Vietnamese EV start-up VinFast announced a “prudent,” 3-year delay in the opening of its first U.S. assembly plant. It’s the latest in a series of setbacks for the automaker which suffered a wave of harsh reviews for its initial offering, the VF 8 crossover.
VinFast broke ground for the U.S. plant in July 2023.
VinFast is delaying until 2028 the opening of the $4 billion assembly plant it has been building in North Carolina, the latest setback for the ambitious EV start-up.
The announcement wasn’t entirely unexpected, company officials previously notifying state and local officials that work on the plant was being slowed and scaled back.
“We have adopted a more prudent outlook that is carefully calibrated to near-term headwinds, taking into full consideration the realities of market volatility and potential challenges,” said Madam Thuy Le, chairwoman of the VinFast Board of Directors.
The latest setback
The VinFast assembly plant in Haiphong, Vietnam.
Founded in 2016, VinFast initially began building licensed and modified versions of the BMW X5. It subsequently announced plans to go all-electric with vehicles of its own design. The first model, the midsize VF 8 SUV, was expected to go on sale in the U.S. in December 2022 but was pushed back until the following March. It subsequently received harsh reviews following a spring 2023 media drive event.
The company has since delayed the debut of several more models, including the bigger, 3-row VF 9 that was supposed to reach American showrooms before the end of 2023. Smaller models, including the VF 6 and VF 7, have also been pushed back, though senior company officials last month told Headlight.News they are still determined to bring them to the U.S. in the coming year.
Complicating matters, VinFast has run up escalating losses – red ink coming to $618 million during the first quarter of 2024 — requiring its billionaire founder to pump in more financial support. VinFast shares – created as a result of a SPAC merger last year – have tumbled sharply from an early high of $93.00 a share. Investors did appear to regain confidence on word of the factory delay, however, shares climbing above $4.70 Tuesday afternoon. They hit a low of $2.25 back in mid-April.
The plant delay
VinFast CEO Le Thi Thu Thuy said the delay reflects market realities.
In a statement, VinFast said the North Carolina plant now won’t open until sometime in 2028, three years later than had originally been announced during a groundbreaking ceremony 12 months ago. The move, it explained in a statement, will help “optimize its capital allocation and manage its short-term spending more effectively.”
There seems little reason to add capacity at this point, several observers told Headlight.News, considering the slow build-up of demand for the VF 8. In its announcement, VinFast lowered its forecast for 2024 to 80,000 of its EVs, down from an earlier projection of 100,000. Even that could prove a challenge. Americans purchased just 21,747 of the electric SUVs during the first half of this year – though that was a 92% year-over-year increase.
Nonetheless, Chairwoman Thuy struck an optimistic note, asserting that, “Our robust long-term strategy and proven execution abilities position us well to meet the evolving needs of the dynamic global EV market.”
More VinFast News
- VinFast Shows Off Concepts at CES, Including EV Pickup
- VinFast Shifts Focus from U.S. to Europe
- Shakeup at troubled VinFast: Vietnamese automaker names new CEO, CFO
Downsizing
The VinFast VF 8 got off to a slow start amidst harshly critical reviews.
North Carolina won the seemingly plum project after agreeing to millions of dollars in tax breaks and other incentives. Only months after breaking ground for the 995,000-square-foot factory in July 2023, VinFast began advising state and local officials of plans to cut back on the project.
“In December 2023, VinFast submitted revised foundation plans that changed the footprint and square footage to 782,255,” Chatham County public affairs officer Karen Lusk told The Carolina Journal.
The company recently submitted a request for permission to further downsize the project while also indicating it would be delayed beyond the original 2025 start date.
North Carolina Could Push Back
North Carolina Gov. Roy Cooper was a big VinFast booster when the deal was announced. But the state now could seek to recoup some of its incentives.
The state incentives were based on VinFast meeting several targets, including the $4 billion investment, as well as the hiring of 7,500 local workers.
The cutbacks and delays in construction and hiring could create further financial headaches for the automaker. Authorities could reduce or even end financial assistance. The state could also force VinceFast to sell it back the land if it misses various hiring deadlines, the first set for July 1, 2026.
While VinFast may see reason to slow down construction in North Carolina it continues to see opportunity abroad. Bloomberg reported last week that the company is seeking a $250 million bank loan to allow it to complete a new assembly plant in Indonesia. Other reports suggest the company wants to set up a second assembly plant in India. The first is expected to go operational by mid-2025.
0 Comments