Exactly 50 days after signing a comprehensive memorandum of understanding (MoU) with the government of Tamil Nadu on January 6, 2024, Vietnamese electric vehicle manufacturer VinFast today had the ground-breaking of its integrated EV plant at Thoothukudi (formerly Tuticorin) in Tamil Nadu.
This probably is the fastest move yet from an MoU signing to beginning of plant construction for an overseas automaker in India and is indicative of VinFast’s ambition to rapidly expand its global manufacturing footprint. That the EV OEM has chosen to do so in India, which is the world’s third-largest automobile market and one of the fastest-growing global economies, is a strategic plan designed to cater to both the domestic Indian market as well as made-in-India EV exports to South Asian, Middle Eastern and African markets. Furthermore, given the strength of the Indian automotive component manufacturing ecosystem, the India project is also a key part of VinFast’s overall aim to strengthen its supply chain for global expansion.
VinFast’s speed at setting up manufacturing plants is seen in its main facility at Cat Hai Island, near the city of Hai Phong in Vietnam. The company broke ground on this plant, spread across 828 acres, in September 2017 – within just 21 months, it built the factory equipped with paint shop, press shop, assembly shop and engine shop to produce electric passenger vehicles, buses and two-wheelers. By 2026, the manufacturing capacity at the Hai Phong plant, which boasts up to 90% automation, is expected to be around 950,000 EVs per annum.
Meanwhile, VinFast’s assembly plant near Raleigh, North Carolina, USA is slated to begin production in July 2024 with capacity in phase 1 of 150,000 EVs per annum.
The integrated EV plant at Thoothukudi will be VinFast’s third manufacturing plant with an annual manufacturing capacity of up to 150,000 units and is expected to generate employment opportunities for up to 3,500 people. Last month, Zac Hollis, former brand director of Skoda Auto India, joined VinFast as its Asia Head. Apart from overseeing the India entry strategy, Hollis is likely to play an important role in picking up key talent for VinFast India
In addition to building the manufacturing facilities in Tamil Nadu, VinFast also plans to develop a nationwide dealership network which will enable to build its brand presence, considering the Vietnamese brand is relatively not so known in India as yet. VinFast and the Tamil Nadu government will also explore collaboration in the form of setting up a charging station network.
India as a strategic EV manufacturing base
India, which is seeing strong growth for EVs across the two-, three- and four-wheeler segments, could prove to be the Asian growth driver that VinFast is looking for. Along with the growing demand for EVs in India, the location of the plant could help give VinFast a fillip in EV exports. With the VinFast India plant located near the Thoothukudi (previously known as Tuticorin) Port, the company will benefit from easy access to shipping facilities.
Furthermore, given the potential of a high level of vehicle localisation in India, VinFast will also derive gains as a result of the well-established automotive component industry. Like many other global OEMs, there could be considerable purchase of made-in-India EV parts for its manufacturing operations both in Vietnam and the USA. Some Indian component suppliers like Uno Minda, Spark Minda and Star Engineering have already invested in Vietnam. In an interview to Autocar Professional last year, Vinnie Mehta, director-general, ACMA said: “Vietnam offers a great opportunity for the Indian auto components industry to explore business opportunities for both supplying to the OEMs and the aftermarket.”
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