Vietnam's automaker VinFast said on Tuesday it has signed a preliminary deal to initially invest $2 billion to build a factory in North Carolina to make electric buses, sport utility vehicles (SUVs) along with batteries for EVs.
The unit of Vietnam's biggest conglomerate Vingroup, said it plans to have a total investment of $4 billion in its first U.S. factory complex.
Construction should begin this year as soon as the company gets necessary permits, and is expected to finish by July 2024. The plant's initial capacity will be 150,000 units per year, Vinfast said.
"With a manufacturing facility right in the U.S. market, VinFast can stabilize prices and shorten product delivery time, making our EVs more accessible to customers," said Nguyen Thi Thu Thuy, Vingroup vice chair and VinFast Global CEO.
VinFast has begun taking pre-orders globally for two electric SUVs with a goal to begin delivering them in the fourth quarter.
U.S. President Joe Biden said the VinFast investment, which will create more than 7,000 jobs, is "the latest example of my economic strategy at work."
"It builds on recent announcements from companies like GM, Ford, and Siemens to invest in America again and create jobs, said Biden, who set an ambitious goal for half of new car sales to be electric by 2030.
This will be North Carolina's first car plant and it is the largest economic development announcement in the state's history, the governor's office said in a statement.
VinFast said prices for its VF8 sport SUV started from $41,000 in the United States. By comparison, a Tesla SUV sells for around $63,000. VinFast is targeting global electric vehicle sales of 42,000 this year.
Production is hard
VinFast is betting big on the U.S. market, where it hopes to compete with legacy automakers and startups with affordable electric SUVs and a battery leasing model.
Other electric vehicle startups like Rivian and Lucid have slashed their production targets this year due to supply chain disruptions caused by coronavirus, which hit their share prices.
Tesla CEO Elon Musk said last year, "It's insanely difficult to reach volume production at affordable unit cost."
VinFast, which became Vietnam's first fully fledged domestic car manufacturer in 2019, plans to transition to all-electric vehicle production from late 2022.
Outside of North America, the company is looking for a plant in Germany, it said in January.