Vietnam’s EV maker VinFast set to break ground on delayed U.S. factory

Vietnam’s VinFast will begin construction on its electric vehicle factory in North Carolina on Friday morning local time, the Vietnamese automaker confirmed with CNBC.

“We just completed getting the permit for the construction. We are very excited that [it] is going to be a big milestone for VinFast history in the U.S. and we will start groundbreaking for the plant here in the U.S.,” VinFast CEO Le Thi Thu Thuy told CNBC.

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VinFast said the 1,800-acre facility is designed to produce up to 150,000 vehicles a year in phase 1.

The factory is expected to start operations in 2025 — a year later than its initial target of 2024.

“We see a lot of potential in the U.S. market with EV infrastructure … with the regulations to force EVs in major cities by 2035. So I think there’s a huge market and the whole world is moving from internal combustion engine vehicles to EVs,” Le told CNBC’s “Squawk Box Asia” on Friday.

VinFast has received incentives worth $1.2 billion from the state of North Carolina for the project.

Le acknowledged that there’s increasing competition in the U.S. market.

“We think that there’s still a lot of room for new players. I think the U.S. consumers are open to new players, as long as we have good quality products,” said Le.

VinFast entering the U.S. EV market means it will have to go up against Tesla and BYD, as well as traditional automakers increasingly focusing on hybrids and EVs.

But crucially, the electric vehicles produced at VinFast’s new facility could qualify for up to $7,500 in U.S. tax credits. VinFast vehicles do not currently qualify because they are not built in the country, but are built in Vietnam.

The company is also pricing its VF 9 model at a considerable discount to the comparable Tesla Model X. Prices for VinFast’s VF 9 are expected to begin around $85,000 for the Eco model, according to Motor Trend. A Tesla Model X costs about $100,000.

“Our strategy from the beginning has always been providing premium quality products at affordable pricing, coupled with excellent customer service. So we stay true to that strategy,” said Le.

“We are the only one in the market that have a lineup of vehicles from very small city vehicles like $12,000 vehicles to full-size three-row SUVs like the VF 9 that will go to market in the U.S. later this year.”

VinFast’s U.S. expansion has faced hurdles, including delayed deliveries to its first customers due to a software issue in May. The company also reduced its U.S. headcount in February.

“We [recalled] the vehicles because the screens could potentially go blank for a second. So we updated our software over the air to to fix the issues out of precaution. We announced that we [recalled] the vehicles but that was just a software update,” Le said.

In May, the firm announced that it plans to list in the U.S. via a merger with special purpose acquisition company Black Spade Acquisition Co.

— CNBC’s Penny Chen contributed to this report.