VinFast, a Vietnamese electric car manufacturer, is following in Tesla’s footsteps by investing $200 million to establish an electric vehicle (EV) unit in India. This move comes as India’s EV market experiences rapid growth, with only 1% market penetration so far.
The company’s Q3 2023 earnings release outlined its plans to invest in a completely knocked-down (CKD) assembly unit in India. This facility is expected to commence operations by 2026, with an initial capacity of around 50,000 cars per year.
VinFast aims to tap into India’s booming EV market, which holds immense potential. To facilitate its global expansion, the company plans to have a presence in up to 50 markets and countries by the end of 2024.
Establishing facilities in these markets offers several advantages, including access to government incentives for local manufacturing, relief from certain tariffs and taxes, and access to raw materials at competitive rates.
It’s worth noting that the Indian government has launched a production-linked incentive scheme worth over INR 25,000 Crores to boost domestic automobile production, including electric vehicles.
David Mansfield, VinFast’s Chief Financial Officer, commented on the company’s India plans, stating, “VinFast is on track to meet its deliveries guidance and is well-positioned to expand in strategic markets such as Indonesia and India.” The company also plans to establish an EV unit in Indonesia.
India, as the world’s most populous country, has become an attractive market for global brands across various sectors, including EV manufacturers. While electric two-wheelers have gained popularity in the country, there’s ample opportunity for electric car makers to capture a significant share of the Indian market.
Currently, companies like Tata, Mahindra, Hyundai, and Ola Electric sell electric cars in India. Tesla, the renowned electric vehicle giant, also announced plans to enter the Indian market. They have taken significant steps, such as renting office space in Pune, meeting with government officials, and exploring opportunities for manufacturing and sourcing EV components locally.
In addition to Tesla, Audi and Mercedes-Benz are also eyeing opportunities in the Indian EV ecosystem. This influx of global players demonstrates India’s growing importance in the electric vehicle industry, highlighting the nation’s potential to become a significant player in the global electric vehicle market.
