Vietnam automaker Vinfast to build factory in India, eyeing growth in Asia

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THOOTHUKUDI, India (AP) — Vietnam’s Vinfast is due to break ground Monday on a $500 million electric vehicle plant in southern India’s Tamil Nadu state, part of a planned $2 billion investment in India and a broader expansion across Asia.

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The factory in Thoothukudi will initially make 50,000 electric vehicles annually, with room to triple output to 150,000 cars. Given its proximity to a major port in one of India’s most industrialized states, Vinfast hopes it will be a hub for future exports to the region. It says the factory will create more than 3,000 local jobs.

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The Vietnamese company says it scouted 15 locations across six Indian states before choosing Tamil Nadu. It’s the center of India’s auto industry, with strong manufacturing, skilled workers, good infrastructure, and a reliable supply chain, according to Tamil Nadu’s Industries Minister T.R.B. Raaja.

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“This investment will lead to an entirely new industrial cluster in south Tamil Nadu, and more clusters is what India needs to emerge as a global manufacturing hub,” he said.

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A strategic pivot to Asia

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Vinfast’s foray into India reflects a broader shift in strategy.

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The company increasingly is focusing on Asian markets after struggling to gain traction in the U.S. and Europe. It broke ground last year on a $200 million EV assembly plant in Indonesia, where it plans to make 50,000 cars annually. It’s also expanding in Thailand and the Philippines.

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Vinfast sold nearly 97,000 vehicles in 2024. That’s triple what it sold the year before, but only about 10% of those sales were outside Vietnam. As it eyes markets in Asia, it hopes the factory in India will be a base for exports to South Asian countries like Nepal and Sri Lanka and also to countries in the Middle East and Africa.

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India is the world’s third-largest car market by number of vehicles sold. It presents an enticing mix: A fast growing economy, rising adoption of EVs, supportive government policies and a rare market where players have yet to completely dominate EV sales.

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“It is a market that no automaker in the world can ignore,” said Ishan Raghav, managing editor of the Indian car magazine autoX. .

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A growing EV market in India

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EV growth in India has been led by two and three-wheelers that accounted for 86% of the over six million EVs sold last year.

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Sales of four wheel passenger EVs made up only 2.5% of all car sales in India last year, but they have been surging, jumping to more than 110,000 in 2024 from just 1,841 in 2019. The government aims to have EVs account for a third of all passenger vehicle sales by 2030.

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“The electric car story has started (in India) only three or four years ago,” said Charith Konda, an energy specialist who looks at India’s transport and clean energy sectors for the think-tank Institute for Energy Economics and Financial Analysis or IEEFA. New cars that “look great on the road,” with better batteries, quick charging and longer driving ranges are driving the sector’s rapid growth, he said.