North Carolina cut a deal with VinFast in 2022 to provide one of the largest incentives packages in state history to coax Vietnamese electric automaker VinFast to build its U.S. headquarters and production facility in Chatham County. For a little over $1.25 billion in benefits provided by the state, VinFast claims it will invest $4 billion at a future factory near the town of Moncure, and create 7,500 jobs in the process. The state has appropriated $450 million for site preparation costs, upgrades to public roads in the area, and expansions of the county’s water and sewer infrastructure.
According to News & Observer reporter Brian Gordon, the state has already used eminent domain to acquire two businesses and a church, and it is “still negotiating with more businesses and homeowners to make room for road improvements.”
“NC has spent close to $96 million on the site, which the EV maker VinFast now says it’ll open in 2028. VinFast has gotten $51.7 million from the state to cover site preparation costs. NC has right to claw back this money if company defaults on its deal.”
North Carolina has paid out that $51.7 million directly to VinFast, while a further $15.6 million has been paid for water and sewer improvements, and NCDOT has spent a little over $18 million around the site. There isn’t a full breakdown of the project’s expenses thus far, but as the projected date of production looms, the costs to the state are expected to grow.
In order to achieve the full $1.25 billion in state-provided benefits, VinFast will need to begin hiring workers basically immediately. To receive the payments, the automaker will need to hire 1,997 workers by the end of 2024, and hold at least 3,875 employed workers from 2026 until 2036. It will also need to invest at least $3.21 billion in the “Triangle Innovation Point” facility by the end of 2026. State contingency plans allow for recapture of at least some of the funds if VinFast fails to meet targets (or pulls out altogether.)
VinFast has recently announced that it will delay the start of U.S. production from its initial plan in 2025, now out to 2028. The company managed to deliver 12,058 units in Q2 of 2024, which is an improvement over the same period last year, but pushed the company to reduce its delivery forecast from 100,000 to just 80,000 units this year.
“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,” VinFast said in a statement. “The adjustment doesn’t change VinFast’s fundamental growth strategy and key operating targets.”
The company posted a net loss of $618 million in the first quarter of 2024.
This isn’t the first time North Carolina has courted an automaker. In the 1990s the state was a finalist in the bid to get Mercedes-Benz’ first factory outside of Germany, a bid it lost to Alabama. It has similarly lost out on getting factories in the state from Volkswagen, Audi, Volvo, Toyota, and Mazda in recent years as well. These losses caused the state to continue upping the ante and developing new taxpayer-funded benefits packages.
Will this VinFast project bring the prosperity to North Carolina that it hopes? If I were a betting man, I certainly wouldn’t bet on VinFast.
