On May 29, 2024, a source told Reuters that the Vietnameseelectric car(EV) maker VinFast isconsidering delayingthe construction of its $4 billion manufacturing factory in North Carolina.
This follows the news that the company sold less than a thousand cars in 2023. After launching in 2017, the company has focused solely on EVs since 2022 but hasn’t made a profit yet.
VinFast EV Factory in North Carolina
Leveraging the Biden Administration’s focus on greener transportation, VinFast announced its plans to build an EV and battery factory in the U.S. in 2022. The factory was scheduled to be completed and opened in July 2024, but this was later rescheduled for 2025.
The facility was estimated to produce 150,000 vehicles a year, and even President Bidenpraised the project, highlighting its alignment with the administration’s economic strategy, as it would, inter alia, create over 7,000 new job positions.
VinFast’s Struggles in U.S. EV Market
Despite its ambitions, VinFast has not attracted much attention from U.S. consumers. In 2023, the company sold less than 1,000 cars in North America. Given that Republicans won the presidential election in 2020 (albeit by a small margin), a car company endorsed by Biden might not gain much traction in a politically divided market.
Unfortunately, the company doesn’t seem to make much headway internationally, either. Less than 35,000 VinLife vehicles were sold globally last year, most of which were in Vietnam. The company’s North Vietnam factory has the capacity to make 300,000 vehicles per year, but it experienced a 15% loss, which amounted to $2.4 billion compared to 2022’s profits.
VinFast’s Obstacles
In addition, the Reuters source said that the company had already submitted two revisions to the permit department concerning the factory’s size.
VinFast has also faced legal issues, includinga lawsuitfor failing to pay rent on a showroom in the USA, and two probes. The first probe is related to afatal car crashin California involving the company’s VF 8 car, which resulted in four fatalities. The second probe concerns an allegedpatent violationwith ArcelorMittal (MT.LU) over the aluminum used in the VF 8.
VinFast’s Plans Moving Forward
Despite these challenges, VinFast remains optimistic. The official word from the VinFast camp is that it still plans to sell 100,000 EVs in 2024, essentially doubling its 2023 goals. The company said that the slow 2024 sales start was typical of market conditions early in the year and is confident that sales will improve.
In fact, the automaker plans to expand its offerings to include right-hand-drive vehicles and add another couple of assembly plants in India and Indonesia by 2026. Notably, Chatham County, North Carolina officials have not been informed of any delays in the factory’s construction.
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