Vietnamese electric carmaker puts down unlikely stake in rural North Carolina
PITTSBORO, North Carolina — It’s been a long, winding road — geographically and metaphorically — from the Ho Chi Minh Trail to Highway 64 in rural Chatham County in North Carolina, but that is not holding back VinFast, a privately owned Vietnamese company trying to break into the global electric vehicle market, turbocharged by a $4 billion investment for a cutting-edge auto factory in the Southern U.S.
It’s a bold plan by all measures, taking on market leader Tesla and a host of better-known rivals in Europe, North America and East Asia. The global EV market was valued at $185 billion in 2021 and is expected to reach $980 billion by 2028.
VinFast, established in 2017, is betting its vast real estate holdings back home that U.S. consumers will want to drive its sleek electric sport utility vehicles, the VF8 and VF9 models.
U.S. and Vietnamese officials hail the move as a sign of a burgeoning bilateral trade relationship, though it has had some hiccups. Vingroup announced about 80 job cuts last month as it restructured its North American operations, software problems delayed the delivery of the first Vietnamese-made models originally promised in December, and price decreases by Tesla and other companies led VinFast to slash its monthly leasing prices by nearly half.
VinFast CEO Le Thi Thu Thuy insists the future looks bright and the timing of the investment couldn’t be better. She cited the 2022 Inflation Reduction Act, which offers a $7,500 tax credit for EVs manufactured in the U.S.
“If you look at the legislation in all different countries and imagine how many electric vehicles need to be on the road in the coming years, in the coming decade, there’s a lot of room for a lot of players in the market,” Ms. Le told CNBC’s “Squawk Box Asia” this week.
The American South seems to be a magnet for EVs factories. South Carolina Gov. Henry McMaster, a Republican, is asking lawmakers for $1.3 billion in incentives for a group backed by Volkswagen to build an electric vehicle plant. The plan is to revive the 1960s Scout brand, a forerunner to today’s SUVs. Georgia is offering $1.8 billion in incentives to South Korea-based Hyundai for its first U.S. electric vehicle plant near Savannah.
Ted Osius, a former U.S. ambassador to Vietnam and now president of the US-ASEAN Business Council, said VinFast’s investment is a major step toward boosting cooperation between the two nations, now comprehensive trading partners.
“VinFast is making a major investment in the EV future of America — a welcome investment in a sustainable economy for Americans, Vietnamese citizens and the world,” Mr. Osius said. “I couldn’t be more excited about this visible symbol of our two countries’ growing friendship and our joint commitment to combating climate change.”
Still, historical ironies abound. Ms. Le, who attended the Harvard Kennedy School and worked for Lehman Bros. before joining VinFast, was born in 1973, the year after the last U.S. combat troops left her homeland. Vietnam, which normalized trade relations with the U.S. in 1995, built its first world-class automotive factory in just 21 months in Haiphong, in the same industrial area where American military B-52s rained more than 20,000 tons of bombs in one December 1972 strike.
VinFast’s owner, Pham Nhat Vuong, one of the communist country’s richest men with a reputed net worth of more than $4.3 billion, has opened designer-friendly showrooms in Southern California to display the company’s electric SUVs in a direct challenge to fellow billionaire Elon Musk in his Tesla home market.
The automaker has already delivered more than 1,000 SUVs from its state-of-the-art factory in Vietnam to its nine showrooms in California. Last week, it announced the delivery of the first 45 VF 8 City Edition all-electric SUVs with software updates.
The company has recruited aggressively from major rivals such as Tesla, BMW, Porsche, Toyota and Nissan and purchased more than 2,150 acres to build a factory in North Carolina’s rural southeastern Chatham County directly off U.S. Highway 1.
Making progress
VinFast secured initial Environmental Protection Agency approval to sell cars in America and signed a deal with U.S. Bank as its preferred provider of retail financing and leasing. VinFast has also secured permits from the North Carolina Department of Environmental Quality, allowing the first phase of construction to proceed.
During soaring tensions with China, a major player in the EV market, the Biden administration has pushed to expand relations with Vietnam, which has a booming economy and a strategic location on the South China Sea.
Vietnam’s rise to become a major U.S. trading partner was stimulated in part by shifts in regional supply chains, driven by China’s rising production costs and trade tensions with the United States.
VinFast’s proposed factory still awaits a permit from the U.S. Army Corps of Engineers to minimize damage to nearby rivers and streams.
“VinFast can now move forward with the phase 1 construction plan, which was designed to specifically avoid any impact to wetlands,” Nguyen Thi Van Anh, CEO of VinFast North America, told The News & Observer newspaper.
Chatham County Manager Dan LaMontagne is bullish about VinFast’s financial dividends. The plant is projected to generate more than 7,500 jobs over five years when completed.
“In addition to employing thousands of people in our region, workers will build environmentally responsible vehicles that will reduce our carbon footprint, and it will attract other supplier and service industries,” Mr. LaMontagne said in an email.
Chatham County and the state have offered VinFast $1.25 billion in tax and other incentives, including about $250 million for road and rail improvements in and around the site.
Environmental groups have raised concerns about the proposed location on more than 1,300 acres of forestland. Haw River Assembly Executive Director Emily Sutton said in a telephone interview that “the dredging and filling of streams, wetlands and open waters will mean the loss of aquatic life.”
Jed Cayton, a spokesman for the U.S. Army Corps of Engineers Wilmington District, said more than 100 public comments had been filed, “with most concerns being focused on direct and indirect effects to the aquatic environment, adjacent owners and wildlife habitat.”
Area residents have expressed concern about how officials will measure the ecological impact on thousands of linear feet of stream channel, 22 acres of wetlands and at least 1 acre of open waters, including Shaddox Creek, the Haw River, the Deep River and the Cape Fear Basin.
Locals seated in Al’s Diner in Pittsboro may not be discussing the deep divide that once existed between the U.S. and Vietnam. They seem focused on how best to reconcile the economic benefits of the proposed factory with the need to preserve the region’s rural character and prime fishing spots.
“It’s all about economy of scale,” said Gary Phillips, founder of Weaver Street Realty and a former chairman of the Chatham County Board of Commissioners. “I believe that VinFast is the real deal, but I have deep concerns for the [Haw River] system that they can develop river corridors and walkways as a good corporate steward.”
