Vietnam’s EV Maker VinFast To Invest USD 200 Million In India

Vietnam’s electric car manufacturer VinFast Auto said that it is planning to invest up to USD 200 million (INR 1,665 crore) to set up assembly units in India. However, it is not confirmed where the company will set up its plant in the country.

VinFast which considers itself a competitor of world’s largest electric vehicle manufacturer Tesla, “is aiming to access the tremendous potential for increased EV adoption in India and Indonesia where EV penetration is currently only 1 per cent”, the company said in a statement.

It added that the establishment of VinFast facilities in these local markets can provide access to government incentives for local manufacturing, relief from certain tariffs and taxes and access to raw materials at attractive rates.

“Indonesia and India has a planned total capacity of up to 50,000 cars per year and an estimated total capital expenditure of USD 150-200 million in phase 1”, the company said, adding, “Production is expected to commence by 2026.”

The company, however, did not elaborate further on where the plant will be set up in India and what models will be assembled. It has a range of passenger electric vehicles such as VF6, VF7, and VF8, which are five-seaters, along with seven-seater VF9.

VinFast said it has optimised its capital expenditure plan for global manufacturing in 2024 and 2025, which is expected to save about USD 400 million, compared to earlier guidance.

“These savings are expected to be used towards building Complete Knock Down (CKD) factories in Indonesia, the most populous country in Southeast Asia, and India, the third largest auto market in the world,” the statement said.

The company earlier started recruiting resource and had issued a notice on its LinkedIn which read “Dare to think, dare to do, and dare to face difficulties.” It had said that the company was looking out for the resources in legal, sales and back office job in India with office location in Gurugram, Haryana.   

The announcement comes at a time when Tesla has been actively planning to enter the Indian market after so many years of deliberation. The US-based electric vehicle maker is also looking to source components worth around USD 1.9 billion this year against USD 1 billion in the last year.

EV Market In India

The Indian automobile industry is the fifth largest in the world and is expected to become the third largest by 2030. As per India Energy Storage Alliance (IESA), the Indian EV industry is expected to expand at a CAGR of 36 per cent. As population rises and demand for vehicles grow, dependence on conventional energy resources is not a sustainable option as India imports close to 80 per cent of its crude oil requirements. NITI Aayog aims to achieve EV sales penetration of 70 per cent for all commercial cars, 30 per cent for private cars, 40 per cent for buses and 80 per cent for two and three-wheelers by 2030.

This is in line with the goal to achieve net zero carbon emission by 2070. Over the last three years, 0.52 million EVs were registered in India, according to the Ministry of Heavy Industries. EVs recorded robust growth in 2021, supported by the implementation of favourable policies and programmes by the government.