Vietnam EV maker VinFast to invest up to US$2 billion in India

HO CHI MINH CITY – Vietnamese electric vehicle (EV) maker VinFast announced on Jan 6 that it will invest up to US$2 billion (S$2.66 billion) to set up its first manufacturing facilities in India.

The company, which is looking to make inroads into the world’s third-largest vehicle market, said it will build an integrated EV facility in the southern state of Tamil Nadu. The initial investment will be US$500 million for the first five years of the project, it said in a statement.

The construction of this EV and battery manufacturing plant will start later in 2024 in the city of Thoothukudi in Tamil Nadu. The project will have an annual capacity of up to 150,000 units and create 3,000 to 3,500 jobs locally, the statement added.

There are also plans for VinFast to establish a nationwide dealership network in India to develop brand awareness and reach out to consumers.

It was a busy day for VinFast on Jan 6 as the company also announced that chairman Pham Nhat Vuong would become its new chief executive officer and directly oversee the company’s global operations.

Current CEO Le Thi Thu Thuy, who has held the post since late-2021, will serve as chairwoman and continue to engage with VinFast’s external stakeholders and fundraising activities.

VinFast currently has four battery facilities in Vietnam. It also has two EV manufacturing plants – one in Vietnam’s Hai Phong province, and another that’s under construction in North Carolina in the US.

VinFast, which made its Nasdaq debut in August last year and has yet to turn a profit, said in October that it wanted to make inroads in India, where EVs made up less than 2 per cent of the country’s total car sales of more than four million in 2023.

The Indian government has a target to boost this to 30 per cent by 2030 and is working on incentives and schemes to attract more EV makers.

“Foreign companies who want to crack the market in India will have to figure out domestic manufacturing,” said Mr Shashidhar Kagganti Jayakumar, a research associate at India-based research network Digital Futures Lab.

Investors will need to “understand the context of how things work in India”, he said, noting that there needs to be good after-sales services for EVs that must be able to suit India’s hot weather.

India is rolling out a scheme to grant subsidies to EV original equipment manufacturers that have at least 50 per cent of the vehicle components manufactured in India and locally sourced.

The national government is also offering different types of financial incentives to EV consumers, including direct discounts, exemption from road taxes and registration fees, and access to low-interest loans.

As things stand, the growth of EVs in India is largely from two-wheelers, said Mr Jayakumar, as well as the ongoing green transition in the logistics sector.