CHENNAI/HO CHI MINH CITY — Vietnam’s electric vehicle manufacturer VinFast has officially commenced production at its $500 million factory in Thoothukudi, Tamil Nadu, marking a significant milestone in its planned $2 billion investment in India. The move is part of VinFast’s larger strategy to accelerate its presence across Asia, after facing stiff competition in Western markets.
The new facility will initially produce 50,000 electric vehicles (EVs) annually, with capacity to scale up to 150,000 units. Strategically located near a major port in one of India’s key industrial hubs, the factory is positioned to serve as an export gateway to South Asia, the Middle East, and Africa.
“This investment will trigger the development of an entirely new industrial cluster in South Tamil Nadu,” said Tamil Nadu Industries Minister T.R.B. Raaja, emphasizing the state’s ambition to cement its position as India’s automotive heartland. The project is expected to generate over 3,000 local jobs.
VinFast’s Asia-Centric Growth After Western Setbacks
VinFast’s expansion into India follows its pivot towards Asian markets after limited traction in the U.S. and Europe. In 2024, VinFast sold nearly 97,000 vehicles, tripling its previous year’s sales, but with 90% of them confined to Vietnam.
After breaking ground on a $200 million assembly plant in Indonesia last year, VinFast is now building momentum across Thailand and the Philippines. The India facility is a cornerstone of its Asian strategy, aimed at tapping into fast-growing but under-penetrated EV markets.
“We have aspirations to turn this factory into a regional export hub,” said Pham Sanh Chau, CEO of VinFast Asia, noting ongoing discussions with Tamil Nadu’s government for broader investments across green energy, smart cities, and tourism.
India’s EV Market: An Unmissable Opportunity
India, now the world’s third-largest car market, presents a rare window of opportunity for EV makers. While two- and three-wheelers dominate India’s six million EV fleet, the market for four-wheel passenger EVs is accelerating, with sales jumping to over 110,000 units in 2024, up from a mere 1,841 in 2019.
“The electric car story in India is just beginning,” said Charith Konda, an energy specialist at the Institute for Energy Economics and Financial Analysis (IEEFA). He cited improved battery technology, faster charging infrastructure, and better vehicle designs as key drivers of the recent surge.
VinFast plans to enter India’s EV market later this year with its VF6 and VF7 SUV models, specifically designed for Indian consumers. Unlike models sold in the U.S., Canada, EU, and Southeast Asia, the VF7 will headline VinFast’s India launch, blending premium features with competitive pricing to challenge local incumbents.
A New Chapter in India-Vietnam Industrial Ties
VinFast’s India venture is not just a business expansion but could signal the beginning of a broader Vingroup presence in the country. Chief Minister M.K. Stalin has invited the Vietnamese conglomerate to explore investments in sectors like clean energy and smart infrastructure, promising full support to establish a comprehensive ecosystem in Tamil Nadu.
With global EV giants keeping a close watch on India’s evolving landscape, VinFast’s aggressive entry could reshape the competitive dynamics, especially as the Indian government aims for 30% EV penetration in passenger vehicle sales by 2030.
“This is a market no automaker can afford to ignore,” said Ishan Raghav, Managing Editor of autoX magazine, underlining India’s growing significance in global EV strategies. (zai)
Sources: AP, Reuters, ANI, The Hindu, Vietnam News Agency