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, turbo-charged by a $4 billion investment for a cutting-edge auto factory in this Southern state.

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 may rise as much as 24.5% to reach $980 billion by 2028.

Vinfast is betting its vast real estate holdings back home that U.S. consumers will want to drive away in one of their sleek electric SUVs, the VF8 and VF9 models.

The move, which officials in the U.S. and Vietnam hail as a sign of a burgeoning bilateral trade relationship, hasn’t come with hiccups —  Vingroup announced some about 80 jobs earlier this year as its restructured its North American operations, software problems delayed the delivery of the first Vietnamese-made models originally promised in December, and price cuts by Tesla and other companies led Vinfast to cut its own monthly leasing prices by nearly half.

Just last week, the company delivered the first 45 VF 8 City Edition all-electric SUVs to U.S. customers at its nine showrooms across California. 

Still, insists Vinfast CEO Le Thi Thu Thuy, the future looks bright and the U.S. investment couldn’t be better timed, as the 2022 Inflation Reduction Act 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 developing new EVs factories. In neighboring South Carolina, Republican Governor Henry McMaster is asking lawmakers for $1.3 billion for a new electric vehicle plant by a group backed by Volkswagen, in a bid to revive the Scout brand from the 1960s that was an early 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, former U.S. ambassador to Vietnam and now president of the US-ASEAN Business Council, Vinfast’s investment is a major step to boost 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 with the project. Ms. Le, who attended the Harvard Kennedy School and worked for Lehman Brothers before joining Vinfast, was born the year after the last U.S. combat troops left her homeland in 1973. 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.

The auto manufacturing company established in 2017 has already delivered more than 1000 new SUVs in California from their state-of-the-art factory and announced that the first batch of its US-bound VF 8 electric cars has been delivered to customers with software updates.

Vinfast’s billionaire owner, Pham Nhat Vuong, one of the communist country’s richest men with a reputed net worth in excess of $4.3 billion, has also opened designer-friendly showrooms in Southern California to display the company’s electric sports utility vehicles, in a direct challenge to fellow billionaire Elon Musk in his Tesla home market.

The company has recruited aggressively from major rivals such as Tesla, BMW, Porsche, Toyota, and Nissan and purchased the more than 2,150 acres in rural southeastern Chatham County in rural North Carolina directly off U.S. Highway 1 to build their auto factory.

Making progress

Despite the bumps in the road, there has also been good news for Vinfast’s U.S. operations. The company secured initial EPA regulatory approval to sell cars in America and signed a deal with U.S. Bank as its preferred provider of retail financing and leasing of Vinfast vehicles. Vinfast has also secured permits from the North Carolina Department of Environmental Quality allowing the first phase of construction to proceed.

While tensions with China — a major player itself in the EV market — soar, the Biden White House administration has pushed to expand relations with Vietnam, with its booming economy and strategic location on the South China Sea.

Vietnam’s rise to be a major U.S. trading partner was stimulated in part by shifts in regional supply chains, driven by rising production costs in China as well as trade tensions between the PRC and the United States.

Yet a few passing clouds hang over the auto manufacturer’s auto plant project in rural North Carolina’s nearby rivers and streams.  Vinfast’s proposed factory still awaits a permit from the U.S. Army Corps of Engineers designed to minimize damage to water quality and wetlands.

“Vinfast can now move forward with the Phase 1 construction plan which was designed to specifically avoid any impact to wetlands,” said Nguyen Thi Van Anh, CEO of Vinfast North America, told The News & Observer newspaper.

Chatham County Manager Dan LaMontaigne is bullish about the financial dividends offered by Vinfast, with projections the new plant will generate more than 7,500 jobs over five years when completed, while minimizing the environmental downside.

“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. LaMontaigne said in an email.

Chatham County and the state have offered the company $1.25 billion in tax and other incentives to help attract Vinfast, including about $250 million for road and rail improvements in and around the site.

The factory proposed location on over 1,300 acres of forested land and near Old Highway 1 and Corinth Road has some detractors, especially from the Haw River Assembly and other environmental groups. In a telephone conversation, Emily Sutton, a riverkeeper, is clear about her concerns, warning 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 office in Wilmington, 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 express fears over how officials will measure the ecological impact on thousands of linear feet of stream channel, 22 acres of wetlands and at least one acre of open waters in waterways, including Shaddox Creek, the Haw River, the Deep River and the Cape Fear Basin.

The locals seated in Al’s Diner in historic Pittsboro may not be discussing the deep divide that once existed between the U.S. and Vietnam. They seem mainly 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.