Vietnamese EV maker VinFast plans $2 billion investment in India

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VinFast, the Vietnamese electric car maker, plans to invest an initial $500 million to set up an integrated facility in India and enter the world’s third-largest car market.

A memorandum of understanding with the Tamil Nadu government announced on Saturday envisages investments of up to $2 billion, the company said without citing a specific deadline.

Construction of the Thoothukudi facility, which has a production capacity of up to 150,000 units per year, is targeted to begin this year. This is expected to create employment opportunities for 3,000 to 3,5000 people.

The southern state of India is a major hub for car manufacturing, with production facilities for prominent companies such as BMW, Hyundai and Renault-Nissan, as well as China’s BYD and India-based electric car manufacturing specialist Assur.・There are also electric vehicle manufacturers such as Energy and Ola Electric. Two-wheeled vehicle. (Ola Electric is aiming to list in Mumbai this year.)

“We are delighted that VinFast has chosen to invest in Tamil Nadu to set up an integrated EV facility. With our strong capabilities and unwavering commitment to a sustainable future, VinFast is a reliable economic partner. We believe that this will greatly contribute to the long-term development of Tamil Nadu,” said Dr. Talikotai Raju Bal Raja, Minister of Industry, Government of Tamil. Mr. Nadeau said in his statement.

In addition to manufacturing facilities, the automaker also aims to develop a pan-India dealer network to cater to consumers in the world’s third-largest four-wheeler market.

“The MoU demonstrates VinFast’s strong commitment to sustainable development and a future vision of zero-emission transport. We are confident that our investment in Tamil Nadu will bring significant economic benefits to both parties. We believe it will also help accelerate the transition to green energy in India and the region,” said Tran Mai Hoa, Deputy CEO, Sales & Marketing, VinFast Global. said.

Founded in 2017, VinFast has been manufacturing EVs since 2021, and has expanded into markets such as the United States and Canada in addition to the domestic Vietnamese market. The loss-making company, often compared to Tesla, went public on the Nasdaq through a SPAC deal with Black Spade in August and announced plans to enter India in October.

VinFast is investing dollars in India to expand its market, but is facing financial challenges in its existing markets. Last year, the company cut jobs in the U.S. and Canada, and its VF8 electric vehicle faced criticism over quality and safety issues. VinFast’s stock price has fallen more than 81% since its initial public offering to $7.02.

Nevertheless, India aims to achieve 30% electrification by 2030, making it an attractive market for global EV players. Up until now, domestic automaker Tata Motors has been the dominant EV automaker in India, but Chinese players BYD and MG Motors are also attracting attention. Expanding its presence in Japan with EV models. Similarly, South Korea’s Hyundai Motors has also started launching EVs in the Indian market to meet rising demand. Tesla has also established a factory in the western state of Gujarat and is actively working to enter the market.

According to data available on the government’s Vahan portal, the current penetration rate of electric vehicles in the Indian market is only 0.25% of the total vehicle sales of over 51 million vehicles. However, the government is providing incentives and subsidies to help the EV car market grow.

The acquisition announcement in India follows VinFast’s appointment of founder and biggest backer Pham Nhat Vuong as CEO on Saturday.