Vietnamese manufacturer VinFast may once again delay its planned assembly plant in the U.S. Recall that the brand announced the $4-billion project with great fanfare, as it prepared to invade the North American market.
However, the arrival of the first models has been slow in coming, and the debut of its products has been rather modest. VinFast sold fewer than 1,000 vehicles in North America in 2023.
Information about the postponement was given to Reuters by a person familiar with the matter.
In 2022, VinFast announced plans to build a plant in North Carolina, with an annual production capacity of 150,000 electric vehicles. The company wanted to take advantage of the efforts of the Biden administration, which distributes subsidies for electric vehicles manufactured in the U.S.
VinFast had originally planned to complete the plant in July 2024, before pushing back the start of operations to 2025. It’s now considering a further postponement, according to the source who spoke to Reuters.
There are many reasons for the company's decision or thinking. Count the forthcoming U.S. elections among them. Should Donald Trump return to the White House, electric vehicle manufacturers fear they will have to write off the government aid currently in place. VinFast needs support from U.S. authorities.
In a statement sent to Reuters, VinFast explains that it is “conducting a thorough review and assessment of all aspects of the construction process for our North Carolina plant”.
Other factors weighing in the decision include the company's poor sales results to date, and certain legal problems in the U.S. (non-payment of rent on a dealership, investigation into a fatal accident involving one of its vehicles, and infringement of ArcelorMittal patents relating to the aluminum used in the VF 8).
VinFast has also twice revised the size of its planned assembly plant in North Carolina. The latest revision was submitted in April and is still under review by authorities.
Last year, VinFast sold fewer than 35,000 vehicles worldwide, most of them within the borders of Vietnam, and about half to companies operating within the Vingroup empire, within which VinFast operates. The production plant it operates in the north of the country can assemble 300,000 vehicles on an annual basis.
The company has other models in the pipeline, which should help it meet its targets. It sold fewer than 10,000 vehicles in the first quarter of this year, however, a result it attributes to the usual slow start to the year for business, particularly in Vietnam.
Clearly, VinFast is experiencing growing pains, having racked up accumulated losses of $2.4 billion USD. The automaker still aims to sell 100,000 vehicles this year, twice as many as its 2023 target, while it hopes to reach other markets, including Indonesia and India, where it also intends to set up an assembly plant.