Domestic EV Major VinFast Gets Ambitious with New India Factory

Posted by Written by Melissa Cyrill Reading Time: 3 minutes

Homegrown auto major, VinFast, is establishing a factory in southern India to manufacture electric vehicles, targeting the India, South Asian, Middle East, and African markets. It is testament to Vietnam’s rapidly advancing electric vehicle ecosystem and capacity for domestic innovation.

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

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

The VinFast factory is situated on a 400-acre parcel within the industrial park of the Tamil Nadu Industrial Promotion Corporation (SIPCOT) in Thoothukudi (formerly Tuticorin) and will create employment opportunities for approximately 3,000 to 3,500 individuals.

The decision to set up in Tamil Nadu was influenced by factors such as the availability of a skilled workforce, progressive state government policies supporting the EV sector, and the existing EV manufacturing ecosystem.

VinFast’s Tamil Nadu facility intends to serve markets in South Asia, the Middle East, and Africa.

It is understood, but not confirmed, that VinFast will produce electric cars and electric two-wheelers at the facility. The two-wheeler segment is India’s fastest growing EV market. Meanwhile, as per Vietnam’s Ministry of Industry and Trade, sales of electric motorcycles surged by approximately 30-35 percent in recent years, positioning Vietnam as the foremost electric two-wheeler market in the ASEAN region and the second-largest globally, following China.

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

VinFast has advocated for a reduction in India’s 100-percent import duty on fully built EVs, a proposal met with opposition from domestic automakers. While India, the world’s third-largest vehicle 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 auto import duties from UK carmakers under their ongoing FTA negotiations, besides Tesla. In response, the Indian government came out with a new EV scheme allowing access to lower import duties upon fulfilling certain criteria.

Although electric models accounted for just about two percent of India’s car sales in 2023, the country’s federal government aims to achieve a 30 percent market share by 2030 and is actively pursuing programs to attract EV manufacturers. On its part, the Vietnam government has also set an ambitious target, seeking 10 percent of all new vehicles sold in the country to be electric vehicles by 2030.

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

VinFast’s Tamil Nadu project is projected to have an annual production capacity of up to 150,000 vehicles, compared to 250,000 at VinFast’s main plant in Vietnam.

In its press release, VinFast notes: “Investing in building a factory in Tamil Nadu state not only aims to seize opportunities from the world’s third largest automobile market but also affirms VinFast’s global stature, making an important addition to the production ecosystem. around the world, including an existing factory in Vietnam, a factory under construction in the US and a factory to be built in Indonesia.”

Pham Sanh Chau, VinFast India CEO and former Vietnam ambassador to India, is leading the company’s endeavors in India. VinFast is currently collaborating with approximately 55 Indian dealers to establish a sales network and may explore opportunities to introduce its two-wheeler models in the future.

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