Tesla rival VinFast mulls setting up manufacturing plant in India

VinFast Auto became the world's third largest automaker by market capitalisation behind Tesla and Toyota in August

Electric vehicle maker VinFast Auto is contemplating the establishment of a manufacturing plant in India, according to a report by The Economic Times (ET). Should the firm's plan materialise, it would be the first Vietnamese automaker to set up a manufacturing unit in India. The company emerged as the world's third most valuable carmaker last month.

A source was quoted as stating that the firm held discussions with various state governments before focusing on Tamil Nadu and Gujarat as potential investment destinations.

Another source informed ET that the discussions are in the preliminary stages. VinFast is keen on establishing a presence in India, and the investment could be significant. However, whether VinFast aims for exports remains unclear or whether the new manufacturing unit would solely cater to the Indian market.

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VinFast Auto became the world's third-largest automaker by market capitalisation, trailing only Tesla and Toyota, in August. Its shares surged by 700 per cent after its listing on Nasdaq. Post-listing, VinFast Auto was valued at 191 billion US dollars. The company's shares have since experienced volatility, with its current market capitalisation dropping to 25.7 billion US dollars, according to Nasdaq data.

The EV maker disclosed during its second-quarter earnings announcement on Thursday that it is considering the expansion of dealership networks in new market clusters, including India, starting in 2024. ET's report indicated that VinFast harbours ambitious plans to compete with the Elon Musk-owned Tesla in the US, where Tesla holds over a 50 per cent market share.

Although VinFast sold only 7,400 cars last year, it anticipates sales to be between 40,000 and 50,000 cars this year as it expands beyond Vietnam. On July 28, VinFast inaugurated its first American factory in North Carolina, which occupies 1,800 acres. The plant's annual production capacity is projected to reach 150,000 vehicles in its initial phase.

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Analysts opine that VinFast cars are perceived as affordable alternatives to Tesla and are gaining positive traction in the Indian market due to their value for money.