Vietnam's VinFast starts building EV plant in Tamil Nadu; seeks import duty cut

Vietnamese electric vehicle manufacturer VinFast started construction of its first integrated electric vehicle (EV) facility in Thoothkudi district in Tamil Nadu on February 25, as part of its expansion plans into the world's third-largest automobile market.

"India represents a key market in VinFast's global expansion plan, capitalising on the potential presented by this rapidly growing market. The project not only affirms VinFast's global reach but also joins the existing manufacturing complex in Vietnam and future plants in the U.S. and Indonesia, solidifying VinFast's global manufacturing ecosystem," the company says in a statement.

The development comes days after the company signed an agreement with the Tamil Nadu government in January this year, for an investment of up to $2 billion in the state.

According to the company, VinFast plans to invest an initial amount worth $500 million over the next five years in the facility. The company aims to reportedly start production by the middle of next year for domestic sales, followed by exports. While the EV manufacturer aims to eventually localise its products, like its peer Tesla, VinFast has also reportedly sought a 70-80% reduction in import duties on fully-built EVs for the next two years in order for the customers to get used to its products.

The electric vehicle plant, which is spanned across 400 acres within the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) industrial estate, has a projected capacity of 150,000 vehicles annually. Through the facility, the Vietnamese EV manufacturer aims to create jobs for 3,000 to 3,500 people.

"VinFast's groundbreaking ceremony for its plant in Thoothukudi, Tamil Nadu, is a significant stride towards sustainable and green mobility in India. By establishing an integrated electric vehicle facility, the company's commitment to job creation, green transportation, and strategic partnerships solidifies VinFast's position as a major player in the electric vehicle industry. This milestone strengthens the bonds between the robust economies of Vietnam and India, and underscores VinFast's dedication to a zero-emission transportation future, setting the stage for economic growth, innovation, and environmental sustainability in the region," says Pham Sanh Chau, CEO, VinFast India.

Apart from this, the company is also planning to build a pan-India network of dealerships in order to build a strong brand presence.

Notably, as the world’s third-largest automobile market continues to expand, global automakers are bolstering their presence in the country. Last week, Japan’s Mitsubishi Corporation partnered with TVS Mobility, an automotive distribution and aftermarket major to establish a joint venture to focus on vehicle mobility solutions.

According to a report by Fortune Business Insights, the domestic electric vehicle market size is projected to grow from $3.21 billion in 2022 to $113.99 billion in 2029, growing at a compound annual growth rate of 66.52%.