NC got VinFast. But how close was Chatham County to landing a Hyundai factory?

For three decades, North Carolina kept striking out on a major car factory. Mercedes-Benz spurned the Tar Heel State for Alabama in 1993, and in subsequent years, fellow foreign manufacturers Volkswagen, Audi, Volvo, Toyota and Mazda bypassed North Carolina to open factories in nearby Southeastern states.

But in the winter of 2022, North Carolina was presented with two chances to end this losing streak.

Early that January, a pair of national site selection firms contacted the Economic Development Partnership of North Carolina, the state’s main business recruitment organization, about building electric vehicle plants. One firm, JLL, represented the new Vietnamese startup VinFast. The other, KPMG, represented the more established South Korean brand Hyundai.

On history and sales, the two Asian car companies diverged. In 2021, Hyundai sold around 740,000 vehicles in the United States alone. Founded in 2017, VinFast had never previously sold cars outside its native Vietnam.

JLL was first to reach out to North Carolina; the firm had had periodic communication with state officials regarding a VinFast factory since October 2021. Yet public records obtained this month by The News & Observer show North Carolina economic leaders actually had more contact with Hyundai’s representatives for stretches of that pivotal winter.

The first Hyundai correspondence came on Jan. 5, 2022, when KPMG requested information from the Economic Development Partnership of North Carolina about the state’s most suitable sites. Working on a five-day deadline, EDPNC provided specifications on four sites: two in Chatham County, one in Person County and another in Brunswick County.

The next day, EDPNC looped in the North Carolina Department of Commerce about the Hyundai opportunity, which the company had code-named “Project EA.” In an email, EDPNC’s director of business recruitment, Austin Rouse, informed Commerce officials that KPMG had already spoken with Duke Energy about their search for a Hyundai site in North Carolina.

Then on Jan. 26, the president and CEO of Hyundai Motor North America and Hyundai Motor America visited the two Chatham County megasites. One was on the western edge of the county near Siler City. The other sat about 30 miles from downtown Raleigh in Chatham’s southeastern corner, near the unincorporated town of Moncure. During this tour, the Hyundai team informed EDPNC that the Chatham sites were among its “five to six” finalists for a factory.

“This project is moving extremely fast,” Rouse told Commerce officials on Jan 31. He relayed Hyundai’s interest in the two Chatham sites and advised that both Commerce Department leaders and Gov. Roy Cooper keep a week open in late February for a potential visit from Hyundai’s executive team in South Korea.

Later that day, EDPNC CEO Christopher Chung emailed North Carolina Commerce Secretary Machelle Baker Sanders and Cooper economic adviser Lee Lilley with specifics on Project EA. Chung said Hyundai intended to build a new electric vehicle assembly and battery factory that would create at least 2,000 jobs and draw an investment of at least $1.5 billion.

KPMG gave the state until Feb. 2 to respond to a second request for information, in which the site selection firm asked North Carolina to prioritize details “related to the site development timeline, specifically grading, site preparation, and wetland impacts.”

That was the last correspondence from KPMG in the public records. The discussed February visit from Hyundai’s top executive team never occurred. “We’re not expecting a visit,” Rouse told Lilley on Feb. 17. “Waiting to hear back from the consultant about next steps with Project EA.”

Ten days later, Rouse delivered the final message on Hyundai’s prospects in Chatham County, or anywhere in the state, telling Secretary Sanders, “To clarify, Project EA is no longer considering North Carolina.”

On May 20, 2022, Hyundai Motor Group joined Georgia Gov. Brian Kemp to announce the company would open an assembly and battery megaplant outside Savannah. This factory, in partnership with the battery maker LG Energy Solution, promised to create 8,500 jobs and spark around $7.6 billion in regional investment. Georgia and local governments combined to give Hyundai $1.8 billion in economic incentives, including tax breaks.

VinFast reenages North Carolina

By late February 2022, North Carolina had lost Hyundai and another car company had lost Georgia.

Right around the time North Carolina officials learned the state was no longer a candidate for Hyundai’s Project EA, consultants for the Vietnamese automaker VinFast intensified discussions about building a massive electric vehicle factory in Chatham County.

In a Feb. 28 email, then Senior Assistant Secretary of Finance David Spratley informed Lilley that “Project Blue,” which was the code name for the VinFast factory, had “reengaged with us in a big way over the weekend.”

The timing was likely no coincidence. VinFast had also been looking at the Savannah site, so when that land was taken, the company needed a new location.

In an interview this week with The News & Observer, Spratley said “my understanding is the carpet was pulled out of (VinFast) in Georgia.”

“When Hyundai communicated to some degree to Georgia that they had a preference for that (Savannah) site over other sites, Georgia shut down all other conversations,” said Spratley, who is now a director of economic development at the law firm Maynard Nexsen. “Georgia sent a number of clients that were considering that site packing.”

VinFast wanted to secure an alternative site rapidly. If the Hyundai project was described as moving “extremely fast,” factory talks from the five-year-old Vietnamese carmaker were progressing at hyperspeed. The site selection firm JLL gave North Carolina a week to present a deal to VinFast, and Commerce Department staff hurried to condense months of work, including drafting an incentive package, outlining permit requirements and coordinating future job training options.

“To say this is a daunting challenge is a gross understatement,” Spratley told colleagues in an email on Feb. 26. “It is unlike anything I have ever seen.”

On March 29, 2022, North Carolina leaders gathered at the eastern Chatham site near Moncure to celebrate what promised to be the state’s first car manufacturing factory: A 7,500-worker, $2 billion electric vehicle and battery assembly plant from VinFast.

When announcing VinFast’s arrival, North Carolina officials shared that the car company had narrowed its final site search to two locations: Chatham and a site near Savannah, Georgia.

Two projects, two disparate timelines

In a sense, both North Carolina and Georgia sought a major automotive project and got one. But in the two and a half years since the VinFast and Hyandai factory announcements, progress toward opening the plants has not been equal.

VinFast’s promised North Carolina plant has been plagued by delays and shifts in corporate strategy. No significant construction has occurred at the Chatham site. During a Sept. 20 earnings call, leaders for the loss-making car company explained they had decided to postpone the Moncure plant until 2028 in order to reserve money to build factories in Indonesia and India.

VinFast chairwoman Le Thi Thu Thuy told investors these markets, in contrast to North America, have “policies and the culture a lot closer to us (in Vietnam).”

On the other hand, the Hyundai megaplant in Georgia has actually moved up its opening date; instead of beginning production in early 2025, Hyundai now plans to start manufacturing cars near Savannah by the end of this year. The company has said the first model it will manufacturer at the Georgia plant will be its Ioniq 5 electric crossover.

In July, The Atlanta Journal-Constitution reported Hyundai had already hired more than 900 workers for the incoming factory.

NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com

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