VinFast, the Vietnamese electric vehicle maker, plans to invest an initial $500 million to set up an integrated facility in India and enter the world’s third-largest auto market.
The memorandum of understanding with the Tamil Nadu state government, unveiled on Saturday, calls for an investment of up to $2 billion, the company said without giving a specific timeline.
Construction of the Thoothukudi facility – which will have an annual capacity of up to 150,000 units – is targeted to begin this year. It is expected to create 3,000–3,5000 employment opportunities.
The Indian southern state is a major center for car manufacturing with production facilities of prominent companies such as BMW, Hyundai and Renault-Nissan, along with electric vehicle manufacturers such as China’s BYD and India’s Ather Energy and Ola Electric specializing in the manufacture of electric two-wheelers. (Ola Electric is looking to enter Mumbai this year.)
“We are delighted that VinFast has chosen to invest in Tamil Nadu to set up its integrated EV facility. With strong capabilities and an unwavering commitment to a sustainable future, I believe VinFast will emerge as a reliable financial partner and contribute significantly to the long-term development of Tamil Nadu,” said Dr. Thalikotai Raju Balu Rajaa, Minister for Industries, Government of Tamil. Nadu, in the statement.
Apart from the manufacturing facilities, the automaker is also looking to develop a dealer network in India to serve consumers in the world’s third-largest four-wheeler market.
“The MOU demonstrates VinFast’s strong commitment to sustainable development and the vision of a zero-emission transportation future. We believe that the investment in Tamil Nadu will not only bring significant economic benefits to both parties, but will also help accelerate the transition to green energy in India and the region,” said Tran Mai Hoa, Deputy Managing Director of Sales and Marketing of VinFast Global.
Founded in 2017, VinFast has been building EVs since 2021 and is in markets including the US and Canada — in addition to its home market of Vietnam. The loss-making company, often compared to Tesla, listed on Nasdaq through a SPAC deal with Black Spade in August and announced plans to enter India in October.
While VinFast is looking to expand its market by investing dollars in India, the company faces financial challenges in its existing markets. Last year, it cut jobs in the US and Canada and faced criticism over the VF8 EV over quality and safety issues. VinFast’s share price has fallen more than 81% since its initial public offering of $7.02.
However, India has been an attractive market for global EV players as the country aims to have 30% electrification by 2030. Domestic automaker Tata Motors has so far been the dominant manufacturer of EV cars in the country, while Chinese players BYD and MG Motors are looking to expand their presence in the country with their EV models. Similarly, South Korea’s Hyundai Motor has started bringing its electric vehicles to the Indian market to meet the growing demand. Tesla is also actively working to enter the market by establishing a factory in the western state of Gujarat.
The current penetration of electric cars in the Indian market is only 0.25% of total car sales of over 51 million, according to data available on the government portal Vahan. However, the government has offered incentives and subsidies to develop the electric car market.
The announcement of the India deal follows VinFast naming its founder and biggest backer Pham Nhat Voung as CEO earlier on Saturday.
