and ensure 20 fourseven roadside assistance support for our customer in the Philippines.

Speaker 2

We launched the VF3 first in the Philippines to leverage our existing product market fit, given the demand for an urban mobility offering that is suitable for Manila traffic and currently have opened for reservation 3 models in the market. As of October 31, we have established 8 showrooms in the Philippines with 3 located in Manila and other regions. Before we move on to our outlook, let me provide some updates on our global showroom and charging network. As of October 31, 2024, we had 173 showrooms, up from 130 in June as we expanded our dealership network. In Vietnam, we completed our Poon transition into local dealer network with all 91 store operated by dealers.

Speaker 2

Meanwhile, about 50% of our 82 international showrooms are dealers owned. This approach lowers CapEx and optimizes expansion costs by utilizing dealers' own locations, allowing us to focus on supporting our dealers with marketing activities and leveraging their local expertise to accelerate sales. The impact is already shown in our financial, which our CFO will share later. Meanwhile, FinFAST customers' access to charging points remains extremely comprehensive in the industry. By the end of Q3, our customers had access to over 1,000,000 ChargePoint globally, either at WinFast owned station in Vietnam or through third party options internationally.

Speaker 2

In North America, FinFas customers can access approximately 140,000 smart, public and third party networks, all easily locatable through the FinFas app. The FinFas app aggregates and simplifies the public charging user experience. It allows users to plan travel routes and easily pay as you go for charging within the app, instead of having to use multiple apps and digital wallets for different third party providers. Looking ahead, there's plenty to be excited about at VinFast. Earlier this month, we announced restructuring and financial support from Vingroup and from Mr.

Speaker 2

Farm Network, VinFast founder, which was designed to equip VinFast with sufficient resources at this critical juncture on our journey toward becoming self sustaining. The loans from VIN Group and grants for Mr. Farm amidst currently unfavorable market conditions allow VINFAS to stay focused on executing our business plan and avoid fundraising on unreasonable terms. About 2024 delivery target, as I mentioned earlier, we are reiterating our 80,000 delivery target for 2024 and with recent performance in October, we believe we are on track. With that, I will hand it over to our CFO, Lanai for the financial highlights.

Speaker 3

Thank you, Madam T and hello everyone. It's great to speak with you again. I'm pleased to share that Q3 2024 was in line with our internal forecast driven by an acceleration in our top line and an improvement in profitability as cost loss and net loss narrowed significantly. As we discussed in Q2 2024, optimizing costs with our sacrificing customer experience remains a top priority. Q3 2024 net revenue was US512 million dollars a 42% quarter over quarter and 49% year over year increase.

Speaker 3

Our assessable segment, which includes VF3 and VF5, accounted for 35% of revenue this quarter, reflecting our continued focus on accelerating EV adoption to a wider population. Q3 2024 gross loss was US123 $1,000,000 and gross loss margin was minus 24%, a significant improvement from Q2, 2024 gross loss of US226 million dollars and gross margin of minus 62.7%. On a year over year basis, Q3 2024 gross loss margin of minus 24% was approximately 300 basis points narrower than the Q3 2023 gross loss margin of minus 27%. The improvement of gross margin over the Q2 of 2024 was driven by increased sales, improved costs and decrease in charge to write down the carrying value of inventories. In Q3, we continued to see average units' bill of material costs for electric cars declined by 8.3% and average unit production costs for electric cars declined by 20.1%.

Speaker 3

In terms of SG and A, SG and A expense of US144 $1,000,000 represents a 10% decline quarter over quarter and a 23% increase year over year. This was still much lower than revenue growth. As a percentage of sales, SG and A was 28% compared to 44% in Q2 as we benefited from economies of scale. R and D expenses as a percentage of sales were 17% or US87 $1,000,000 R and D declined 21% quarter over quarter and 42% year over year. We expect R and D as a percentage of sales to continue to trend downwards in the coming years, given that we have preloaded our product development work.

Speaker 3

The incremental spending on R and D going forward will be mostly on technological enhancements, facelifts and market specific adjustments. EBITDA and EBITDA margin in Q3 2024 was minus US232 million dollars and minus 45.3 percent respectively, a significant improvement from minus US484 million dollars and minus 134.4 percent in Q2 2024 and from minus US400 million dollars and minus 116.8 percent in Q3 2023 respectively. On cost savings and higher volume have held our net loss for the quarter declined to minus US550 million dollars versus minus US779 million dollars in Q2, narrowing by 29% quarter over quarter and 15% year over year. CapEx in the 3rd quarter was US132 million dollars a 21% increase quarter over quarter and a 33% decline year over year. The sequential increase in CapEx was due to our investments in wrapping up the constructions in our India and Indonesia factories as planned.

Speaker 3

Cash flow from operations was minus US465 million dollars a 42% increase quarter over quarter from minus US326 million dollars in Q2 2024. On a year over year basis comparison though, cash flow from operations improved by 47% from minus US871 million dollars in Q3 2023. Total cash burn for Q3 2024 was US596 million dollars This figure accounts for both cash flow from operations and cash flow from investing. About cash balance and liquidity, we ended Q3 2024 with US79 million dollars in cash and US968 million dollars in Elok facility.

Operator

On top

Speaker 3

of this, we have recently announced an additional capital injection of US3.5 billion dollars by the end of 2026. This amount includes US1.4 billion dollars loans from Vingroup and US2.1 billion dollars grant from VinFast Powder. Overall, I'm pleased by the business results in Q3 and happy that we have a clear visibility on overall financial position to support our growth and profitability plan. With that, I'd like to hand it back to Madame Cui for her closing remarks.

Speaker 2

Thank you, Lanai. Looking ahead to 2025, DynFas is preparing for a growth territory similar to what we have seen in 2024. We have started setting our footprint in several new markets this year. It is not the first time we have done so and with the progress in the highly demanding markets of North America, we feel more confident and more equipped in our further expansion journey. Mindful that we are still a relatively newcomer in the EV industry, we are taking all necessary steps to remain competitive in the long term.

Speaker 2

We strive to be nimble in our execution as we stay true to our mission of creating a sustainable future for everyone. Building a sustainable green mobility business is a big undertaking and our recent liquidity boost will enable management to concentrate on executing our profitability road map. It does not mean that VinFast will not explore and seize external funding opportunities when the time and the deals are right. Producing high quality electric vehicles is a complex task, one that requires unwavering dedication and fortitude to navigate ongoing uncertainties. Every day, we are learning how to make durable and exciting EVs that will be a key part of the global transition to green mobility.

Speaker 2

The path to green mobility is challenging, but our commitment to this future is resolute, because the future is without question, electric. Let us now open for Q and A.

Operator

Thank you. We will now begin the question and answer session.

Speaker 1

Thank you, operator. We have the first question from the floor. Can you share any color on your confidence in hitting the full year 2024 target, given that you have only met 55% of the 80 ks as of Q3. Also ramping up to 40 ks in the last 3 months can be daunting. Do you see any challenges to production?

Speaker 2

Thank you. We're very confident about hitting the 80,000 target, especially having seen October November numbers as well. We had a very robust Q3 number where we hit a number of milestones. We became a number one OEM in Vietnam and have exceeded our internal forecast for deliveries in the U. S.

Speaker 2

In Canada as well, we saw 3 consecutive best selling months. So we continue the traction to solidify our market leading position in October in Vietnam and for the 1st 10 months in 2024 in the domestic market. We expect that this momentum will continue through Q4. And like I said, having seen the number in October November, we're very confident to hit the 80,000 delivery target.

Speaker 1

Thank you, Ma'am Thuy. We have the next question from the floor. You have talked about BOM optimization for the last two quarters. Can you share more specifics on what areas are you focused on with regards to BOM optimization? And how does this impact your EV architecture?

Speaker 3

Thank you, Nick. We have a number of planned initiatives for form optimization that are undergoing the testing and validation phase, optimizing and upgrading an electric vehicle, electric electronics architecture is complex, edibles that given that the safety is the overarching priority. We also have the look for the discussion with the many long term relationship with the suppliers that we support us with better terms and in terms and in payment. Beside, we also have the we are also optimizing some features like ADAS features for various modules and better sourcing for the other components that we have the very good result for the negotiation or favorable material price changes.

Speaker 1

Thank you, Ms. Langan. I see there are some hands for live question. Operator, please open the line.

Operator

Thank you. We will now take our first live question from Andre Sheppard from Cantor Fitzgerald. Please ask your question, Andre.

Speaker 4

Hi, good evening, everyone. Congratulations on the quarter and thank you so much for taking our questions. Tui, I was just wondering if you wouldn't mind just walking us through the liquidity one more time. Just given the recent $3,500,000,000 capital injection, can you maybe just remind us when you're expecting I guess, just when you're expecting to receive this and what is the expected cash runway as a result of this recent capital raise? Thank you.

Speaker 2

Good morning, Angie.

Speaker 3

As we have previously shared the inception of US3.5 billion dollars wind tax over a 2 years period to 2026. We will disclose the timing and amount from grants and loans as it happens. Our liquidity provision, as I just mentioned in the remarks, that at the end of Q3 2020 4 stood at US1 $1,000,000,000 which includes US79 $1,000,000 in cash and US968 million dollars in e lock facilities. We expect conservatively that our cash burn to be roughly in line with the historical spend even as a revenue growth is expected. The use of proceeds from the capital injection will go into our CapEx and debt repayment.

Speaker 3

The major CapEx items to consider, including our factories, ongoing battery leasing expenses and CapEx R and D. For the our capital deployment strategy, balances near term growth investment with the long term sustainability And our committed capital support gives us the confidence in executing our growth plans while maintaining financial discipline.

Speaker 2

So Andrea, just to add a little bit to that, right, as you could appreciate that when we did the calculation for all these all sort of approval at Windfast as well as Green Group level, We calculated to make sure that we have enough runway until we get to EBITDA like to get to profitability. Even in the worst case scenario where we cannot raise capital from external sources, we believe this is not going to be the case. We believe that the market will get better, but to give us confidence that we can keep our head down and focus on executing on our plan. Our shareholders have already provided us with sufficient capital so that we can get to profitability.

Speaker 4

Wonderful. That's super helpful. I appreciate all that detail. Maybe just as a follow-up, there was a very good improvement in gross margins this quarter. Just wondering if you're still on track to achieve positive gross margins next year and kind of what that path between here and there might look like?

Speaker 4

Thank you.

Speaker 2

For now, we still maintain the our forecast for 20252026. We are in the middle of the budget season right now and making changes to the 5 year plans. So we expect that we're going to be able to provide more guidance at the end of this quarter.

Speaker 4

Wonderful. Thank you so much and congratulations on the quarter again. I'll pass it on.

Speaker 2

Thank you.

Operator

Thank you. Our next question comes from the line of Tyler Di Mario from BTIG. Please ask your question, Tyler.

Speaker 5

Hi, and thank you for taking the questions. Appreciate the time. I wanted to follow-up on some of the comments in the press release about the responding to increasing demand, the new EV facility in Vietnam, the completely knocked down concept. I guess, I'm just curious to get a little bit more color on kind of the rationale for that facility. It seems like it's just going to be to manufacture the BF3 and BF5, which makes sense given the demand you're seeing.

Speaker 5

I guess I'm just curious kind of why pursue this route and kind of just the strategic rationale here for this new facility? Thank you.

Speaker 2

Thank you, Tyler. We still have a backlog for VF3. We've been trying very hard in the last month to deliver on the backlog orders of BS3, but we don't think we'll be able to finish it this year. And the demand for BS3 and BS5 continue growing. These are the best selling models for Vietnamese market.

Speaker 2

Having seen the other markets like Indonesia, like Philippines, we see the same trend as well. And we see the excitement for the VF3 3 pretty much everywhere globally. So this CKD factory dedicated to VF 3 and VF5 is to meet the growing need for those affordable models.

Speaker 5

Okay, great. And then just the follow-up here on the India and Indonesia facilities. I guess given those comments, how does this maybe change how you think about the production capabilities of those 2 facilities? And then also on those 2, I mean, at this point, what's still left to be completed on those 2 to get them up and running next year?

Speaker 2

So the India and Indonesia facility are still necessary for the tax reasons in those countries. So these are the countries that are quite like very protective of the domestic manufacturing. So having the facilities in those markets necessary to be competitive. The new CKD facility in Vietnam are meant to meet the need for mostly domestic market and maybe some other markets as well. So they are complementary with each other.

Speaker 5

Okay, great. Thank you for the time. I really appreciate it. I'll turn it back to the queue.

Operator

Thank you. I'll now like to hand back to the room for questions on the floor.

Speaker 1

Thank you, operator. We have the next question from Tuk Tang. In the 9 months 2024, what is the contribution of the Vietnamese market to overall car deliveries for 2025? How many EVs or expected growth versus 2024 do you project to deliver? And what would be the projected split between Vietnam and international markets or B2C and B2B channels?

Speaker 3

9 months 2024, Vietnam contributed around 90% as the market continued to be the stronger foundation driving our growth. Being fast in Vietnam market, we saw 9 months of 2024. Result is very like encouraging. We growth up 500 and 4% year over year. This is also the highest year over year growth in the Vietnam industry and also the significantly higher than the other players.

Speaker 3

So for the 2025, internally, we are in the process of reviewing 2025 business plan and the budget. We're not providing the formal guidance until around end

Speaker 2

of this year or next year.

Speaker 3

However, what we can share is that we expect increasing market share in Vietnam to be one of the strategies that would continue.

Speaker 1

Thank you, Ms. Langham. We have the next question from the line. Can you elaborate more on the finance lease for the new factory?

Speaker 2

Okay. So the new facility is on the long term lease structure, so similar to the sales lease back kind of structure where we don't have to invest initial capital and we pay the lease on annual basis. And we have the option to buy back to have the option to buy the facility from the lessor in the future. This structure allow WinFast to carry out prudent management of capital and enabling the company to allocate resources efficiently while balancing growth and profitability.

Speaker 1

Thank you, Madam Thuy. We have the next question regarding ASP trends. Can you comment about your ASP is really fast overly focused on lower price models and targeting lower income countries?

Speaker 2

In

Speaker 3

Q3, ASP was US21000 dollars per unit compared to US24000 dollars per unit in Q2, a decline of over 10% in ASP, driven primarily by we introduced a VF3 into the mix. We expect to see ASP remain within range during the early adoption stage where customers tend to prefer smaller cars, low price task to explore and experience. We expect ASP to pick up once the early adoption wave is done and customers are more comfortable with EVs, thus becoming more willing to pay for higher priced, bigger cars. However, ASP is one is only one part of the equation. The other part is unit growth.

Speaker 3

Our objective as in introduction of the more affordable models is to capture a particular underserved cohort of consumers that prioritized value in those dollar terms and environmental impact. So ultimately, strong unit growth should offset the ASP decline and lead to the sustainable revenue growth.

Speaker 1

Thank you, Ms. Langham. We have the next question from the floor regarding VF9 in the U. S. Exciting to see that VinFast introduced another model in North America, especially at the time when you your peers seem to be retreating or putting their EV plans on hold.

Speaker 1

Can you share what the initial dealer feedback has been on the VF9? And which models will be the VF9 be competing with? Is your target demographic for the VF9 different from the VF8?

Speaker 2

Thank you. So VF9 has been a long awaiting model in the U. S. If you recall originally, right, 2 third of the preorders in the U. S.

Speaker 2

Were for the VF9. This is Vietnam is one of the very few 7 seater, 3 row electric car models on the market globally. We believe that the VS9 will be an ideal vehicle for large families, delivering the premium quality and luxurious experience while maintaining excellent value. And is going to be a good product for the market in the U. S.

Speaker 2

Adding the VF9 will help us widen the customer base in North America market where there are currently quite limited choices for quality and reasonably priced 3 row EVs.

Speaker 1

Thank you, Madam Cui. Next question from the line regarding comment on related party customer, GSM. Can you share the deliveries to GSM in the Q3 2024 as well the guidance for future deliveries to GSM? Thank you.

Speaker 3

For TSM in Q3 2024 accounted for 22% of the our total volume less than the Q1 because you as you may remember that in Q1, GSM accounted for 46% of the total volume. So in the total 9 months of the 2024, total the volume from related party is much less significant than it was in last year 2023, like 38% versus 72%. So we see that the GSMS B2B customer has been strategically has pushed for the EV adoption, bringing WinPath EV closer to the consumers through real life experiences using a brand awareness, not just in Vietnam but also in the markets that GSM is expanding into. As we have been able to grow our customer base, we also expect GSM contribution to VINFAS revenue will be less significant in 2024 compared to 2023.

Speaker 2

Maybe can I share a little bit about the GSM, right? Because last year, I remember we had a lot and a lot of questions about related party transactions, why you had 72% of your sales to your related party. And this is exactly how we explained it last year and it turned out to be exactly that way. GSM help us get the customer into the vehicles, get them familiar with the EVs and help us sell more to the retail customer. And this happened, I mean, it increased like almost 6 fold compared to last year, the sales to retail customer in Vietnam.

Speaker 2

Another interesting fact is actually other taxi companies in Vietnam started buying EVs now that they see they can save I mean, some of the taxi company told me that, oh, we can save like up to 38%, 40% of operating costs within E. So we had contract with like 120 different taxi companies in Vietnam. So like 90 something percent of the taxi companies in Vietnam, some of them buy a few cars, some of them have contracts for like 3000, 5000 cars in a few years. So GSM was great and has been great to us. And the introduction of GSM in other markets also expect to have a similar act.

Speaker 2

We might sell to GSM a little bit more at the beginning, but bring us a lot more results by bringing the retail customer and B2B customers.

Speaker 1

Thank you, Madam Thuy. Back to the operator, please open the line.

Operator

Thank you. We will now take our next live question from Dan Ives from Wedbush. Please ask your question, Dan.

Speaker 4

Yes, thanks. It's a solid progress to the team. So can you talk about what the if we think about 2025, what the ramp is going to look like when you think about Indonesia, in the U. S. Like is that going to be something where it's more of like a second half ramp or first half?

Speaker 4

Can you just maybe talk about as much as you could explain as we go in 2025? Thanks.

Speaker 2

Hi, Dan. So 2025, we still think that Vietnam will contribute a significant path to the deliveries in the year. And it's actually a good thing that we have Vietnam as the whole market, the foundation market that allow us to get closer to profitability. We also expect that we just barely started Indonesia, in the Philippines. Next year, we're opening in India.

Speaker 2

We continue having traction in North America, the Middle East as well. So we believe that next year, we're going to expand further in international markets. We need to balance between growth and profitability so that balancing act will continue into next year as well.

Speaker 4

Okay, great. And then with Vietnam, does it feel like going I guess we go as you think about going into 2025 versus 2024, does it feel like you have like a better line of sight in terms of like deliveries, growth, variability as we go into 2025 versus 2024? Can you just maybe compare? Thanks.

Speaker 2

We started gathering a lot of momentum in Vietnam. In September, we celebrated the first time in Vietnam and probably in the history of many countries that a local OEM, bit older international brands in Vietnam. We were ahead of Toyota. We were ahead of pandan. October reaffirmed that number as well.

Speaker 2

We are I think in Vietnam, we hit about 11.5 1,000 deliveries in October alone in Vietnam alone. And Toyota was like 9,000, something like that. So year to date, we are ahead of everybody else in the market, EV and internal combustion engines combined. So that momentum and we started feeling the momentum. People started just started talking about EVs and started moving to EVs.

Speaker 2

So you can feel very clearly the sentiment and the momentum on the market. And we don't even we didn't have all the models for the whole year in Vietnam, right? So we think that next year is going to be a great year for us in Vietnam with all the models out, a lot of issues fixed and all the momentum that we have altogether in 2024. So this year, we anticipate that by the end of the year, we're going to have about a little bit shy of a quarter of the market share in Vietnam for the whole year. Next year, maybe we get 50% of market share, who knows, but that's the target.

Speaker 2

And in addition to that, we would continue growing international markets as well.

Speaker 4

Thank you.

Speaker 1

Thanks, Ben.

Operator

Thank you. I'll hand back to the room for questions on the floor.

Speaker 1

Thank you, operator. We have the next question from the line regarding charging solution in your market. Could you let us know how you intend to be competitive overseas when it comes to charging and related services.

Speaker 2

So at WinFast, we can see the services is a very important factor for the EV experience. So we keep repeating good quality products, affordable pricing and excellent after sales service, so that we will be leaving we staying true to that. And we build our brand loyalty through our battery leasing to warranty packages and add on connected services as well as charging solutions. WinFast vehicles have through V Green to our sister company, which was part of WinFast before, have connection to more than 1,000,000 charging points all over the world. In we have access to WinFast customer have access to more than 90% of the smart public third party charging stations in the U.

Speaker 2

S. We have access to about 900,000 charging point in Europe. In Vietnam, V Green charging network is growing very quickly and is expanding to other markets as well. The good thing about WinFast charging is the WinFast charging WinFast app actually aggregates and simplifies the public charging user experience, update live data to every minute and allowing the user to plan the travel routes and easily pay as you go for charging within the app. So instead of having to use like multiple apps and different digital wallet for different third party providers.

Speaker 2

So we continue experiencing the we continue improving the charging experience for our customers.

Speaker 1

Thank you, Madam Thuy. We have the next question from the floor. What are the main international markets contributing to sales in 9 months 2024? And which models are driving those sales?

Speaker 3

For the international markets contributing the main to the sales in 9 months 2024, we account for the North America. So the model is to VF8 as a sold model. But we have just introduced a VF9 to this market. And we see that the North America market now has started to pay off that for the our calibration that we made. In September September was also the best month in the history of being fast North American market, thanks to our growing dealer network and continuous improvement in our EVs.

Speaker 3

Taking Canada is an example. We observed 3 consecutive months of growth in July, August and 2010.

Speaker 1

Thank you, Ms. Langan. We have the last question from the floor. What are the key milestones we should be on the lookout for the remaining months of the year or heading into 2025?

Speaker 2

So I think in 2025, we continue focusing on the domestic market. This is like very, very important for us. But the groundwork that we have laid in 2024 for international strategy, we continue to gather momentum into 2025. Firstly, we continue to diversify our product offering in North America with the recent delivery of VF9. And we're looking to add like VF6 and VF7 to the market next year.

Speaker 2

Secondly, we have put in place 2 key levers for our Indonesia strategy, battery leasing, which is already being offered

Speaker 4

in the

Speaker 2

country and get a lot of interest and the upcoming launch of GSM in Indonesia as well. For the Philippines, we expect to take the same approach as Indonesia. We also have new CKD facility in Indonesia and India coming online in 2025, which will be an integral part to our international strategies and allow us to be competitive in these two important markets. And finally, in 2025, we planned our first ever Investor Day in the first half of twenty twenty five. So we hope to be able to see a lot of you, and I hope to introduce our leaders and different people from management team to the investment community in the New Year.

Speaker 1

Thank you, Madam Thuy. That was the last question we got from the line today. Thank you everyone again for joining Windfrost and for your continued support. If you need any clarification, please don't hesitate to let us know by sending an email to irwinfrostautodot com. Goodbye and take care.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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Earnings Conference Call
NL Industries Q3 2024
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