Vietnam’s VinFast has just delayed its proposed electric vehicle factory opening in North Carolina to 2028 due to “economic headwinds,” according to the press release.
VinFast delays US production
VinFast announced plans to postpone the launch of its $4 billion electric vehicle factory in North Carolina by three years from the original 2025 schedule to 2028.
The Vietnamese electric automaker also reduced its delivery forecast by a whopping 20,000 units from 100,000 units to 80,000 in FY 2024 amid global market uncertainties.
While VinFast blames economic headwinds, numerous market challenges played a crucial role in its decision to delay its planned 995,500-square-foot EV production plant in the US.
“While the second-quarter delivery results were encouraging, ongoing economic headwinds and uncertainties in different macro-economies and (the) global EV landscape necessitate a more prudent outlook for the rest of the year.”
VinFast stated in a press release on Saturday
For context, VinFast’s electric vehicle sales surged 24% to about 12,000 units in Q2 2024 from the previous quarter. In H1 2024, its EV sales grew 92% year-on-year to a total of 21,747 units compared to the same period in 2023. However, these results are just around one-fourth of the new yearly forecast.
Brief background
Vietnam’s wealthiest man, Pham Nhat Vuong, established VinFast in 2017. It then became an all-electric vehicle brand in 2022.
In the same year, VinFast announced plans to establish an EV and battery factory in the United States with an annual production capacity target of 150,000 units. The move will supposedly aid VinFast in accessing the Biden administration’s major incentives for local EV and battery production under the Inflation Reduction Act.
However, electric vehicle demand has waned amid increasing interest rates and the growing popularity of cheaper hybrid models, prompting numerous players to scale back new factory and model launch plans.
“This decision will allow the company to optimize its capital allocation and manage its short-term spending more effectively, focusing more resources on supporting near-term growth targets and strengthening existing operations. The adjustment doesn’t change VinFast’s fundamental growth strategy and key operating targets.”
VinFast
Other affecting factors
Apart from the “economic headwinds,” VinFast has also struggled with numerous challenges that influenced the changes in its EV strategies.
These challenges include the following:
- Negative early reviews
- Allegations of impropriety in its home country
- An investor lawsuit in the US
- Serious build quality issues
For instance, VinFast’s current sole model in the US market, the VF8, has been hit with bad reviews. Car critics bashed the VinFast EV’s ride quality, user experience, handling, and price tag, among others. Since then, the company has heavily depended on influencers and social media marketing to promote the VF8 to US buyers.
Despite the scaleback, VinFast remains optimistic about strong sales growth in H2 2024 with its diverse product range and expansion in key regions. VinFast will publish its 2024 financial results before the market opens on August 15th, 2024.
