Vietnam’s VinFast weighs delaying $4 Billion US assembly plant to refocus expansion in Southeast Asia
Vietnamese EV maker VinFast is considering another delay for its $4 billion US assembly plant, originally set for July 2024, as it shifts focus to Southeast Asia. Amid challenges in the US market, VinFast plans to open six dealerships in the Philippines and expand its vehicle lineup
Vietnamese electric vehicle (EV) manufacturer VinFast is contemplating further delays for its planned $4 billion assembly plant in North Carolina. Initially slated for completion in July 2024, the project’s start of operations was pushed back to 2025. Now, another delay is under consideration as the company struggles to gain traction with US consumers, according to Reuters.
VinFast originally announced its plans to build an EV and battery factory in the US in 2022, aiming for an annual production capacity of 150,000 vehicles. This was designed to leverage the Biden administration’s subsidies for American-made EVs.
However, the Asian OEM, which is said to have sold fewer than 1,000 cars in North America last year, is “conducting a thorough review and evaluation of all aspects of the construction process for our North Carolina factory,” according to the same source.
The factory, expected to create over 7,000 jobs, was a part of Biden’s economic strategy, with the president even tweeting that it was the latest example of his economic strategy at work when VinFast first announced the project. But now the company is facing several challenges including low regional sales, legal proceedings over unpaid showroom rent, and further probes relating to a fatal California crash involving a VinFast VF 8 in April of last last year, and patent violations related to ArcelorMittal’s aluminium, interestingly used in the same model.
“We come to the Philippine market with good quality products and accessible prices”
Thi Minh Ngoc, CEO, VinFast Philippines
Vinfast: Southeast Asia expansion with six dealerships in the Philippines
The picture seems to show that while putting the brakes on its US production operations, VinFast is redirecting its efforts towards distribution and market penetration in Southeast Asia. The OEM has announced the launch of several operations in the Philippines, marking its regional market entry with plans to open six dealerships for cars, as well as e-scooters and e-bikes. “We come to the Philippine market with good quality products and accessible prices,” said VinFast Philippines CEO Nguyen Thi Minh Ngoc at the launch.
Vinfast reported net losses of $618.3 million in the first quarter of 2023, yet said it remains resolute in its goal to deliver 100,000 cars in 2024; to double its target from 2023
The first dealership is set to open in June, with the Philippines being VinFast’s first market outside the US for electric bikes. The move also has an economic logic since the country is supporting an extended no-tariff policy on EVs and parts through 2028. Government data also shows that sales of two- and four-wheeled EVs soared to 10,602 units in 2023 in the Philippines, a tenfold increase from 2022
VinFast’s activities in the region will see it competing with China’s EV giant BYD, which has partnered with local conglomerate Ayala Corp. “We will be here for the long term in the Philippine market,” Ngoc assured. VinFast has already established a presence in India, Indonesia and Thailand, and during a January visit by Philippine President Ferdinand Marcos Jr. to Vietnam, the company committed to investing in the Philippines and establishing an EV business network.
Asia Yes, USA No? Recalibrating electric objectives with fiscal losses
Despite the global EV market facing weaker demand and a price war, and despite the company making losses, (reporting net losses of $618.3 million in the first quarter of this year), VinFast said it remains resolute in its goal to deliver 100,000 cars in 2024; to double its target from 2023.
The OEM plans to expand its vehicle lineup by the end of June, including models for right-hand drive markets like Thailand and Indonesia.
The Vietnam-based conglomerate’s ambitious expansion plan includes establishing an assembly plant in Indonesia and another in India by 2026. In Indonesia, the company expects to begin deliveries of the VF e34 model soon, and launch the VF 5 model within the second quarter.
