Domestic EV Major VinFast Gets Ambitious with New Indian Factory

Homegrown auto major, VinFast, is setting up a plant in southern India to manufacture electric vehicles, targeting the Indian, South Asian, Middle East and African markets. It’s a testament to Vietnam’s rapidly developing electric vehicle ecosystem and local innovation potential.

VinFast Auto Ltd, an electric vehicle (EV) manufacturer under Vingroup, one of Vietnam’s largest private conglomerates, has started construction of a new manufacturing facility in the southern state of Tamil Nadu.

VinFast plans to invest US$500 million over five years in this project. Earlier in January, VinFast had signed an agreement with the Tamil Nadu government to invest US$2 billion over time.

The VinFast plant is located on a 400-acre site within the Tamil Nadu Industrial Promotion Corporation (SIPCOT) industrial park at Thoothukudi (formerly Tuticorin) and will create employment opportunities for approximately 3,000 to 3,500 people.

The decision to start Tamil Nadu it was influenced by factors such as the availability of skilled workers, ongoing government policies supporting the EV industry, and the existing EV manufacturing system.

The Tamil Nadu VinFast facility intends to serve the markets of South Asia, Middle East and Africa.

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It is understood, but not confirmed, that VinFast will produce electric cars and electric two-wheelers at the facility. The two-wheeler segment is the fastest growing EV market in India. Meanwhile, according to Vietnam’s Ministry of Industry and Trade, sales of electric motorcycles increased by approx. 30-35 percent in recent years, placing Vietnam first in the electric two-wheeler market in the ASEAN region and the second largest in the world, after China.

VinFast sold 72,468 electric scooters in calendar year 2023 in Vietnam and has trademarked the Klara S design in India. Klara uses an LFP battery instead of Li-Ion and has a capacity of 3.5kWh, for AutoCarProfessional.

VinFast has proposed a 100 percent reduction in India’s excise duty on fully-built EVs, a proposal that faced opposition from domestic automakers. While India, the world’s third-largest auto market, has been considering the request, no decision has been reached, according to a government official.

New Delhi has also been asked to reduce its import duties on cars from British carmakers under their ongoing FTA negotiations, apart from Tesla. In response, the Indian government came out with a new EV plan allowing access to lower import duties after meeting certain criteria.

While electric models accounted for about two percent of India’s vehicle sales in 2023, the federal government aims to achieve a 30 percent market share by 2030 and is actively pursuing plans to attract EV manufacturers. For its part, the Vietnamese government has also set a big goal, wanting 10 percent of all new cars sold in the country to be electric by 2030.

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Indian automakers competing in the country’s nascent EV market include ICE segment stalwarts Tata Motors and Mahindra. Recently, China’s SAIC-backed MG Motors entered into a joint venture with the JSW Group to expand its EV offerings in the Indian market.

VinFast’s Tamil Nadu project is expected to have the capacity to produce up to 150,000 vehicles per year, compared to 250,000 at VinFast’s main plant in Vietnam.

In its press release, VinFast notes: “Investing in the construction of a factory in the state of Tamil Nadu not only aims to take advantage of the third largest car market in the world but also confirms VinFast’s international status, and makes an important addition to the system production ecology. around the world, including a factory in Vietnam, a factory being built in the United States and a factory to be built in Indonesia.”

Pham Sanh Chau, CEO of VinFast India and former ambassador of Vietnam to India, heads the company’s operations in India. VinFast is currently partnering with around 55 Indian dealers to establish a sales network and may look for opportunities to introduce its two-wheeler models in the future.