VinFast in NC
Vietnames automaker VinFast announced in March 2022 that it would open an electric vehicle assembly plant in North Carolina. The battery manufacturing plant will be built in Chatham County and is expected to eventually create 7,500 jobs. It’s the largest economic development announcement in the state’s history. Here is coverage from The News & Observer about the plans.
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Months before
last week’s groundbreaking on new Vietnamese carmaker VinFast’s promised $4 billion facility in Chatham County, records show the company sought the governor’s help to secure more cash needed “to complete the project without further delays.”
VinFast originally aimed to open the factory about 30 miles southwest of Raleigh by the second quarter of next year before
postponing its targeted start date to 2025. But even meeting this timeline could hinge on whether the high-spending company secures a sizable loan from the U.S. Department of Energy.
Emails obtained by The News & Observer through a public records request show a top VinFast official reached out to the governor’s office multiple times this spring to ask for help advancing a $1.4 billion federal loan application, a process VinFast complained was lagging.
Since 2007, the Department of Energy has overseen the
Advanced Technology Vehicles Manufacturing Loan Program, which is designed to bolster domestic production of fuel-efficient vehicles. VinFast applied for the $1.4 billion loan through the program around the middle of last year, the emails show.
The company’s vice president of government relations and strategic partnerships, Brook Taylor, contacted the governor’s team on March 30
to request a call between Gov. Roy Cooper and VinFast CEO Le Thi Thu Thuy. Taylor proposed discussing, among other topics, a “status update on our ATVM loan thru the US Department of Energy.”
VinFast CEO Le Thi Thu Thuy and N.C. Gov. Roy Cooper sit inside a VF8 electric car Tuesday, March 29, 2022 outside the Raleigh Convention Center following an announcement that the company will build a manufacturing facility in Chatham County. Travis Long
[email protected]
In a response, Cooper economic adviser Lee Lilley
told other staffers the call would be “good to do, not urgent.” A conversation between Cooper and Thuywas not scheduled until more than two months later, in early June.
In the meantime, Taylor lobbied the governor’s office to intervene with DOE on VinFast’s loan application.
“Unfortunately, the process seems to have slowed down as the DOE focuses attention on projects that will send federal funding to other states,” Taylor
wrote in an April 13 email to Lilley.
Taylor said VinFast hoped the Department of Energy would “move the application forward into what the (DOE) calls ‘Letter of Substantial Completion’/’Due Diligence.’” He added, “We could use the support of Governor Cooper to ensure our application takes priority over other companies and North Carolina gets its fair share of federal funding.”
In a follow-up message to Lilley on May 11, Taylor expressed mounting frustration with the federal government.
“The state of North Carolina has stepped up and provided substantive support for this project,” he wrote. “Meanwhile, the (Biden) Administration has taken credit for the efforts of VinFast and North Carolina — while eliminating our vehicles from federal incentive eligibility, raising interest rates and making it harder to access private capital, and dragging out the process for a federal loan.”
The Federal Reserve, not the Biden administration, dictates interest rates. It began a series of rate hikes in March 2022, shortly before VinFast announced it had chosen North Carolina for its manufacturing plant, in an attempt to stem rising inflation.
The “federal incentive eligibility” Taylor referenced is the Clean Vehicle Tax Credit created under the Inflation Reduction Act of 2022, which
offers up to $7,500 for qualified electric vehicles. Last year, the federal government said only vehicles that undergo final assembly in North America would be eligible for the tax credit, thereby excluding Vietnamese-made VinFast SUVs.
But Taylor’s complaint centered on the $1.4 billion DOE loan.
Without it, he wrote, “We are left to the whims of the capital markets which are increasingly unstable.”
“We are simply asking for support from the federal government in the form of a loan — not a grant — so we can start construction and be confident that there is enough available capital to complete the project without further delays,” Taylor wrote.
Cooper speaks with U.S. Energy secretary
Cooper scheduled a call with U.S. Department of Energy Secretary Jennifer Granholm for May 15.
In a memo to Cooper’s chief of staff, Kristi Jones, Lilley outlined several suggested talking points for the meeting, including that Cooper “would be grateful for any support you could lend to ensure that (the VinFast) application is getting priority consideration in this process.
“This is a very important project for North Carolina and for the Biden Administration’s goals on domestic production of EVs,” the last talking point read.
In a statement to the N&O, governor’s office spokesperson Jordan Monaghan said Cooper “touted VinFast’s work and investment” in the state during the call with Granholm, encouraging the federal agency “to give full consideration to their loan application.”
“The Governor frequently advocates on behalf of North Carolina companies, communities, and nonprofits for support from the federal government, especially when that support creates good-paying jobs and helps the clean energy economy,” Monaghan told the N&O in an email.
He said Granholm indicated during the call that her department’s loan office addresses applications through “its own process.”
The U.S. Department of Energy’s public affairs staff did not respond to calls and emails seeking comment about the conversation.
VinFast CEO Le Thi Thu Thuy and Gov. Roy Cooper clap during a groundbreaking ceremony Friday at the future site of a VinFast plant in Moncure. Travis Long
[email protected]
Asked about the status of VinFast’s application, a DOE Loan Programs Office spokesperson said the status of loan applications are confidential and that the agency “cannot confirm or deny” the identity of applicants.
The LPO’s
website states states its application process typically takes up to a year but may “move faster or slower depending on applicant readiness with required materials.”
“Before issuing a loan, LPO conducts rigorous due diligence that is comparable to what is considered best practice in the private sector,” the site says. That process includes credit, legal, market, financial and regulatory reviews.
VinFast declined to share the status of its ATVM loan application. As VinFast waits, DOE in June
provided Ford with an ATVM loan worth $9.2 billion to help pay for a trio of electric vehicle battery plant projects across Kentucky and Tennessee.
Tony Copeland, the former secretary of commerce under Cooper, said he isn’t surprised the governor reached out to Granholm upon VinFast’s urging.
“I think it would be appropriate to inquire (about the loan) or even be an advocate for it after the state government did their due diligence on the company,” he said.
One watchdog group was equally unsurprised by Cooper’s conversation with Granholm. Greg LeRoy, executive director of Good Jobs First, a nonprofit research group that tracks corporate subsidies across the country, said the size of the VinFast project likely warranted Cooper’s attention.
“This is not an unusual action by a governor’s office,” LeRoy wrote in an email to the N&O. “I assume he’d call it constituency service (even though the ‘constituent’ in this case is a foreign-based corporation).”
VinFast’s big ambitions for NC
Since forming in 2017, VinFast has tried to move quickly to achieve its lofty global goals.
Owned by the richest person in Vietnam, the company pivoted two years ago to solely produce electric vehicles. While it had sold internal combustion engine cars in its home country, VinFast has now spent billions to expand its fully EV lineup into foreign markets.
VinFast has so far delivered 350 vehicles to U.S. customers and “tens of thousands” globally, a company spokesperson said. The company
shipped its first U.S. vehicles, produced in Vietnam, in late November.
Initial reviews of the company’s five-seat VF8 model
were poor, and VinFast has acknowledged it will make changes to improve the driving experience.
VinFast plans to spend $2 billion to build the first phase of its Chatham County plant, a vehicle manufacturing and assembly facility capable of initially producing 150,000 SUVs a year. By 2028, VinFast has committed to employ 7,500 at the facility.
The plant will sit on 1,800 acres of of land and is expected to include nearly 3 million square feet of space in its initial phase.
VinFast manufactures cars and scooters that it sells in its home country, Vietnam. Only sport utility vehicles are available in the U.S. Provided photo
VinFast is set to be the first car manufacturer in North Carolina history, and the largest state-backed economic project in terms of projected job creation.
When announcing the site in March 2022, North Carolina and Chatham County combined to offer VinFast up to $1.25 billion in performance-based payroll tax cuts if the company met its future hiring and investment targets. The N.C. General Assembly appropriated $450 million to improve the surrounding roads, prepare the site and upgrade the water and sewer infrastructure at the facility near the rural town of Moncure.
Billions in funding, billions in losses
While lucrative tax breaks could be on the horizon, VinFast leaders seek more funding now.
Without a major revenue stream, the company has recorded substantial losses — $1.3 billion in 2021 and $2.1 billion in 2022. The losses have continued this year.
In June, VinFast
reported it lost more than $598 million in the first quarter as its revenue declined 49% from the same period last year. Overall, VinFast’s parent company VinGroup, has spent $9.3 billion to fund its operations, public filings show.
Heavy equipment prepares the site for a new VinFast production facility Friday in Moncure. Travis Long
[email protected]
Last summer, the company borrowed $4 billion from Credit Suisse and Citigroup. In April, VinFast secured a combined $2.5 billion from its parent company and from VinGroup Chairman Pham Nhat Vuong, the wealthiest person in the southeast Asian country.
VinFast is poised to become a publicly traded company by merging with a special purpose acquisition company, or SPAC, on Aug. 10. However,
SPAC experts caution the prospective deal VinFast has arranged is unlikely to raise significant short-term capital for the carmaker.
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