Yahoo Finance VinFast shares more details on why it has delayed promised North Carolina car factory
This summer, the Vietnamese automaker VinFast announced it would delay its promised North Carolina auto factory until 2028 — four years later than the company’s initial timeline. On an investor call Friday, the loss-making automaker shared more about what went into this decision.
Pushing out the North Carolina plant has freed up money for the electric vehicle producer to invest in the lower-cost markets of Indonesia and India, VinFast chairwoman Le Thi Thu Thuy said. She added these markets, in contrast to North America, have “policies and the culture a lot closer to us (in Vietnam).”
“We made the strategic decision to push out the timing of our North Carolina plan in response to current macroeconomic uncertainties,” she said. “This does not change our long-term business plan and is part of ongoing assessment of our key market as a multinational company.”
On Friday, VinFast reported another fiscal quarter of heavy losses. Between April and June, the company lost $773.5 million, an increase from losses of $526.7 million over the same three-month period last year. Since 2021, the year VinFast shifted toward producing electric vehicles, the company has lost more than $7 billion.
The company assured investors it has sufficient money to operate for the rest of this year, with additional capital avenues for the future. VinFast is owned by the wealthiest person in Vietnam, Pham Nhat Vuong, who has vowed to continue funding the carmaker.
VinFast aims to deliver 80,000 electric vehicles in 2024. However, during the first six months of the year, the company delivered only 22,350. Furthermore, just over half of these sales were made to parties related to the company, financial records show.
VinFast in North Carolina: Fast announcement, then delays
Founded in 2017, VinFast at first produced gas-powered cars with a focus on its home market. Then in 2021, the company broadened its ambitions to sell both within Vietnam and to international customers. Early in this transition, VinFast eyed expansion into the U.S. and Canada.
In February 2022, the carmaker reengaged North Carolina officials about building the company’s first foreign assembly plant in Chatham County, on a 1,765-acre site roughly 30 miles southwest of downtown Raleigh. Following a hastened timeline, the state compiled an economic incentive package and, the following month, announced VinFast’s arrival.
Pledging to support 7,500 workers, the $2 billion factory was to be the state’s first major automobile assembly plant, fulfilling a decades-long goal of many North Carolina officials. The announcement came shortly after Hyundai bypassed Chatham County for a new electric vehicle assembly facility (The South Korean car company instead selected a site outside Savannah, Georgia.)
Two years later, no significant construction has occurred at the VinFast site, located near the unincorporated community of Moncure. Having initially postponed the factory from 2024 to 2025, the automaker told The News & Observer last spring it was “conducting a thorough review and evaluation of all aspects of the construction process for our North Carolina factory.”
Then in July, VinFast confirmed its latest projections called for opening the factory by 2028.
“EV has not been in favor this year,” Thuy told investors Friday. “So after (the first quarter) we took a more prudent review of our strategy and decided to take a more prudent approach for the rest of the year. So, delaying the plant in North Carolina is part of that prudent approach.”
North Carolina will likely have leverage to purchase the Chatham site from VinFast if it wishes. In November 2022, the state commerce department signed a purchase option agreement with VinFast, which gave North Carolina the right to buy all or parts of the Moncure site should the automaker miss concrete hiring and construction deadlines. One of those deadlines is for VinFast to begin operations by July 1, 2026.
The state also has a clawback provision to reclaim $125 million it spent reimbursing VinFast for site expenses. If the EV maker ultimately creates fewer than 3,875 jobs in Chatham County, the state can recoup 100% of this reimbursement.
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