Vietnam automaker Vinfast opens factory in India, eyeing growth in Asia
[August 04, 2025] By
SIBI ARASU, ANIRUDDHA GHOSAL and RISHI LEKHI
THOOTHUKUDI, India (AP) — Vietnam’s Vinfast began production at a $500
million electric vehicle plant in southern India’s Tamil Nadu state on
Monday, part of a planned $2 billion investment in India and a broader
expansion across Asia.
The factory in Thoothukudi will initially make 50,000 electric vehicles
annually, with room to triple output to 150,000 cars. Given its
proximity to a major port in one of India's most industrialized states,
Vinfast hopes it will be a hub for future exports to the region. It says
the factory will create more than 3,000 local jobs.
The Vietnamese company says it scouted 15 locations across six Indian
states before choosing Tamil Nadu. It's the center of India’s auto
industry, with strong manufacturing, skilled workers, good
infrastructure, and a reliable supply chain, according to Tamil Nadu’s
Industries Minister T.R.B. Raaja.
“This investment will lead to an entirely new industrial cluster in
south Tamil Nadu, and more clusters is what India needs to emerge as a
global manufacturing hub,” he said.
VinFast Asia CEO Pham Sanh Chau said the company has aspirations to
export cars across the region and it hopes to turn the new factory into
an export hub.
The new factory could also mark the start of an effort to bring other
parts of the Vingroup empire to India. The sprawling conglomerate,
founded by Vietnam’s richest man Pham Nhat Vuong, began as an instant
noodle company in Ukraine in the 1990s and now spans real estate,
hospitals, schools and more.
Chau said Tamil Nadu Chief Minister M.K. Stalin had invited the company
to “invest in a big way” across sectors like green energy, smart cities
and tourism, and said that the chief minister had “promised he will do
all what is necessary for us to move the whole ecosystem here.”
A strategic pivot to Asia
Vinfast's foray into India reflects a broader shift in strategy.
The company increasingly is focusing on Asian markets after struggling
to gain traction in the U.S. and Europe. It broke ground last year on a
$200 million EV assembly plant in Indonesia, where it plans to make
50,000 cars annually. It's also expanding in Thailand and the
Philippines.
Vinfast sold nearly 97,000 vehicles in 2024. That's triple what it sold
the year before, but only about 10% of those sales were outside Vietnam.
As it eyes markets in Asia, it hopes the factory in India will be a base
for exports to South Asian countries like Nepal and Sri Lanka and also
to countries in the Middle East and Africa.
India is the world’s third-largest car market by number of vehicles
sold. It presents an enticing mix: A fast growing economy, rising
adoption of EVs, supportive government policies and a rare market where
players have yet to completely dominate EV sales.
“It is a market that no automaker in the world can ignore,” said Ishan
Raghav, managing editor of the Indian car magazine autoX. .
A growing EV market in India
EV growth in India has been led by two and three-wheelers that accounted
for 86% of the over six million EVs sold last year.
Sales of four wheel passenger EVs made up only 2.5% of all car sales in
India last year, but they have been surging, jumping to more than
110,000 in 2024 from just 1,841 in 2019. The government aims to have EVs
account for a third of all passenger vehicle sales by 2030.
“The electric car story has started (in India) only three or four years
ago,” said Charith Konda, an energy specialist who looks at India’s
transport and clean energy sectors for the think-tank Institute for
Energy Economics and Financial Analysis or IEEFA. New cars that “look
great on the road,” with better batteries, quick charging and longer
driving ranges are driving the sector's rapid growth, he said.
[to top of second column] |
A Vinfast VF 7 electric vehicle model is seen at the plant in
Thoothukudi, in the southern Indian state of Tamil Nadu, Monday,
Aug. 4, 2025. (AP Photo/ Rafiq Maqbool)
 The shift to EVs is mostly powered
by Indian automakers, but Vinfast plans to break into the market
later this year with its VF6 and VF7 SUV models, which are designed
for India.
The company chose the VF7 for its India launch—unlike the models
introduced in the U.S., Canada, the EU, or Southeast Asia—to
position itself as a premium global brand while keeping the price
affordable, added Chau, the Vinfast Asia CEO.
Can Vinfast Succeed Where Chinese EVs Faltered?
Chinese EV brands that dominate in countries like Thailand and
Brazil have found India more challenging.
After border clashes with China in 2020, India blocked companies
like BYD from building their own factories. Some then turned to
partnerships. China's SAIC, owner of MG Motor, has joined with
India’s JSW Group. Their MG Windsor, a five-seater, sold 30,000
units in just nine months, nibbling Tata Motors’ 70% EV market share
down to about 50%.
Tata was the first local automaker to court mass-market consumers
with EVs. Its 2020 launch of the electric Nexon, a small SUV, became
India’s first major EV car success.
Vinfast lacks the geopolitical baggage of its larger Chinese rivals
and will also benefit from incentives like lower land prices and tax
breaks for building locally in India. That's part of India's policy
of discouraging imports with high import duties to help encourage
local manufacturing and create more jobs.
The push for onshore manufacturing is a concern also for Tesla,
which launched its Model Y in India last month at a price of nearly
$80,000, compared to about $44,990 in the U.S without a federal tax
credit.
“India’s stand is very clear. We do not want to import manufactured
cars, even Teslas. Whether it's Tesla or Chinese cars, they are
taxed heavily,” added Konda.
An uphill battle in a tough market
The road ahead remains daunting. India’s EV market is crowded with
well-entrenched players like Tata Motors and Mahindra, which
dominate the more affordable segment, while Hyundai, MG Motors and
luxury brands like Mercedes-Benz and Audi compete at high price
points.
Indians tend to purchase EVs as second cars used for driving within
the city, since the infrastructure for charging elsewhere can be
undependable. Vinfast will need to win over India's cost-sensitive
and conservative drivers with a reputation for quality batteries and
services while keeping prices low, said Vivek Gulia, co-founder of
JMK Research.
“Initially, people will be apprehensive,” he said.
Vinfast says it plans to set up showrooms and service centers across
India, working with local companies for charging and repairs, and
cutting costs by recycling batteries and making key parts like
powertrains and battery packs in the country.
Chau added that after a customer clinic in September 2024 and input
from top engineers in Vietnam, the company upgraded its feature list
to better match Indian customer expectations.
Scale will be key. VinFast has signed agreements to establish 32
dealerships across 27 Indian cities. Hyundai has 1,300 places for
Indians to buy their cars. Building a brand in India takes time —
Hyundai, for instance, pulled it off over decades, helped by an
early endorsement from Bollywood superstar Shah Rukh Khan.
VinFast can succeed if it can get its pricing right and earn the
trust of customers, Gulia said, “Then they can actually do really
good.”
___
Sibi Arasu contributed from Bengaluru, India and Aniruddha Ghosal
contributed from Hanoi, Vietnam.
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