New Delhi: Fast-growing Vietnamese EV maker Vinfast plans to open its new manufacturing facility in Thoothukudi in Tamil Nadu by the end of June. This is a time when car sales are slowing in the US due to sanctions and Chinese EV makers are swiftly dominating the markets in Europe.
Vinfast, which first launched its electric car in 2022, first tried to launch its highly lucrative US market after swiftly dominating the local Vietnamese market with electric bikes and cars.
Despite it being a mature market with adequate charging infrastructure, Vinfast couldn’t meet its sales targets, and eventually refocused its efforts towards the Gulf, India and South-East Asia.
It is currently building new factories in India and Indonesia, where it plans to compete with established players in a fiercely competitive industry where charging infrastructure hasn’t kept up to convince buyers to make the switch to electric.
Vinfast aims to eventually invest up to $2 billion in its Tamil Nadu plant, with an annual production capacity of 1,50,000 vehicles. This is even as the company value has shrunk by almost half and it has accumulated almost $9 billion in losses ever since.
Vinfast was forced to abandon its US expansion plans as it managed to capture less than 1% of the market with just about 2,000 units sold. Due to this, it also postponed its proposed North Carolina factory launch to 2028.
This aggressive expansion spree has forced Vingroup chairman Phạm Nhật Vượng to pledge his personal assets to Vinfast, even as BlackRock, DWS and JPMorgan have nearly halved their shares in the company. Even its largest shareholder, South Korea’s SK Group, has decided to trim its stake from 6.05% to 4.72% in the company.
India’s car market is the third largest globally, with more than 43 lakh cars sold in 2024. Vinfast will need to come up with customized solutions that meet India’s unique road conditions while meeting the needs of the extremely price sensitive Indian customer.
With EVs commanding just 4% of the car market in India, how Vinfast can crack this market amid intense competition from established players like Tata Motors and Mahindra remains to be seen.
