VinFastVinFastVinFast is a Vietnamese EV maker with global ambitions, which listed on the Nasdaq Composite stock market index in the U.S. in 2023.READ MORE is building factories faster than it can sell cars.
The Vietnamese electric-vehicle maker opened its first Indian factory on August 4, betting on expansion even as its existing plant at home sits mostly idle. The new 160-hectare (400 acres) facility in the southern state of Tamil Nadu can produce 150,000 cars annually, according to VinFast. That’s more than its entire global output last year, when it delivered fewer than 100,000 vehicles — 90% of them in Vietnam.
The India plant, originally slated to start operations on June 30, debuted after multiple delays. VinFast broke ground in February 2024 and showcased its VF6 and VF7 premium SUVs at New Delhi’s auto show in January. It started taking prebookings in July.
The India push comes as VinFast has accumulated $11.5 billion in losses and pivoted away from the U.S. market after poor reviews and disappointing sales. The company now targets Asia and the Gulf, where consumer expectations differ from Western markets and U.S. reviews may not impact demand.
The plant will initially assemble 50,000 combined units of VF6 and VF7 SUVs a year. The facility will create as many as 3,500 direct jobs, Tamil Nadu Industries Minister T.R.B. Raja said, while inaugurating the facility.
“This plant marks a strategic milestone in our long-term commitment to the Indian market,” VinFast Asia CEO Pham Sanh Chau said at the press briefing. “It enables us to offer high-quality, competitively priced electric vehicles to Indian consumers.”
In the U.S., VinFast sold 332 EVs in December 2024, compared to more than 65,000 by market leader Tesla. The VF8 suffered from software glitches, poor build quality, and safety concerns. VinFast delayed its North Carolina factory to 2028 and resorted to heavy discounts, offering what industry observers called the cheapest lease in America.
While VinFast has yet to disclose its strategy for India, its playbook in Vietnam, Indonesia, and the Philippines includes setting up a network of VinFast-exclusive chargers and deploying its vehicles as part of a taxi service owned by a group company.
“With local manufacturing in India, VinFast hopes to avoid high import duties and tap into government incentives,” Abhik Mukherjee, automotive analyst at Counterpoint Research, told Rest of World. “This strategy could lead to unused factory capacity if sales don’t pick up.”
India has slashed duties to 15% from 110% for EVs priced above $35,000, but only for carmakers who invest at least $500 million in local production. VinFast doesn’t yet qualify, although its new factory could eventually unlock these benefits.
India’s regulatory hurdles for Chinese automakers could benefit VinFast. BYD’s billion-dollar plant was blocked last year because of national security concerns, while Great Wall Motor couldn’t secure government approval for its factory in 2022.
VinFast hopes to avoid high import duties and tap into government incentives.
MG Motor — a China-India venture — already operates successfully and is among the market leaders. VinFast must also contend with established local players Tata Motors and Mahindra, plus Tesla, which opened its first India showroom last month.
VinFast’s Vietnamese factory can produce 250,000 EVs annually, but operated at just 12% capacity in mid-2023. Despite the underutilization, the company recently opened a second Vietnamese plant with a 200,000-unit capacity.
Almost all VinFast’s deliveries have been made in Vietnam, with Green and Smart Mobility, majority owned by VinFast founder and CEO Pham Nhat Vuong, receiving 46,500 EVs between March 2023 and December 2024. VinFast, which introduced Green and Smart Mobility in Indonesia and the Philippines, relies heavily on its taxi subsidiary for sales volume rather than individual consumers.
The company may find it difficult to copy-paste this strategy in India because the ride-hailing sector has long been dominated by the Uber-Ola duopoly, and these services favor lower-trim, cost-effective models, Counterpoint’s Mukherjee said.
A 2024 report by Mathias Corvinus Collegium, a Hungarian think tank, noted that VinFast has addressed production capacity through massive investment but failed to realize the economies of scale through actual sales.
Last year, when VinFast postponed building its $4 billion North Carolina plant to 2028, chairperson Le Thi Thu Thuy said the company was reallocating capital to markets with “policies and the culture a lot closer to us [in Vietnam].”
In India, VinFast is about to discover if proximity equals profitability.
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