VinFast, Vietnam’s Electric Vehicle Manufacturer, to Invest $2 Billion in India

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Vietnamese energy company VinFast has started planning to set up a $500 million joint venture factory in India. The move targets the world’s third-largest automotive industry. A memorandum of understanding (MoU) was signed with the Tamil Nadu government envisaging investment of up to $2 billion, but the company did not offer a specific timeline.

The construction of the factory in Thoothukudi is continuing and it is expected to start production this year with an annual capacity of 150,000 units. The development is expected to create 3,000-3,500 jobs.

Tamil Nadu is a major automobile manufacturing hub, home to factories of well-known brands such as BMW, Hyundai, and Renault-Nissan, as well as EV manufacturers such as China’s BYD, India’s Ather Energy, and Ola Electric, which specialize in electric two-wheelers.

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Dr. Thalikotai Raju Balu Rajaa, Minister of Industries, Government of Tamil Nadu, expressed appreciation for VinFast’s decision to invest in Tamil Nadu and wished it to become a valued financial partner and contributor to the development of long-term treatment.

In addition to its manufacturing location, VinFast also plans to establish a global marketing network to support customers in India, the world’s third-largest ATV market.

Tran Mai Hoa, Deputy General Manager of Sales and Marketing of VinFast Global, emphasized the company’s commitment to sustainable development and the future of zero-emission transportation through this memorandum of understanding. An investment in Tamil Nadu is seen as a win-win, bringing economic benefits to both parties and helping to accelerate the green energy transition in India and the wider region.

Founded in 2017, VinFast has been producing electric vehicles since 2021 and is expanding its presence in markets such as the US and Canada in addition to its home market in Vietnam.

Despite financial problems, including job cuts in the US and Canada and criticism over the VF8 EV’s quality and safety issues, VinFast is actively seeking to enter the Indian market. The company, often compared to Tesla, went public on the Nasdaq through a SPAC deal with Black Spade in August.

With its target of 30% electrification by 2030, India remains an attractive market for global electric vehicle players. While domestic Tata Motors dominates the EV market, Chinese players like BYD and MG Motors are trying to expand their presence.

South Korea’s Hyundai Motor has also entered the Indian market with its EVs and Tesla is working on setting up a factory in Gujarat.

Despite the current penetration of EVs in India being only 0.25% of total car sales, government incentives and subsidies aim to spur growth in the EV market. VinFast’s announcement of its deal with India comes on the heels of the appointment of its founder and main backer, Pham Nhat Voung, as CEO.