VinFast Delays North Carolina Factory Until 2028, Focuses on Lower-Cost Markets

VinFast, the Vietnamese automaker, has announced a significant delay in its plans to build an electric vehicle (EV) factory in North Carolina. Originally slated for 2024, the factory’s opening has been pushed back to 2028. This move comes as the company looks to invest in lower-cost markets like Indonesia and India, as reported by The News & Observer.

Strategic Shift Amid Economic Uncertainties

VinFast chairwoman Le Thi Thu Thuy explained the decision during an investor call, stating that the delay is a response to “current macroeconomic uncertainties.” She noted that the move allows the company to focus on markets with policies and cultures more aligned with Vietnam‘s.

“We made the strategic decision to push out the timing of our North Carolina plan in response to current macroeconomic uncertainties,” Thuy said. “This does not change our long-term business plan and is part of ongoing assessment of our key market as a multinational company.”

Financial Struggles and Future Plans

The delay comes amidst heavy financial losses for VinFast. The company reported a loss of $773.5 million between April and June, up from $526.7 million in the same period last year. Since shifting to EV production in 2021, VinFast has lost over $7 billion. Despite these losses, the company assures investors it has sufficient funds to operate through the end of the year, with additional capital avenues for the future.

VinFast aims to deliver 80,000 electric vehicles in 2024, but so far, it has only delivered 22,350 vehicles in the first half of the year. Notably, over half of these sales were to parties related to the company.

The North Carolina Story

Founded in 2017, VinFast initially produced gas-powered cars for the Vietnamese market. In 2021, the company expanded its ambitions to include international markets, with a focus on the U.S. and Canada. In February 2022, VinFast announced plans to build its first foreign assembly plant in Chatham County, North Carolina, pledging to support 7,500 workers.

However, two years later, no significant construction has occurred at the site. The company initially postponed the factory opening from 2024 to 2025, and then to 2028. Thuy explained that the delay is part of a “more prudent approach” given the current economic climate.

North Carolina’s Leverage

North Carolina has some leverage in this situation. The state signed a purchase option agreement with VinFast in November 2022, giving it the right to buy all or parts of the Moncure site if VinFast misses hiring and construction deadlines. One of these deadlines requires VinFast to begin operations by July 1, 2026.

The state also has a clawback provision to reclaim $125 million spent reimbursing VinFast for site expenses if the company creates fewer than 3,875 jobs in Chatham County.

EVXL’s Take

The delay in VinFast’s North Carolina factory highlights the challenges faced by EV manufacturers in the current economic climate. However, it also underscores the strategic importance of expanding into lower-cost markets. As VinFast navigates these challenges, it’s clear that the global shift towards electric vehicles continues to gain momentum.

For more on the global EV market, check out our recent articles on VinFast and Tesla.

What are your thoughts on VinFast’s strategic shift? Leave your comments below.

Photos courtesy of VinFast.