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North Carolina Sues VinFast Over Delayed, Downsized Factory
State Says It's Exercising Contractual Right to Claim Property
Key Takeaways:
- The state is suing VinFast for failing to meet commitments tied to a planned EV and battery factory.
- VinFast fell short of key requirements, including job creation and operational deadlines, and now expects delays until at least 2028.
- North Carolina is moving to take back the project site to protect taxpayer investments and find a new project that creates jobs.
North Carolina sued Vietnamese electric vehicle maker VinFast Auto Ltd., alleging the company breached agreements tied to a planned electric vehicle and battery manufacturing facility, and seeking to reclaim the project site.
The state was exercising its contractual right to acquire the property to protect taxpayer investments after VinFast failed to meet key obligations tied to the project, Attorney General Jeff Jackson said in a statement.
“VinFast agreed to build a factory and create jobs for North Carolinians — it didn’t do either,” Jackson said. “When North Carolina makes a deal, we build in protection for taxpayers. VinFast broke the deal, so we’re using that protection to find a project for this site that will create jobs.”
The state’s action was “about protecting taxpayers and getting the Chatham County megasite back on the market to support future good-paying manufacturing jobs,” Gov. Josh Stein said in the same statement.
VinFast, in a statement, said it had not been alerted by North Carolina about the lawsuit. “We will review and provide an official response once we receive all relevant materials from the state,” the company said.
In 2022, North Carolina rolled out generous incentives for VinFast’s ambitious electric vehicle factory. The manufacturing facility was expected to create 7,500 jobs and involve more than $3 billion in investment, the statement said. The state Legislature also appropriated $450 million for site preparation, transportation improvements, and water and sewer infrastructure linked to the project, it added.
Image
A rendering of the delayed VinFast factory in North Carolina. (VinFast)
Under agreements with the state, VinFast was required to meet construction benchmarks, have the facility operational by July 2026, and create 1,750 jobs by the end of 2026. The agreements also gave North Carolina the right to reacquire the site if the company failed to meet performance requirements, according to the statement.
VinFast cleared and graded the site in 2023, with those costs reimbursed by the state. But North Carolina said the company later failed to meet key obligations and has publicly acknowledged the facility is unlikely to begin operating before 2028, two years later than required under its agreement.
VinFast said in March it was resuming construction, with operations at a downsized complex set to begin in 2028. Its latest blueprint, however, calls for about 1,400 workers, around 80% fewer than originally promised, according to Michael Smith, president of the Chatham County Economic Development Corp.
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“Recent changes in U.S. policies related to the EV industry have impacted the project timeline, requiring additional time for us to evaluate appropriate implementation conditions,” VinFast said in its statement. “Contracts with contractors have already been signed, and construction activities are expected to commence shortly in accordance with the planned schedule.”
The legal action comes as VinFast is working to shore up its finances. It said this month it would sell two factories in Vietnam as part of efforts to reduce about 182 trillion dong ($6.9 billion) in debt and obligations, and accelerate its path toward profitability.
