- VinFast said it only became aware of the lawsuit through the media and it still plans to go ahead with construction of the factory.
Editor’s Note: This story has been updated to reflect VinFast’s response.
North Carolina is suing VinFast, the Vietnamese electric vehicle manufacturer for a breach of agreements with the state for a planned EV factory in Moncure, Chatham County.
State Attorney General Jeff Jackson filed the suit on behalf of the state’s Department of Commerce. He said in a press release that through the lawsuit, the state is exercising its contractual right to acquire the property, thereby, protecting taxpayer investments while preserving the site for future economic development opportunities.
“VinFast agreed to build a factory and create jobs for North Carolinians – it didn’t do either,” Jackson said in the release. “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 lawsuit states that the company has defaulted on its agreements with the state which was to create 7,500 jobs and over $3 billion in private investments in order to receive all grant payments with the state and that “VinFast’s continued inaction all but guarantees further imminent default” and “will continue to default on its obligations in several key ways,” noting that each gives the state the right to take the land back contractually.
The first way, the suit states, is that the company failed to commence “vertical construction of buildings and structures on Parcel A” of the site by January 1, 2024. VinFast’s default, therefore, gives the state contractual rights to purchase the site.
As a result, the suit says, “it is now impossible for the Company to meet its contractual deadline to have an operational manufacturing plant on the Site by July 1, 2026,” and that the company admitted publicly that it will be unable to construct an operational facility until at least 2028.
It also states that the new plans that the company announced in March would not meet the jobs or the investment commitments to the state.
Additionally, Jackson’s suit said that since the facility wouldn’t be operational until 2028, it won’t be able to meet its commitment of creating the 1,750 scaled down jobs for the site by Dec. 31.
Finally, the suit states that VinFast ceased operations on the site in December 2024.
“VinFast has failed to take any concrete action that shows it can and will fulfill its obligations to the state,” the suit says.
According to the press release, the North Carolina Department of Justice notified VinFast in January that it had defaulted on its agreement and that the state intended to protect its investment by exercising its right to acquire the site. In response, VinFast argued that it had met its construction deadlines and would have a facility opened on a delayed 2028 timeline. The state’s action seeks to protect taxpayer investments and enforce the commitments tied to the project.
The news of the lawsuit comes on the heels of news earlier this week that VinFast plans to sell its two main factories and shift $7 billion worth of debt, which has been raising concerns.
“North Carolina will always compete aggressively for jobs and investment, but we also protect taxpayers by requiring the company to hold up its end of the deal,” Gov. Josh Stein, a Democrat, said in the release. “VinFast has not fulfilled its commitments. Today’s action is about protecting taxpayers and getting the Chatham County mega-site back on the market to support future good-paying manufacturing jobs.”
In 2022, the embattled company received a Job Development and Investment Grant (JDIG) of up to $316.1 million in state reimbursements over three decades, along with another $400-million incentive package from Chatham County, are contingent on the company meeting its hiring goal of 7,500 and investing $4 billion.
Then Gov. Roy Cooper attended the groundbreaking in July 2023 with company officials.
The state was also spending $450 million on infrastructure around the site, including a new highway to gain access in and out of the site.
JDIGS are contingent on a company’s agreement with the state before the company receives any funding.
Merry Oaks Baptist Church, which stood on the border between Moncure and New Hill on the corner of Old US-1 and New Elam Church Road since 1888, met with a wrecking ball in June to make way for the highway.
The church, along with 27 homes and five businesses, had to forfeit its land under eminent domain to make way for the North Carolina Department of Transportation’s highway plans.
The company, which has received poor reviews over the years, has been whittling away at its original plan over the years in the building of the factory.
A 995,500-square-foot building was originally planned for the general assembly facility, but in December 2023 the square footage was scaled down to 782,255 square feet.
In April 2024, the company submitted revisions for the building, with a new size of 810,100 square feet.
VinFast’s focus shifted to Asia in 2024, with a groundbreaking on an EV assembly plant in Indonesia. It has also pivoted to markets in India and the Philippines, and has remained somewhat strong in its home country of Vietnam.
However, those familiar with the EV industry and the financial markets still speculate about VinFast’s chances in the United States and Europe, according to several reports in August.
Financial and investing advice company The Motley Fool called the company a “money pit,” echoing Insideevs’ article. It added that in addition to Vuong’s own money, capital from Vuong’s Vingroup, its affiliates, and other external lenders amounted to more than $14 billion that was put into the EV maker.
According to the Economist, the company has lost $11 billion since 2021.
Brian Balfour, senior vice president of research at the John Locke Foundation told Carolina Journal in what was arguably the largest corporate welfare deal in state history, Cooper endorsed a deal worth potentially $1.2 billion with an untested Vietnamese electric car manufacturer.
“The deal would have committed North Carolina taxpayers to this company for more than 30 years,” he said. “It’s amazing why politicians continue to engage in doling out political privileges and tax handouts to favored corporations given these programs’ terrible track record. For instance, more than 80 percent of completed JDIG deals ended with a failure to meet their state goals. It’s long past time to give up on these schemes of government direction of the economy and instead embrace a free enterprise system that has a proven track record of success.”
new: vinfast’s response
In an emailed statement on Friday to Carolina Journal, a spokesperson for VinFast said, “We have only become aware of the matter through public media reports and have not yet received any official documentation from the State of North Carolina. We will review and provide an official response once we receive all relevant materials from the State.”
They also said that recent changes in US policies related to the EV industry have impacted the project timeline, requiring additional time for them to evaluate appropriate implementation conditions.
“Contracts with contractors have already been signed, and construction activities are expected to commence shortly in accordance with the planned schedule,” the statement concluded.
Carolina Journal also reached out to Chatham County officials, but didn’t hear back prior to publication of this article.