Investing 2 billion USD, VinFast plans to promote green transportation in India
Báo Dân trí•28/02/2024
According to Dr. Majo George, VinFast's decision to open a manufacturing plant in India is a strategic move that will help the company gain an advantageous position against future competitors.
On February 25, Vietnam's leading electric vehicle manufacturer VinFast officially broke ground on its first integrated electric vehicle manufacturing plant in the state of Tamil Nadu, India. Entering the Indian market is an important step in VinFast's global expansion, demonstrating its ambition to penetrate the world's third largest car market. This initiative includes a significant investment of up to 2 billion USD, with a commitment to invest 500 million USD in the first 5 years. The integrated electric vehicle manufacturing plant is expected to be operational in 2026. Vietnamese car company opens factory in India (Photo: Unsplash). Tamil Nadu is already a major automobile manufacturing hub, home to global giants such as BMW, Hyundai and Renault-Nissan. The Thoothukudi city in Tamil Nadu, which VinFast has chosen, is expected to develop into a leading electric vehicle manufacturing hub, with a capacity of up to 150,000 vehicles per year. The plant in Tamil Nadu will be VinFast’s third manufacturing project and is considered the most significant investment in the history of the state. In addition to the manufacturing facility, VinFast plans to set up a nationwide dealer network in India to build a strong brand presence and quickly connect with customers across India. This initiative is an important step towards promoting green transportation in India. This is in line with the Indian government’s ambitious target of electrifying 30% of private vehicles by 2030. The Tamil Nadu government has committed to supporting the project by providing cleared land, reliable power supply and other infrastructure support. Furthermore, the project is expected to create around 3,500 local jobs, thereby contributing significantly to the local economy. This investment plan provides VinFast with an excellent opportunity to take advantage of the generous policies of the Indian government to position the country as a key global automotive export hub. India’s well-developed infrastructure, stable policies at both the central and state levels, a young and skilled workforce and a large domestic market make it an ideal location for VinFast’s ambitious expansion. Tapping the $100 billion electric vehicle market The Indian electric vehicle market is expected to reach $100 billion, making it a lucrative opportunity for global manufacturers. However, the market is still in its early stages of development, so early adopters like VinFast have a unique opportunity to build presence and brand loyalty. VinFast’s entry into the Indian market comes at a pivotal and strategic time as VinFast has been ahead of Tesla’s plans to enter the Indian manufacturing industry. The timing is good for VinFast as establishing a foothold before Tesla could provide a significant competitive advantage. With the Indian government’s commitment to the transition to electric vehicles, VinFast’s car sales in India are likely to surpass those in Vietnam, provided the company knows how to market effectively to Indian consumers. With its attractively priced electric vehicles and cutting-edge designs, VinFast has the potential to capture a significant share of the Indian electric vehicle market, which could fuel its growth amid the volatile US market. Dr Majo George, Senior Lecturer, Department of Supply Chain Management and Logistics, School of Business, RMIT University Vietnam (Photo: RMIT). The relationship between Vietnam and India has been built over centuries, which will further enhance VinFast’s potential in this new market. With Vietnam emerging as a popular tourist destination, many Indians are familiar with VinFast and its vehicles. The cultural similarities between the two countries, reflected in the shared preference for SUVs, sedans, and other electric vehicles, including two- and three-wheelers, give VinFast a distinct advantage. Moreover, VinFast has a great opportunity to participate in the development of electric batteries, not only for the Indian market but also for the global electric vehicle market. Entering the Indian taxi market with VinFast GSM could be another lucrative route by tapping into a large and growing sector. VinFast should also focus on two new areas: heavy vehicles and trucks. The company’s existing electric bus manufacturing capabilities are in line with the current trend of Indian state governments to convert traditional buses to electric models. The heavy transport sector, especially electric trucks, is another area ripe for exploration. With advanced technology and visionary leadership from Pham Nhat Vuong, VinFast is well-positioned to conduct further research and potentially dominate this segment. Open policies in India provide an attractive environment for such innovative ventures. Overall, VinFast’s expansion into India represents a strategic move into one of the world’s most populous countries and fastest-growing electric vehicle markets. It reflects the company’s commitment to sustainability and vision of a zero-emission mobility future, delivering economic benefits and contributing to the region’s green energy transition.
Dr.Majo George
Senior Lecturer in Logistics and Supply Chain Management, School of Business, RMIT University Vietnam
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