Vietnam EV maker VinFast plans $2B investment in India

VinFast, Vietnam’s electric vehicle manufacturer, plans to initially invest $500 million to set up an integrated facility in India and break into the world’s third-largest automobile market.

The memorandum of understanding with the state government of Tamil Nadu, unveiled on Saturday, earmarks an investment of up to $2 billion, the company said without giving a concrete timeframe.

Construction of the facility in Thoothukudi — which will have an annual capacity of 150,000 units — is targeted to start this year. It’s projected to generate 3,000–3,500 employment opportunities.

The Indian southern state is a major center for automobile manufacturing with production facilities of prominent companies such as BMW, Hyundai, and Renault-Nissan, alongside electric vehicle manufacturers, including BYD from China and India-based Ather Energy and Ola Electric that specialize in making electric two-wheelers. (Ola Electric is looking to list in Mumbai this year.)

“We are delighted that VinFast has chosen to invest in Tamil Nadu to establish its integrated EV facility. Possessing robust capabilities and unwavering commitment to a sustainable future, I believe that VinFast will emerge as a reliable economic partner and substantial contributor to Tamil Nadu’s long-term development,” said Dr. Thallikotai Raju Balu Rajaa, Minister of Industries of the government of Tamil Nadu, in the statement.

In addition to the manufacturing facility, the carmaker is also looking to develop a Pan-India dealership network to cater to consumers in the world’s third-largest four-wheeler market.

“The MoU demonstrates VinFast’s strong commitment to the sustainable development and vision of a zero-emission transportation future. We believe that investing in Tamil Nadu will not only bring considerable economic benefits to both parties but will also help accelerate the green energy transition in India and the region,” said Tran Mai Hoa, Deputy CEO of Sales and Marketing at VinFast Global.

Founded in 2017, VinFast has been making EVs since 2021 and is in markets in the U.S. and Canada, in addition to its domestic market in Vietnam. The lossmaking firm, often compared to Tesla, listed on the Nasdaq through a SPAC deal with Black Spade in August and announced its plan to enter India in October.

While VinFast looks 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 U.S. and Canada and faced criticism for the VF8 EV over quality and safety issues. VinFast’s share price fell by more than 81% since its initial public offering to $7.02.

Nonetheless, India has been an attractive market for global EV players as the country aims to have 30% electrification by 2030. Homegrown carmaker Tata Motors has so far been the dominating EV car manufacturer in the country, while Chinese players BYD and MG Motor are looking to expand their presence in the country with their EV models. Similarly, South Korea’s Hyundai Motor has started bringing its EVs to the Indian market to cater to 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 India’s market is only 0.25% of the total car sales of over 51 million, per the data available on the government’s Vahan portal. However, the government has offered incentives and subsidies to grow the EV car market.

Its India deal announcement follows VinFast naming its founder and biggest backer, Pham Nhat Vuong, as CEO earlier on Saturday.