Vietnamese electric vehicle (EV) maker VinFast Auto is evaluating potential sites for its planned manufacturing facility and has already reviewed two locations in Tamil Nadu, people aware of the developments told ET.
Touted as a rival to iconic EV maker Tesla, the auto company has been shown land in the Manalur region north of Chennai as well as in one of the state’s southernmost districts Tuticorin, according to sources who said that VinFast was also set to evaluate plots in Gujarat shortly.
“VinFast has been keen on Tamil Nadu and Gujarat as it needs a port. Tamil Nadu is an advantageous option for the company owing to the state’s East-West connection,” said one of the people cited above.
India a market with ‘tremendous potential’: VinFast
The company, which had confirmed its intent to establish a manufacturing facility in India earlier this month, will invest about USD 200 million with an aim to start assembling vehicles by 2026 in what it has termed as a market with “tremendous potential”.
ET had reported on September 28 that VinFast was evaluating both Tamil Nadu and Gujarat to set up its manufacturing facility and was in discussions on the matter.
The Vietnamese company had temporarily become the world’s third-most valuable carmaker in August following its listing on Nasdaq.
Queries sent to VinFast remained unanswered until press time.
In its most recent post-earnings call with analysts, VinFast said that in addition to Indonesia, it has identified India as another market where it intends to build a facility to begin production in 2026.
“Each facility has a planned total capacity of up to 50,000 cars (per year) in Phase I and an estimated total coverage of USD 150-200 million,” Le Thi Thu Thuy, managing director and global CEO of VinFast Auto said on October 5.
“We expect to participate in the tremendous potential brought by increased EV adoption in both Indonesia and India where EV penetration is currently still very low,” he said.
The company did not provide further details on proposed locations for its plant in India or on finer aspects of its investment plan.
VinFast expects to build CKD or completely-knocked-down facilities in Indonesia and India. The establishment of such facilities in these markets can provide access to government incentives for local manufacturing, relief from certain tariffs and taxes, and access to raw materials at attractive rates, it noted.
Founded in 2017, VinFast Auto recently said that for its next phase of development beginning in 2024, it plans to roll out dealership networks in new market clusters including India. The company is the EV arm of Vingroup, the largest private corporation in Vietnam.
Although smaller in size compared to the likes of Tesla, the Vietnamese company is expanding fast and has ambitious plans to take on the Elon Musk-owned firm in the US where Tesla has over a 50% market share.
VinFast has a manufacturing facility in Hai Phong in Vietnam. On July 28, the company broke ground for its first American factory in North Carolina which spans across 1,800 acres and consists of main production areas for general assembly, body, and paint shops in addition to other manufacturing facilities. It said its annual production capacity is expected to reach 150,000 vehicles in the first phase.
India plans
A person in the know of the company’s India plans said that “if (it) were to go ahead with Gujarat, its access to the East would be cut off” and therefore would lean more towards Tamil Nadu owing to its better connectivity with the East Asian markets where VinFast has interests.
A Sea Lines Of Communication (SLOC) is a route taken by a ship to transit from point A to B. In maritime terms, it should be short, economical and safe for transporting cargo and they have been termed by some as the ‘umbilical cords’ of a state’s economy and ‘arteries of a region’s economy’. SLOCs vary in length depending on the geography in terms of landmass, choke points, reefs, foul ground and location of ports and harbours.
“The Indian Ocean is home to important SLOCs and maritime choke points,” Vijay Sakhuja said in Strategic Analysis, the bimonthly journal of the Institute for Defence Studies and Analyses (IDSA). “A large volume of international long haul maritime cargo from the Persian Gulf, Africa and Europe transits through this ocean. The shipping lane transiting the Indian Ocean and entering the strategic choke point of Southeast Asia has great geostrategic importance to the United States, China, Japan, Korea, Taiwan and the Southeast Asian countries. Given these conditions, the northern Indian Ocean is booming with maritime activity, and both economic and security interests impact in a concentrated form.”
Tamil Nadu has three major ports and tops the list of Indian states with the most important ports. The three ports are Chennai Port, Kamarajar Port (in Ennore near Chennai), and V. O. Chidambaranar Port Authority (in Tuticorin).
In April this year, it was reported that the Chennai Port Authority (ChPA) and the Kamarajar Port Ltd in Ennore together exported 380,000 cars during FY23 against 306,000 units in the year-earlier period. Hyundai Motor and Kia Motors accounted for a major share of exports from ChPA during the period.
