VinFast, a leading electric vehicle manufacturer from Vietnam, has set its sights on India as it plans to make a grand entrance into the world’s third-largest automobile market. With an initial investment of $500 million, the company aims to establish an integrated facility that will pave the way for future growth.
The memorandum of understanding with the state government of Tamil Nadu, revealed on Saturday, outlines an investment of up to $2 billion. While no concrete timeframe has been announced, construction of the facility in Thoothukudi is expected to commence this year and will have an annual capacity of 150,000 units. This ambitious project is projected to generate 3,000-3,500 employment opportunities.
Tamil Nadu, a prominent hub for automobile manufacturing in India, is home to production facilities of major companies such as BMW, Hyundai, and Renault-Nissan. It also houses electric vehicle manufacturers including BYD from China, as well as Indian-based Ather Energy and Ola Electric, known for their expertise in producing electric two-wheelers. (Ola Electric is expected to be listed on the Mumbai stock exchange later this year.)
“We are delighted that VinFast has chosen to invest in Tamil Nadu to establish its integrated EV facility. With robust capabilities and a strong commitment to sustainability, I firmly believe that VinFast will become a valuable economic partner and contributor to the long-term development of Tamil Nadu,” stated Dr. Thallikotai Raju Balu Rajaa, Minister of Industries for the Government of Tamil Nadu, in a official statement.
In addition to the manufacturing facility, VinFast also plans to establish a pan-India dealership network to cater to consumers in the four-wheeler market.
“This MoU showcases VinFast’s unwavering commitment towards sustainable development and our vision for a zero-emission transportation future. We believe that investing in Tamil Nadu will not only bring significant economic benefits to both parties but will also help accelerate the adoption of green energy in India and the surrounding region,” said Tran Mai Hoa, Deputy CEO of Sales and Marketing at VinFast Global.
Founded in 2017, VinFast entered the EV market in 2021 and has since expanded its presence to countries such as the United States and Canada, in addition to its domestic market in Vietnam. In August, the company went public through a SPAC deal with Black Spade and announced its intention to enter the Indian market in October.
While VinFast looks to expand its market and invest in India, it faces challenges in its existing markets. Last year, it cut jobs in the U.S. and Canada and received criticism for the quality and safety issues surrounding its VF8 EV. Since its initial public offering, VinFast’s share price has dropped by over 81%, currently sitting at $7.02.
However, India remains an attractive market for global EV players, as the country has set a target of 30% electrification by 2030. Currently, homegrown carmaker Tata Motors dominates the EV car market in India, with Chinese players BYD and MG Motors also looking to expand their presence with their own EV models. South Korea’s Hyundai Motor has also entered the market with its EV offerings, and Tesla continues to work towards establishing a factory in the western state of Gujarat.
According to data on the government’s Vahan portal, the current penetration of electric cars in India’s market is only 0.25% of total car sales, which amount to over 51 million. However, the Indian government has put forth incentives and subsidies to drive the growth of the EV market in the country.
In a separate announcement, VinFast named its founder and biggest backer, Pham Nhat Voung, as the CEO earlier on Saturday. This move further solidifies the company’s determination to make its mark in the Indian market.
