Overstretched VinFast slows US plant opening, prioritizes Asia

Vietnam-based automotive company VinFast plans to delay its US factory launch by three years and expedite the opening of its two Asian facilities in 2025. These moves could optimize capital expenditure as the firm navigates tough market conditions in the US, analysts say.

“While the delay in VinFast’s US plant will slow its entry into the North American market, it is for the best. It will buy some time and improve its ability to weather the ongoing EV market conditions,” says Joshua Cobb, senior automobiles analyst at market intelligence firm BMI.

A VinFast store in Santa Monica, California / Photo credit: VinFast

The carmaker, Cobb adds, has stretched its resources too thinly with its hasty plans to set up three plants abroad before ironing out its production and software woes.

VinFast had previously planned to allocate US$1.4 billion to set up a plant in North Carolina and US$400 million in initial investments to build two other facilities in Indonesia and India.

This year, VinFast’s capital expenditure is planned at US$1.5 billion, even as accumulated losses at the end of last year hit US$7.7 billion, according to the company’s filing in late March.

Steep declines in EV prices – fueled by a price war and rising exports from Chinese carmakers – could also make it more difficult for VinFast to control its current cash burn rate, says Cobb.

The company’s latest moves are also unfolding amid a slowdown in the growth of battery EV sales in the US and Europe. In South and Southeast Asia, however, EV adoption levels are low, which means there’s plenty of room for growth.

“It’s a good move to delay the large capex planned for the US and to instead focus on these Asian markets,” says Barry Weisblatt, head of research at Vietnam-based Vndirect Securities. “The cost of the Indonesia and India plants is much lower than the one in the US.”

Shifting market conditions

Demand for VinFast’s vehicles in the US may be hobbled because buyers there are ineligible for the country’s tax credits. The 2022 Inflation Reduction Act gives these tax breaks only to those purchasing vehicles assembled in North America, analysts say.

They also cautioned that the shifting political landscape in the US, with the ongoing presidential election, calls for a more cautious approach.

Colin Richardson, founder and principal at Canada-based firm Omni-Channel Automotive Solutions, says that VinFast vehicles may be subjected to additional tariffs if Donald Trump returns to the White House and puts the current tariff scheme under scrutiny.

VinFast booth in an automotive show in Indonesia / Photo credit: Toto Santiko Budi / Shutterstock

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