VinFast Starts Electric Vehicle Production in Tamil Nadu, India
VinFast, the Vietnamese electric vehicle company, has begun production at its new $500 million factory in Thoothukudi, Tamil Nadu. This marks a significant step in the company’s plans to invest $2 billion in India and expand its presence across Asia.
The Thoothukudi plant is set to initially produce 50,000 electric vehicles per year, with ambitions to increase that number to 150,000 over time. Its location near a major port in one of India’s most industrialized states makes it a strategic site for potential exports. The factory is also expected to create over 3,000 jobs for the local community.
After evaluating 15 different locations across six Indian states, VinFast chose Tamil Nadu due to its reputation as the heart of India’s auto industry. The state’s strong manufacturing capabilities, skilled workforce, and supportive infrastructure played a vital role in this decision, according to T.R.B. Raaja, the state’s Industries Minister.
“This investment will foster a whole new industrial ecosystem in southern Tamil Nadu, which is exactly what India needs to strengthen its global manufacturing position,” he stated.
VinFast is eyeing this factory not just for local sales but as an export hub for vehicles aimed at markets in South Asia, the Middle East, and Africa. This indicates a shift in the company’s strategy, focusing more on Asian markets after facing challenges in the U.S. and Europe. VinFast has already started building another assembly plant in Indonesia and is expanding in Thailand and the Philippines.
In 2024, the company sold nearly 97,000 vehicles, a substantial increase compared to previous years, but most of these sales were still within Vietnam. With such a large and growing market, India represents a unique opportunity. As the third-largest car market globally, India’s economic growth, increasing interest in electric vehicles, and unstinting government support make it an attractive destination for auto manufacturers.
The Indian electric vehicle market is primarily driven by two and three-wheelers, which accounted for a staggering 86% of more than six million EVs sold last year. Although four-wheel electric vehicle sales are just starting to climb, reaching over 110,000 units this year, they remain a small portion of overall car sales. The government has set ambitious goals for electric vehicle adoption, aiming for a substantial share of the market by 2030.
VinFast is setting its sights on introducing its VF6 and VF7 SUV models specifically designed for Indian consumers. The company is optimistic about its chances, especially given that it faces less geopolitical tension compared to its Chinese competitors.
Many Chinese electric vehicle brands have found India to be a tougher nut to crack due to domestic policies and high tariffs. While some have opted for partnerships to penetrate the market, VinFast plans to leverage local incentives, making it a win-win for both the company and the Indian economy.
Despite the encouraging outlook, the competition in India is fierce. Established players like Tata Motors already have a considerable foothold in the market, particularly in the affordable segment. VinFast will need to build trust with cost-conscious and cautious consumers, focusing on quality and affordability.
To establish its presence, VinFast plans to set up showrooms and service centers across the country, working closely with local businesses for maintenance and charging solutions. The firm also aims to cut costs by manufacturing key components domestically, aligning with India’s push for local production.
The road ahead won’t be simple, as gaining market traction takes time and effort. However, with the right pricing strategy and a focus on building a strong brand reputation, VinFast could emerge as a significant player in India’s electric vehicle landscape.
