VinFast, the automotive arm of Vietnam’s biggest conglomerate Vingroup
VinFast, the automotive arm of Vietnam’s biggest conglomerate Vingroup, plans to build a $2 billion electric vehicle and battery plant in the U.S.—its latest push into the competitive EV arena.
The company announced last week that it had signed a memorandum of understanding with the North Carolina state government to start up its first U.S.-based vehicle factory. The 1,977-acre compound will have capacity to produce 150,000 vehicles a year. It will primarily produce electric cars, buses and EV batteries.
“The project in North Carolina affirms VinFast’s commitment in investing and developing business in its international markets in general and the U.S. in particular,” the statement says. Vingroup is led by founder Pham Nhat Vuong, the richest person in Vietnam.
Construction of the factory’s phase one will start this year and finish by July 2024, VinFast said in its statement. It says the company will eventually produce seven-passenger and five-passenger electric sport utility vehicles at the factory site.
“It sounds [like] an incredibly logical thing to do,” says Adam McCarty, chief economist with Mekong Economics in Hanoi. “I think they have a global strategy and they’re taking every step seriously.”
The U.S. was the world's second-largest automotive market last year after China with roughly 15 million new car registrations,according to data provider Statista. The factory will put VinFast close to those consumers and fall into line with trends of onshoring and reshoring of factory work in the U.S., McCarty says. The investment will give Vinfast access as well to “complementary technology” and “American marketing skills,” he adds.
To support onshoring, the federal and multiple U.S. state governments have already offered incentives to foreign automakers, such as Toyota and Mercedes-Benz, notes Frederick Burke, Ho Chi Minh City-based senior advisor with law firm Baker McKenzie.
VinFast may need to look hard for EV “sophisticated” components that come from Germany and Japanese-owned automotive operations in Thailand, Burke says. But Vietnamese consumers will feel “pride” in knowing one of their companies is operating in the U.S., he says.
“This is a very nimble company that acts quickly so it will be interesting to watch how they fare in the U.S.,” Burke adds.
Analysts have said VinFast’s EVs may struggle to sell outside the company’s home market due to weak name recognition among American consumers of VinFast and made-in-Vietnam.
VinFast anticipates an initial public offering in the U.S. to help it grow EV sales after opening a U.S. headquarters in Los Angeles last year and rolling out two electric car models at the 2021 Los Angeles Auto Show.
