VinFast Builds India EV Hub After U.S. Setbacks

Vietnamese EV maker VinFast has officially launched operations at its new $500 million electric vehicle plant in Tamil Nadu, India. The move marks VinFast’s first manufacturing footprint in the country.

The Vietnamese automaker’s new EV factory in India is located in the coastal city of Thoothukudi. It is expected to initially produce 50,000 vehicles annually, with a focus on the VF6 and VF7 electric SUVs. Tamil Nadu Industries Minister T.R.B. Raaja stated that the project will create up to 3,500 direct jobs and could eventually scale to produce 150,000 vehicles per year.

India plant to serve as regional export hub

VinFast chose Tamil Nadu over 14 other shortlisted sites across six Indian states, citing the region’s skilled workforce, established auto sector, and robust infrastructure.

The company aims to make the site a key export hub for Asian markets, given its access to a major port and the state’s strategic location. India, the world’s third-largest car market, offers VinFast a foothold in a rapidly growing EV segment with relatively untapped competition.

“With local manufacturing in India, VinFast hopes to avoid high import duties and tap into government incentives. This strategy could lead to unused factory capacity if sales don’t pick up,” automotive analyst Abhik Mukherjee, from Counterpoint Research, told Rest of World.

Shift to Asia follows setbacks in Western markets

The India expansion is part of VinFast’s broader $2 billion commitment to the country, signaling a shift away from Western markets. The automaker has faced mounting losses of reportedly $11.5 billion and tepid U.S. sales, including only 332 units delivered in December 2024 compared to Tesla’s 65,000.

Quality issues with the VF8 SUV and a delayed North Carolina factory have pushed VinFast to refocus on Asia and the Gulf, where it expects fewer headwinds. The company is also building plants in Indonesia and expanding into Thailand and the Philippines.

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