VinFast Auto, a rival to Tesla that last month overtook Toyota to become the third most valued automaker in the world, is considering opening a production facility in India, multiple sources with knowledge of the matter informed ET.
According to them, the factory will probably be built in Gujarat or Tamil Nadu. One of the individuals added, “The conversations are in the early stages, but VinFast is quite interested in starting up in India. “A significant investment is anticipated.”
The insider stated that it is unclear at this time whether VinFast is considering exports or if the new production facility will just serve the Indian market.
According to a second source with knowledge, the corporation held discussions with a number of state governments before settling on Gujarat and Tamil Nadu as potential locations for their plant.
As of Wednesday afternoon, emails made to VinFast were still unanswered.
The company will be the first Vietnamese automaker to open a facility in India if its investment ambitions proceed.
VinFast Auto, which was founded in 2017, was valued at $191 billion last month, making it the third-largest automaker in the world by market capitalization, behind Toyota and Tesla. Days after the company listed on Nasdaq, its shares increased by about 700%.
The unprofitable EV maker, whose stock has been extremely volatile since, had its market capitalization tumble by more than $140 billion at the beginning of this month.
The company currently has a market capitalization of $25.7 billion, according to Nasdaq.
Some estimates place it as the 17th most valuable automaker in the world.
VinFast stated after the release of its second quarter profits on Thursday that it intends to expand out dealership networks in new market clusters, including India, for its next stage of development starting in 2024.
The largest private company in Vietnam, Vingroup, has an EV division called VinFast. Although it is small compared to companies like Tesla, it is growing quickly and has big intentions to compete with Tesla in the US, where it already holds a market share of over 50%.
As it develops outside of Vietnam, VinFast, which only sold 7,400 cars in Vietnam last year, expects to sell between 40,000 and 50,000 vehicles this year.
By contrast, rivals like Toyota and Tesla expect to sell 1.5 million and 1.8 million EVs annually by that time.
The Vietnamese city of Hai Phong is home to a production plant for VinFast. The first American plant for the corporation was officially opened on July 28 in North Carolina. The 1,800-acre complex includes key production areas for general assembly, body, and paint shops in addition to other manufacturing facilities. In the initial phase, its yearly manufacturing capacity is anticipated to exceed 150,000 automobiles.
Although VinFast does not have the same brand value as Tesla, analysts noted that the company’s vehicles are nevertheless projected to acquire favour in the Indian market because of their affordability and value for money.
VinFast utilises a multi-channel distribution approach and differentiates its models for various areas, in contrast to Tesla, which uses a direct-to-consumer sales model, according to Ashwin Amberkar, an automotive analyst at Canalys. VinFast is anticipated to use a similar business strategy in India.
More than 120 showrooms are operated by the company worldwide.
India, according to Amberkar, is a crucial market for VinFast’s global aspirations.
VinFast will, however, certainly face fierce competition from Chinese rival BYD.
According to Soumen Mandal, senior research analyst at Counterpoint Research, “In the context of India, VinFast could emerge as a significant contender, but it will face fierce competition from BYD.” In order to take the top rank in the Southeast Asia (SEA) EV market, BYD has surpassed both VinFast and Tesla. The dynamics of the SEA market are similar to those of India because of its price sensitivity.
But he added that VinFast might have a solid opportunity in the luxury market.
“Cars costing more than Rs 20 lakh accounted for nearly 5% of total sales in 2022; by 2030, this percentage is expected to triple,” Mandal said. VinFast has the chance to deliver premium amenities at costs that are more affordable than those of Tesla and other European luxury brands like Mercedes Benz, BMW, and Audi because of this growth.
Regarding the decision between Tamil Nadu and Gujarat, Mandal stated that it might be more strategically advantageous for VinFast to launch operations in western India given the concentration of the majority of auto manufacturers and supply chain networks in the Gujarat region.
Amberkar of Canalys had a different opinion. Although the car sector is strong and the infrastructure is well-developed in both states, Tamil Nadu, according to him, “has a slight advantage over Gujarat in terms of the availability of skilled labour.”
Following Prime Minister Narendra Modi’s meeting with Musk on his state visit to the US, Tesla has expressed interest in constructing a factory in India and has had many discussions with minister of commerce and industry Piyush Goyal.
Total revenues for VinFast’s second quarter ending in June were 7.95 million Vietnamese dong ($334.1 million), up 131.2% year over year and 303.3% sequentially. The majority of total income comes from the sale of electric vehicles. In the second quarter of 2023, the corporation reported a net loss of around 12.5 trillion Vietnamese dong, or $514 million. This comes after the prior quarter $579 million in losses.
With 9,535 units sold in the June quarter versus 1,780 units in the first quarter of 2023, the business recorded a notable increase in EV deliveries.
