Team Siliconindia

• VinFast has launched production at its new $500 million EV plant in Tamil Nadu, part of a $2 billion India investment to produce 50,000 EVs annually, scalable to 150,000.
• The facility aims to generate 3,000+ local jobs and serve as an export hub for South Asia, the Middle East, and Africa, reinforcing India’s EV manufacturing ambitions.
• Amid limited global traction, VinFast is shifting focus to Asia, leveraging India’s growing EV market and favorable policies to release localized VF6 and VF7 SUV models.

Vietnamese electric car maker VinFast has formally started manufacturing at its newly constructed $500 million facility in Thoothukudi, Tamil Nadu, a key milestone in its $2 billion investment plan for India and its wider expansion strategy in Asia.

The factory, which is situated close to a port, will produce 50,000 EVs in its first year and has the capability of expanding to 150,000. The plant will also help create more than 3,000 jobs for locals and become a future export base to South Asia, the Middle East, and Africa.

VinFast's selection of Tamil Nadu was the result of a careful examination of 15 prospective sites in six Indian states. The area was particularly noted as India's car hub, with a skilled labor force, robust infrastructure, and stable supply chains. Tamil Nadu Industries Minister T.R.B. Raaja said that the investment could trigger the creation of a new industrial cluster in southern Tamil Nadu, consistent with the goal of India emerging as a manufacturing powerhouse of the world.

This action marks a strategic shift for VinFast, which has struggled to penetrate the U.S. and European markets. It is now concentrating more on Asia, including recent forays in Indonesia and plans for expansion in Thailand and the Philippines.

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Although VinFast increased vehicle sales threefold in 2024 to almost 97,000, few were outside Vietnam. With India being the third-largest car market globally and experiencing growing EV penetration, it is an opportunity too big to overlook.

India's electric vehicle  market is still in its nascent stages, with passenger EVs only comprising 2.5% of the total car sales in 2024. Nevertheless, sales are growing rapidly, and the government has a goal for EVs to account for one-third of all vehicle sales by the year 2030. VinFast is going to release its VF6 and VF7 SUV models adapted to the Indian market, and establish a local ecosystem of showrooms, service centers, and manufacturing of major components so that prices remain competitive.

Absent the geopolitical issues that confront Chinese competitors, VinFast is poised to benefit from India's push toward indigenous manufacturing. To succeed, though, will be a function of its capacity to scale up, gain consumer confidence, and provide value in a price-sensitive market.