Vietnamese EV Maker VinFast Shifts Strategy, Plans Local Assembly Of EVs In India—Here's Why

VinFast, the Vietnamese electric vehicle (EV) manufacturer, is reportedly poised to enter the Indian market with locally assembled models.

This marks a significant shift from the company's initial strategy of selling imported EVs in the world's third-largest automobile market.

The change comes in the wake of the accelerated opening of VinFast's new factory in Tamil Nadu, which is expected to be operational by March 2025, three months ahead of schedule, Economic Times reported citing a person with knowledge of the plans.

VinFast, the EV subsidiary of Vietnam's largest conglomerate Vingroup, plans to launch its first locally assembled car during the 2025 festive season.

The vehicles are projected to be priced between Rs 25-30 lakh, targeting the premium affordable segment of India's expanding EV market.

The models are expected to offer a driving range of 300-500 kilometres per charge.

The Vietnamese EV maker's decision to enter the Indian market via the completely knocked down (CKD) route is aimed at avoiding the high import duties associated with fully assembled imported vehicles.

India imposes a 100 per cent import duty on cars with a cost, insurance, and freight (CIF) value exceeding $40,000, and a 70 per cent duty on those below this threshold. Meanwhile, CKD kits attract a significantly lower duty of 15 per cent.

According to the ET report, the company will use the money saved 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 source cited in the ET report.

Although VinFast's entry into the Indian market is not contingent on the newly announced EV policy by the Indian government on 15 March, the company is closely monitoring the policy's guidelines to assess potential incentives.

The initial meeting between EV manufacturers and government officials to discuss the policy took place on 19 April, attended by a VinFast representative among other industry executives.

The new EV policy offers import duty concessions to automakers setting up manufacturing units in India with a minimum investment of $500 million.

Such companies can import up to 8,000 units annually at a reduced import duty of 15 per cent on models priced at a minimum of $35,000 for five years from the date of approval.

VinFast plans to invest over $500 million (Rs 4,150 crore) over the next five years to set up a factory in Thoothukudi, near Chennai, with an annual production capacity of 150,000 units.

The 400-acre facility is expected to employ 3,000-3,500 workers in its first phase, as per its memorandum of understanding with the Tamil Nadu government.

VinFast aims to achieve a peak production capacity of 50,000 units in its first year of operations, with the hope that local assembly and competitive pricing will help it capture a significant share of the Indian EV market.

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