Capital Darling Crashes, This New Force Faces Lawsuit

Compiled by | Zhang Linyu

Edited by | Huang Dalu

Designed by | Zhen Youmei

Source | Nikkei Asia, Reuters, Bloomberg, WSJ, Hunterbrook

VinFast's plan to invest $4 billion in a US electric vehicle factory has not been built to date.

Located in Chatham County, North Carolina, this factory is expected to be completed in July 2026, and this project was once called the "crown jewel on its global expansion map" at the groundbreaking ceremony.

The building permit for this factory expired on December 10, 2024, and construction stopped that year.

Now, at the entrance of this 1811-acre (about 7.32 million square meters) vacant land southwest of Raleigh, the capital of North Carolina, large amounts of unused building materials are piled up.

On May 28, 2026, US North Carolina Attorney General Jeff Jackson (Jeff Jackson) officially sued VinFast, demanding the return of the land and recovery of $80.2 million in state taxpayer funds originally used for road engineering and site construction.

The reason is that the company failed to fulfill the stipulated deadlines, work targets, and investment commitments in the agreement.

"We reached an agreement, but they did not comply," Jackson told reporters from Nikkei Asia the day after the state government filed the lawsuit.

VinFast stated in an email statement: "We recently received a complaint from North Carolina, legal counsel is reviewing the relevant matters, and we will respond at an appropriate time."

Entangled in Lawsuits

In March 2022, this new car manufacturer headquartered in Hanoi, Vietnam, announced it would invest over $4 billion in Chatham County, North Carolina over four years to build an annual production capacity of 150,000 electric vehicles factory and a supporting battery factory, creating over 6,000 jobs locally.

The factory was expected to officially commence production in mid-2024 and was hailed by the state government as the "largest economic development project in the state's history" at the time.

To welcome this "big spender", the North Carolina state government and local authorities offered extremely tempting conditions, promising a total of about $450 million in financial subsidies, tax reductions, and special funds for land preparation, traffic improvement, and infrastructure construction such as water conservancy and sewage.

In July 2023, after months of delays, VinFast held a grand groundbreaking ceremony in the state.

VinFast's parent company Vingroup founder and Vietnam's richest man Pham Nhat Vuong (Pham Nhat Vuong) and several US politicians attended. Bulldozer engines roared, leveling the forest and farmland.

Under the spotlight of the capital market, VinFast subsequently listed successfully on Nasdaq via SPAC in August 2023. The stock price was pumped to the sky within a few days. Market cap once broke $190 billion, briefly surpassing century-old giants like General Motors, Ford, and Porsche, second only to Tesla and Toyota.

After the noise of the groundbreaking ceremony, residents and government officials in Chatham County, North Carolina did not wait for the rise of modern factory buildings, but instead waited for silence.

Throughout 2024, not a single steel beam was erected, nor a single brick laid on this golden industrial plot that cost hundreds of millions of dollars to prepare.

The indictment pointed out mercilessly: As of December 2024, VinFast had in fact "stopped all operations on this plot"; over the past nearly four years, the core construction progress of the project was "zero progress".

Facing the factory that still hasn't started construction, VinFast started a slow delay strategy: first postponing the production start time from mid-2024 to 2025, then in July 2024, simply postponed the production start time by three years at once to 2028.

However, in the March 2026 financial report, although VinFast reiterated under pressure that it "plans to resume construction of the North Carolina factory in 2026 and start production in 2028", the modified plan submitted to the local government has exposed internal weakness. The originally promised 7,500 jobs were halved twice, plummeting to just 1,400, a drop of up to 80%.

This completely angered the North Carolina state government.

Subsidies from US local governments have never been free; they signed a strict phased betting agreement with VinFast.

According to the agreement signed that year, VinFast must start factory construction before January 1, 2024, must have the factory officially in operation before July 2026, and create at least 1,750 jobs by the end of 2026.

If the minimum employment threshold cannot be met, VinFast not only won't get subsequent subsidies but must also refund up to $125 million of early land preparation reimbursement to the state in full.

Additionally, the agreement granted the state government the power to forcibly repurchase the land.

In January 2026, the North Carolina judicial department officially issued a breach of contract notice to VinFast.

And VinFast not only failed to propose feasible rectification and funding proof, but also did not submit the 2025 annual compliance report on time, completely adopting a "playing dead" attitude towards local government inquiries.

Dual Loss

In fact, internal company employees saw through the flaw two years ago.

A former senior employee who did not wish to be named for confidentiality reasons told reporters: "If you are an internal employee, you would know this project is impossible to achieve."

In 2024, the company faced financial difficulties, losses widened, the US team was laid off on a large scale, and both HR and finance departments were affected.

At the beginning of 2026, VinFast released its 2025 financial report data.

The report shows that throughout 2025, VinFast recorded a net loss of up to $3.9 billion. For a young car manufacturer with low annual sales and no "assets", burning nearly $4 billion in cash in one year, if it cannot form its own self-sustaining capability or potential, it will need a lot of funds to continue.

It is worth noting that in the Q4 2025 financial report, VinFast was forced to accrue an asset impairment provision (Impairment Charge) of up to $235.6 million for its North Carolina factory in the US that could not start construction.

This means that VinFast management itself was also very clear that the hundreds of millions of dollars already invested, a significant part of the funds, was totally wasted, turning into unrecoverable bad debts.

Although its official spokesperson tried hard to justify saying "This is just a disciplinary accounting adjustment based on changes in project timeline and development assumptions, not representing giving up the US market", in the eyes of the capital market, this is equivalent to publicly admitting the failure of the localization strategy in the US.

What makes global investors and regulatory agencies even more frightened is its sales volume.

For a long time, VinFast has always claimed externally that its global delivery volume and order volume are continuously growing.

At the beginning of 2026, it announced that the annual global delivery target would challenge 300,000 vehicles, but Reuters and investigative media Hunterbrook exposed its false sales before this.

It was confirmed in the 2025 financial report released at the beginning of 2026 that about 27% of all vehicles delivered globally by VinFast were sold directly to "related parties".

The so-called "related parties" refer to other subsidiaries under Vingroup, mainly the Vietnamese ride-hailing company and taxi operation platform controlled by Pham Nhat Vuong himself.

This means that more than a quarter of the electric vehicles produced by VinFast were not truly bought by consumers, but through a capital game of "left hand to right hand", became an "self-produced and self-sold" tool digested internally by Vingroup in Vietnam.

In June 2024, the construction company Clayco terminated the contract with VinFast.

"The headquarters has not issued any official statement, so no one would tell anyone externally, such as the government, suppliers, or other partners, of course not even North Carolina, that we are no longer building a factory," the former senior employee said, and added that two years ago the US team had already realized that many commitments made by the company were unlikely to be fulfilled.

But in March 2026, VinFast submitted a new plan to Chatham County to reduce the construction scale and lower employment expectations, while publicly announcing plans to resume construction.

VinFast also proposed a plan to move the headquarters to North Carolina and establish a new research and development center.

According to this former employee, since there are no researchers in the US, the number of researchers in Vietnam has also decreased, so this proposal is unlikely to be realized.

A source stated: "It feels like this company has been misleading the state government." Due to sensitivity, the source refused to reveal their name.

On the other hand, this plot of land in North Carolina has attracted the interest of multiple companies. According to informed sources, one company once proposed to purchase the plot, but ultimately VinFast rejected it.

According to the provisions of the land repurchase agreement, after VinFast stopped construction for 12 consecutive months, North Carolina could have exercised the right to take over the plot in December 2025.

North Carolina Commerce Minister Lee Lilley (Lee Lilley) said in an interview with Nikkei Asia in April 2026 that the state government is eager to see "large-scale economic activities" in this area.

He said: "We need to ensure that everything happening there brings economic activity. This requires us to communicate with all relevant parties to ensure there is enough economic activity there, thereby proving that taxpayers' investment is worthwhile."

For a state that has been trying to attract car manufacturers for decades, this failure is particularly heartbreaking.

In 2018, North Carolina lost a Toyota-Mazda assembly plant, which later settled in Alabama; in 2022, it lost a large Hyundai factory worth $5.5 billion, which later settled in Georgia.

VinFast came to the US to make cars after being encouraged by the "Inflation Reduction Act" launched during the Biden administration. Although North Carolina had conducted detailed investigations beforehand, even requesting background information on the company from the US Embassy in Hanoi, it still could not avoid this outcome.

Critics stated that the state acted too fast at the time, and this large project had a political speculation nature.

Scott Lincicome, Vice President of General Economics at the Cato Institute, stated that although federal policies during the Biden administration encouraged electric vehicles, after Trump was elected, most policies were reversed.

He said: "The way the market changes cannot be predicted. And policy changes are also reasons for market changes."

Lincicome added that due to VinFast facing financial difficulties, the state government is unlikely to recover $80 million from the company. The company disclosed that accumulated losses in the past three years have reached $9 billion.

In early May 2026, the company underwent business restructuring, transferring debt worth $7 billion off the books.

"This is a land of extremely high value, now idle for four years, the opportunity cost and resources invested in this project are all unrecoverable forever," said Lincicome.

Turning to India and Indonesia

While car manufacturing in the US hit a standstill and legal disputes, VinFast attempted to continue its globalization story in India and Indonesia. This time, the strategy adopted was a rapid tactic vastly different from the US.

According to Reuters reports, this time VinFast gave up the route of integrated heavy asset super factories costing billions of dollars in the US, and instead chose to quickly implement factories with lower initial investment and CKD/SKD (semi-finished assembly/partial assembly) models, in order to maintain its "global expansion" narrative in the capital market.

India is one of the world's fastest-growing and potentially huge car markets, but at the same time it has extremely strict protection with high import tariffs on cars reaching 70% to 100%.

To bypass tariffs, VinFast adopted a localization strategy in India.

VinFast selected its first manufacturing base in India at Thoothukudi, Tamil Nadu. This area is the core hub of India's automotive industry, with a mature parts supply chain system and port advantages.

The project initially claimed a total planned investment of $2 billion, but in actual implementation, VinFast adopted the practice of "phased capital injection".

The actual investment amount of the first phase was significantly reduced. The factory only took over a year and officially held a production commencement ceremony in August 2025. The planned production capacity of the first phase of the factory is 50,000 electric vehicles per year.

At the beginning of June 2026, VinFast announced that this factory has officially rolled off the 10,000th electric vehicle. The factory currently mainly assembles two models of right-hand drive versions locally and officially launched sales in the Indian market in September 2025.

To enter the Indian ride-hailing and large family market, VinFast also plans to introduce Vietnam's hit 7-seater MPV for production at this factory.

In December 2025, VinFast announced loudly that it would invest an additional $500 million in the second phase of this base.

According to local Indian media reports, the explanation for this money has changed now. Instead of betting solely on four-wheeled electric vehicles, it plans to build dedicated production lines to manufacture electric buses and electric two-wheelers, trying to use India's larger two-wheeler market to share the factory's fixed costs.

Indonesia is the same story.

Here is rich in nickel mineral resources, which are core materials for power batteries. The Indonesian government is also vigorously promoting electrification transformation, so this place has become another important area for VinFast to go overseas to build cars.

Compared to the embarrassment of the US factory being "digging the ground without building houses" for years, VinFast showed surprising "real estate speed" in Indonesia.

The electric vehicle assembly plant located in Subang, West Java, took only 17 months from groundbreaking to officially declare completion and production on December 15, 2025.

The total planned investment for the Subang factory is over $1 billion, but the actual investment in the first phase is about $300 million.

Currently, its annual production capacity is also set at 50,000 units, mainly responsible for assembling entry-level cars more suitable for the low customer unit price market in Southeast Asia.

Additionally, on January 29, 2026, according to Gelonghui reports, VinFast signed an agreement to develop transportation infrastructure in Indonesia. VinFast became a strategic investor in Indonesia and provided full funding for this project.

Industry analysts interviewed by Reuters and Bloomberg held reservations about VinFast's "flourishing everywhere" in Indonesia and India. They generally believed this was capital hypnosis of "covering old scars with new stories".

In the short term, it maintained the globalization appearance of "not falling due to US defeat" in the Nasdaq market, but against the background of the parent company Vingroup's high real estate debt and zero blood-making ability in the automotive main business, whether these two new factories are "life rings" that can bring positive cash flow or "new swamps" that accelerate its capital chain rupture, the market is giving the answer.