VinFast set to drive into India with locally assembled cars

MUMBAI: Vietnamese electric vehicle maker VinFast will enter the Indian market with locally assembled models, marking a shift from its earlier strategy of initially selling only imported EVs in the world's third-largest automobile market, said a person with knowledge of the plans. The revised approach follows a fast-tracked opening of the company's new factory in Tamil Nadu. The plant is likely to become operational in the first half of 2025, 6 months ahead of schedule, the person said, asking not to be named.

VinFast, the EV arm of Vietnam's biggest conglomerate Vingroup, is expected to launch its first locally assembled car during the 2025 festive season. It is likely to sell its vehicles in the ₹25-30 lakh range, placing them in the premium affordable segment of India's burgeoning market for EVs. The models are likely to have a range of 300-500 kilometres.

VinFast's move to enter the Indian market through the completely knocked down (CKD) route will help the maker of VFe-34, VF6, VF7 car models save on high import duties and offer its products at competitive prices. India levies an import duty of 100% on imported car models having a CIF (cost, insurance, freight) value of more than $40,000 and 70% on imported models with a CIF value of less than $40,000. CKD kits attract 15% duty.

"The local assembly of models gives greater confidence to suppliers, dealers, and the buyers. The company will rather use what it saves on duties in brand building and marketing. As the plant is expected to be ready in the first quarter of next calendar year, it makes sense to take the CKD instead of CBU (completely built unit) route," said the person cited above.


A spokesperson at VinFast did not immediately respond to ET's queries. Though VinFast's Indian venture is not reliant on the Indian government's new EV policy announced on March 15, the company is keenly awaiting guidelines of the policy to decide on whether to avail the incentives, said the person cited earlier. The first meeting between EV companies and government officials to discuss the new EV policy took place on April 19. It was attended by a VinFast official, among other industry executives.

The EV policy offers import duty concessions to automakers setting up manufacturing units in the country with a minimum investment of $500 million. Such companies will be allowed to import a limited number of cars - 8,000 units a year at a lower import duty of 15% on models costing at least $35,000 for five years from the date of issuance of the approval letter by the government. VinFast plans to invest over $500 million (?4,150 crore) over the next 5 years to build a 150,000-unit-a-year factory at Thoothukudi, near Chennai. The 400-acre facility will employ 3,000-3,500 workers in the first phase, as per its memorandum of understanding with the Tamil Nadu government.

VinFast is hoping that local assembly and competitive pricing will allow it to attain peak capacity of 50,000 units in the first year of its operations. It envisages India's nascent electric car market to end the current calendar year with 150,000 units, up from 90,000 units in 2023. The company is likely to disclose plans for India at the Bharat Mobility Global Expo that is scheduled between January 17 and 22, 2025.