VinFast is set to set up its first EV manufacturing unit worth $500 million in India

Vietnamese electric vehicle (EV) maker VinFast on Saturday signed an agreement to set up its first manufacturing facilities in India as the ambitious company looks to penetrate the world's third-largest auto market.

According to a joint statement, VinFast and the southern state of Tamil Nadu agreed to work on an investment of up to $2 billion, with a target commitment of $500 million for the first five years of the project.

Construction of the project's EV and battery factories is expected to begin this year and generate 3,000 to 3,500 jobs locally, the statement said.

Reuters reported on Wednesday that VinFast would open its first Indian manufacturing facility in Thoothukudi in Tamil Nadu, where it would make EV batteries.

VinFast, which was founded in 2017 and has been making electric vehicles since 2021, has announced numerous EV growth plans abroad. The company made its Nasdaq debut in August and first announced its Indian expansion plans a month later.

Tamil Nadu's capital, Chennai, is sometimes called the Detroit of Asia, and other districts are home to several EV players, including Indian two-wheeler makers Ola Electric and Ather, and China's BYD.

VinFast said the Tamil Nadu project is expected to become a premier EV manufacturing center in the region, with an annual capacity of up to 150,000 vehicles, compared to 250,000 at the main plant in Vietnam. The joint statement did not specify the capacity of the battery facility.

Electric models accounted for only about 2% of Indian car sales last year, but the national government is targeting 30% by 2030 and is working on a plan to attract EV makers.

The Tamil Nadu government has committed to provide vacant land for the manufacturing facilities, uninterrupted power supply and other infrastructure support, the statement said.

VinFast said it also plans a nationwide dealer network.

First print: January 6, 2024 | 4:59 PM IST