VinFast Breaks Ground for New Plant as SPAC Plans Get New Momentum

After suffering a series of setbacks in recent months, VinFast finally got to enjoy some good news Friday, the Vietnamese auto startup breaking ground for its new, $2 billion assembly plant near Raleigh, North Carolina, the same day the Securities and Exchange Commission gave permission for the automaker’s planned merger with special purpose acquisitions company, or SPAC, Black Spade.

VinFast Global CEO Le Thi Thu Thuy says the company is learning from the problems it’s experienced.

With the SEC’s go ahead, that deal now should be completed in August, VinFast officials told TheDetroitBureau following an official groundbreaking ceremony at the site of the new plant. The automaker hopes that will then allow it to raise as much as $2 billion in additional funding to back its plan to rapidly expand in the American market.

“The last few months have been challenging,” the automaker’s global CEO Le Thi Thu Thuy said in an interview at the plant site. “But everything is falling into place and we have a clean vision” of where the company wants to go.

VinFast slowed down

Founded in 2017 and based in Haiphong, along Vietnam’s busiest harbor, VinFast initially started as a regional manufacturer producing a modified version of the BMW X5 sport-utility vehicle. Two years ago, however, it announced a complete shift in direction, abandoning production of vehicles using internal combustion engines in favor of going all-electric.

In keeping with the rapid pace suggested by its name, VinFast began production of its fast battery-electric vehicle aimed at the U.S., the VF 8, late last year. A shipment of 999 vehicles — a number considered lucky by the Vietnamese — arrived in California in December. But one in a series of  setbacks delayed the first consumer deliveries until March.

VinFast’s CEO described the past few months as “challenging,” but between the groundbreaking and SEC approval things are headed in the right directly.

Then, in May, when journalists were given the first change to drive the VF 8 the reviews were generally harsh, reporters citing a variety of electronic and mechanical concerns.

SPAC on track

Adding to the concerns, VinFast reported a 49% drop in global revenue during the first quarter of 2023, with losses rising to $598 million. And then, questions were raised about whether the SPAC merger with Hong Kong-based Black Spade would go ahead.

That’s now back on track CEO Thuy said Friday. And that was echoed by Black Spade CEO Dennis Tam. In a statement, Tam said, “The declaration of the SEC effectiveness is a significant step towards the successful completion of the business combination between Black Spade and VinFast.”

While the plan now calls for the merger to be completed in August, neither Black Spade nor VinFast officials would discuss timing of a subsequent stock offering. But VinFast is expected to be valued at about $26 billion following the SPAC merger.

Taking the feedback

Thuy said she is hoping the developments Friday will help soften some of the negative coverage VinFast has received in recent months. But she also acknowledged that the company needs to address the problems that were highlighted by reviews of the VF 8.

“The DNA of VinFast is to learn” and then address its problems, the CEO said. “We’re taking that feedback to improve the vehicles.”

The $2 billion plant just outside of Raleigh, North Carolina, is slated to begin production in 2025.

And VinFast insiders said they hope to avoid similar problems, such as issues with the VF 8’s power steering, when they bring out subsequent products. A larger all-electric model, the VF 9, is scheduled to go on sale late this year, followed by two smaller EVs, the VinFast VF 6 and VF 7.

Plant to go operational in 2025

For the next several years, all those models will be imported from the automaker’s current plant in Haiphong.

“You’ll see the first cars coming off the line (at the new North Carolina plant) in 2025, said Van Anh Nguyen, who is serving as CEO of the manufacturing operation, a year later than originally scheduled.

At launch, the goal is to have production capacity to roll out 150,000 EVs annually. “Of course, we want to expand that,” Nguyen said.

Now what?

Additional passenger car models will be added, if VinFast hits its sales goals, while the company is also looking to add electric buses. And the eventual cost of the North Carolina operation could swell to more than $5 billion if a planned battery factory is added.

Friday’s developments were “highly significant,” the plant groundbreaking a “milestone they needed this to qualify for federal and state government incentives,” said Michael Dunne, a longtime analyst focusing on the Asian automotive industry. “Now the key will be to convince American consumers to buy VinFast products.”

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