Vietnamese automaker Vinfast has announced a new manufacturing facility in the Indian state of Tamil Nadu in a deal with the state government worth up to $2bn. The move signals the company's intent to target the fast-growing Indian domestic market with its affordable EVs.
Situated in the coastal city of Thoothukudi, the the facility is slated to have an annual capacity of up to 150,000 units. Construction of the plant is anticipated to begin in 2024.
The firm calls the planned facility "integrated", suggesting, considering Vinfast's vertically integrated battery manufacturing, that the firm may also produce cells at the site.
More of this direct to your inbox?
Get our free weekly newsletter, plus premium data and content
No spam. Unsubscribe anytime.
Vinfast and the state government will work toward a total investment of up to $2bn, with an intended commitment of $500mn for the first phase of the project, which is initially set to last five years.
Growing footprint
The Vietnamese EV pure play has been rapidly investing in manufacturing capacity in several countries, including a$4bn investment in Chatham, South Carolina which is targeting production capacity of 150,000 vehicles/year by 2026.
The firm also has a $1.2bn investment, in a complete knock down (CKD) assembly plant in Indonesia. The plant will have capacity to produce 30,000-50,000 cars annually through a process of assembling pre-packaged imported vehicle parts. Start of production is also scheduled for 2026.
However, the company has a long way to go to profitability, reporting a -30pc gross margin at the end of 2023 on the back of only 10,027 EV deliveries. The effective donation of its sister company VinES by the firm's then-chairman Pham Nhat Vuong, however, means that the automaker can boast of vertically integrated battery production — as well as a partnership with Chinese battery player Gotion for the manufacture of LFP cells in Vietnam.
Indian ambition
Now, though, with vehicle assembly announced for India, the automaker says it also aims to establish a nationwide dealer network in the country, as part of its plans to "establish local distribution in ten key markets", as the company told investors in December. To this end, the firm announced deals last week with four dealers across five US states for local distribution.
The Indian EV market is positioned to grow in coming years thanks to tax exemptions on BEVs and HEVs, as well as a government target of achieving 30pc of all vehicle sales being electric by 2030, according to the Trade Promotion Council of India.
Indeed, Vinfast told investors in December that its choice of India, as well as Indonesia, as strategic markets is intended to "potentially take advantages of local tax benefits and local sourcing".
At the end of 2023, Vinfast reported $131mn in cash and cash equivalents to support its rapid expansion plans. But the company has options open to it financially, including a history of cash grants from its chairman.
"There is still a way to go, but the company has so far been very effective at raising capital in a high interest rate environment," says Jesse Atlas, global e-mobility market manager at US manufacturer Penn Engineering.
"Investors seem to have bought the story that there is value in being the dominant BEV and electric two-wheeler manufacturer in a country of 97mn people with a rapidly growing consumer class," Atlas continues.
Vinfast has also announced that billionaire founder of its parent company Vingroup, Pham Nhat Vuong, will transition from his current role as the chairman of the board of directors of Vinfast to assume the CEO position.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
