(Editor’s note: This story has been updated to reflect new information.)
It’s just mid-July but it’s already been a terrible, awful month for VinFast, the Vietnamese EV startup having its planned SPAC merger delayed, while a new sales report shows that American buyers aren’t rushing out to snap up its VF 8 battery-electric vehicle in the wake of harsh initial reviews.
However, the picture isn’t as bleak as it may seem. The manufacturer just announced it will still go ahead with plans to begin construction of its $4 billion North Carolina assembly plant as early as next week.
The project is seen as essential to gaining a sustainable foothold in the growing American market for EVs, according to Le Thi Thu Thuy, the automaker’s CEO. “When it begins operations, the factory will be VinFast’s primary supplier of electric vehicles to the North American market,” she said, announcing the updated construction plans.
Sales tank
The fate of the plant had seemingly grown uncertain in recent weeks as things started to turn south for the automaker. Initial sales results for the VF 8 have been well below VinFast’s already modest expectations. Through the end of May, it delivered just 128 of the EVs, according to data from tracking service Experian. Buyers registered just one in February, 16 in March, 66 in April and 45 in May.
VinFast officials told TheDetroitBureau.com Friday the recall to fix a problem with the touchscreens in the vehicles negatively impacted the company’s delivery schedule. However, there are “more than 350” on the road right now, the company noted, but declined to speculate on future sales, citing restrictions due to the SPAC process.
There appear to be several reasons for the slow takeoff in the American market. That starts with harsh reviews of the VF 8 following the first media drive of the EV in May. It also doesn’t help that, at a base price of $47,200, it doesn’t qualify for the $7,500 in federal incentives available to some competitors — if someone wanted to buy a VF 8. However, the VF 8 can be leased, allowing consumers secure the $7,500 tax credit using the tax loophole leased electric vehicles.
Stock market listing coming
Complicating matters, VinFast’s bid to raise a planned $2 billion by going public with its own IPO didn’t work out. Now the company is following the path taken by other EV startups, such as Lucid Motors, Faraday Future, Fisker Inc. and Lordstown Motors, taking the SPAC route.
Otherwise known as a Special Purpose Acquisition Company, it’s essentially a merger specifically designed to get a company listed on one of the stock exchanges in a hurry.
VinFast is partnering with Black Spade Acquisition in a deal that would value the automaker at $23 billion. The initial two-year timeframe would’ve have seen the deal completed this week.
But shareholders of Black Spade decided to put things off by as much as a year. Meanwhile, they redeemed 80% of their shares, worth $147 million, in the Hong Kong-based company. That left just $28.6 million in the trust account.
VinFast officials told TheDetroitBureau.com the completion of the SPAC has simply been pushed back. The redemption of the shares is largely procedural, occurring after the parties agreed to extend the timeframe past the initial two-year period for the merger. VinFast plans to complete the SPAC “in the second half of this year.”
Consigned to the “scrapyard”?
While VinFast officials say the delay is commonplace these days with SPACs, others suggest it could be a sign of trouble. In fact, an editorial on Reuters suggested the planned SPAC deal now “belongs in the scrapyard.”
“VinFast would be better off trying to fix its sales and performance teething problems away from the glare of the stock market and to rely instead on its parent and (founder Pham Nat) Vuong to provide any cash needed as they did in April — and to consign its merger to the scrapyard,” Reuters’ Antony Currie stated in a “Breaking View” editorial.
VinFast set to break ground on U.S. factory
But despite such setbacks, VinFast officials have continued laying out an aggressive schedule for the U.S. market entry. Even as they try to address the numerous complaints about the VF 8, the plan calls for adding a second model, the larger VF 9, before year-end. And smaller entries, including the VF 6 and VF 7, are on tap for 2024.
And the automaker now plans to move ahead on the first, $2 billion phase of construction in North Carolina, it says. That would give it a U.S. plant capable of rolling out as many as 150,000 EVs annually.
While the SPAC apparently won’t net VinFast the $2 billion an IPO may have, its founder, Phạm Nhật Vượng, in April, pledged another $2.5 billion to keep things on track.
Construction plans moving forward
There were concerns about the construction plans for the new facility. The automaker has received key permits to move ahead, but it still needed a few more and submitted to the local county planning board an application for a commercial zoning compliance permit a week ago.
However, the Chatham County authorities issued VinFast the remaining permit July 18 so the company is clear to move forward immediately. The 2.85 million square-foot factory and ancillary operations are eventually expected to create 7,500 jobs.