Vietnamese electric vehicle maker VinFast continues to produce a mixed bag of news.
The company submitted an application for a commercial zoning compliance permit to the Chatham County Planning Board on July 11 for its proposed $4 billion EV production plant in Moncure.
Plans include a 2.85 million square foot complex comprising eight buildings, including a press shop, the tallest building, at 75.2 feet; and a general assembly building, the largest at 995,900 square feet. Other buildings include a body shop, central energy plant, paint shop, guard house, pump house, and waste building.
According to the planning board’s website, the next meeting is scheduled for Aug. 1 at 6:30. No word if VinFast’s plans will be discussed.
While that appears promising, word came a few days later, on July 13, that shareholders of Black Spade Acquisition Company, the special-purpose-acquisition company (SPAC) that VinFast was supposed to merge with on July 20, decided to extend the company’s lifespan by another year. The vote now gives the SPAC until July 20, 2024, to merge with the company.
The merger would allow VinFast to go public through a stock offering in the U.S. It would value the company at approximately $27 billion with an equity value of $23 billion. After the transaction, existing shareholders of VinFast would hold about 99% shares of the combined company.
In connection with the extension, shareholders redeemed approximately $147 million, or over 80% of their shares, leaving $28.56 million in the trust account.
Some think the merger should be “scrapped altogether.”
“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,” said Reuters Antony Currie.
SPACS were seen as being popular in the last few years, but recent studies, including one from Harvard University, paint a different picture.
There are risks associated with SPACS, including subpar returns.
Investopedia.com quoted a Renaissance Capital strategist saying that as many as 70% of SPACs that had their initial public offering (IPO) in 2021 were trading below their $10 offer price by the end of that year. He said this downward trend could signal that the SPAC bubble some market experts had predicted may be bursting.
Unfulfilled deals are also another pitfall. The website said that more than 55 supposed SPAC deals, worth tens of billions of dollars, ended up being terminated in 2022, with an additional 65 SPAC sponsors shutting down entirely.
In addition, VinFast has only had 128 new vehicle registrations from January to May for its VF8 crossover.
Although the vehicle is only currently being sold in California, Insideevs.com said the sales are abysmal considering that California is America’s largest EV market, with approximately 40% of all zero-emission vehicle sales in the country.
The National Highway Traffic Safety Administration (NHTSA) issued the recall due to a multifunction head-unit display problem caused by a software error that may cause it to go blank while driving, increasing the chances of a crash. The error was talked about in-depth in many critical reviews in the past few months.
Reviews of the vehicle sparked words like abysmal, “very, very bad,” “yikes,” “simply unacceptable,” and “return to sender,” including from the highly respected MotorTrend, which said VinFast had the right idea, but the VF8 is nowhere near ready for customer deliveries that are already taking place.
The Moncure plant, which was scheduled to open at Triangle Innovation Point in 2024, was pushed back to 2025.
To attract the newly formed company, the state and Chatham County committed to spending nearly $1.2 billion in incentives over the next 32 years.
Using the state’s Transformative Job Development and Investment Grant program (JDIG), VinFast could get up to $316.1 million in reimbursement from the state over three decades if the company meets hiring goals.
The total state appropriation is estimated at $766 million, with Chatham County giving VinFast another $400 million incentive package.
New roads are being built for the project through eminent domain, leading to the loss of many homes, businesses, and a church that has been around since 1888.