Vietnam-based EV (electric vehicle) producer VinFast has said that production at its upcoming US plant won’t start until 2025 and attributed the delay to “administrative procedures.”
Just about a month back the company said that its plant in North Carolina is set to commence production in 2024.
In its statement, VinFast said, “We need more time to complete administrative procedures.” Reuters reported that last month VinFast received Air Permit from local authorities. However, the company is yet to receive the go-ahead from the US Army Corps of Engineers.
Last month, while reiterating the 2024 production timeline, Vinfast CEO Le Thi Thu Thuy said, “We are in the final stages of getting a permit to test the construction but the land has already been cleared. The state has already worked on the infrastructure for the land as well.”
She sounded optimistic about the 2024 production timeline despite layoffs and a business restructuring.
Notably, during their Q3 2022 earnings call, Rivian announced that it is delaying the timeline for its R2 series of vehicles from 2025 to 2026.
In response to an analyst question over the delay, Rivian CEO RJ Scaringe sought to allay fears and said, “This doesn’t represent a material change in the product by any means. This is really reflective of making sure that the production site is prepared.”
Rivian stock fell earlier this week after the company announced a $1.3 billion capital raise. Many other EV companies have raised capital over the last year amid the continued cash burn.
VinFast Delays US Production Timeline
VinFast is part of Vietnam’s Vingroup which has interests in several industries like real estate and education.
Founded in 2017, VinFast delivered its first vehicle in 2019. The company initially produced ICE (internal combustion engine) cars however it has since transitioned into a pure-play EV company. It is the first domestic automaker in Vietnam.
VinFast’s US plant would have an initial annual capacity of 150,000 vehicles. After the passage of the Inflation Reduction Act, automakers have been scrambling to produce cars domestically in the US to take advantage of the $7,500 EV tax credit.
After the Inflation Reduction Act was cleared many brokerages turned bullish on Tesla stock as its cars now also qualify for the EV tax credit—read our guide on how to buy Tesla stock.
Toyota also doubled down on its investment in the US in an apparent bid to capitalize on the lucrative credit. The tax credit has a maximum threshold of $55,000 for sedans. Since Lucid Motors’ Air sedan does not qualify for the tax credit, it is offering customers a $7,500 “credit” on its own to remain competitive.
Many EV Companies Are Struggling with Production
The cash burn and losses for startup EV companies are not expected to come down anytime soon.
Rivian is currently posting gross losses and also expects to post a negative gross margin in 2023, although it is forecasting positive gross margins for 2024.
Things are no different for most other EV companies as they continue to burn cash.
Also, both Rivian and Lucid Motors disappointed markets with their 2023 production guidance. While Rivian attributed continued supply chain issues for lower production, Lucid Motors said it was due to low brand awareness for its products.
VinFast Might Have Delayed Its IPO
Last year, Vinfast filed for a US IPO. Nine banks including Credit Suisse, Citigroup, JPMorgan, and Morgan Stanley, were in the syndicate looking after the deal. However, Vinfast did not disclose anything about the IPO including the price, date, valuation, and the amount that it is seeking from the listing.
The company was first looking at a US IPO in 2021 at a valuation of $60 billion and was considering raising $2 billion from the issue.
However, the valuations of EV companies have taken a beating. Despite the recent rise, even Tesla’s market cap is around half of its all-time highs. Last month, VinFast said that the IPO and valuation would be subject to market conditions.
Some of the other companies have also delayed their IPOs. However, Chinese online fashion company Shein is reportedly looking to IPO in the US later this year—read out guide on some of the major upcoming IPOs.
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