Will VinFast sustain its business in India's hyper-competitive market?

In an industrial complex in Thoothukudi in Tamil Nadu, located a few kilometres from the town’s bustling port, a plant spread over 400 acres of land has been furiously churning out electric cars.

 

Few Indians knew its name just 18 months ago. But that’s no longer the case.

 

VinFast, the automotive subsidiary of the $12.83 billion Vingroup, the largest private conglomerate in Vietnam, is making waves in India. It has built an electric factory at breakneck speed — signing an MoU with the Tamil Nadu government in January 2024, doing ground-breaking within 50 days and delivering the first cars to Indian customers in October. Said a senior representative of VinFast based in their headquarters in Hanoi: “India is one of our key strategic markets — it will be a key contributor to our global business over time.”      

 

By May this year, it had cumulatively sold 10,000 electric cars since its launch, catapulting it from nowhere to the fifth-largest electric car maker in India within just seven months — behind only Tata Motors, M&M, JSW MG Motors and Maruti Suzuki. In June, it had a 4 per cent share of the Indian EV car market, ahead of global giants Hyundai, Kia and BYD.

 

Aggressive pricing

 

An aggressive pricing strategy and a 10-year battery warranty and buyback offer seem to have worked well. Its VF 6 compact electric SUV at an introductory price of ₹16.29 lakh and VF 7, a midsize SUV, at ₹20.89 lakh, were priced lower than models of the Tatas, Hyundai and JSW MG Motors. The company also recently launched its third car model in April, an electric seven seater multi-purpose vehicle for ₹24.49 lakh.

 

While the company’s long-term plan is to invest $2 billion to build a comprehensive EV ecosystem in the country, it has started out by putting $500 million in the first phase of five years to churn out 50,000 electric vehicles and eventually scale up to 150,000 per annum. It is also evaluating India as an export hub for electric cars.

 

Buoyed by the initial response in electric car sales, the Vingroup is now rolling out its successful domestic business model here in India. In June, it introduced Green SM India, which runs an all-electric mobility and ride hailing platform. In Vietnam it ousted rival Grab in a short span of time from the top spot, and now controls 54 per cent of the mobility market.

 

The service has been launched in Delhi-NCR with a fleet of around 1,000 made-in-India VinFast cars, which will slowly be expanded. The captive consumption of VinFast cars by the ride hailing company helps the former to shore up its overall sales when its overall retail sales are waning. That’s not all: It has plans to enter the hyper competitive electric two-wheeler space, where in Vietnam it dominates with a near-99 per cent share of the market. And it will foray into electric buses too.

 

India is part of Vingroup’s ambitious global play, partly driven by the moderate size of the Vietnamese market. It had to look outwards but has not tasted much success in advanced global markets like the US and Europe, where it has been selling its electric cars since 2022. That impelled the group to change tack just two years ago. It has pivoted to India and South-east Asia in markets like Indonesia, Philippines and Laos. This year it is testing out Kazakhstan in Central Asia with EVs and ride hailing services. 

 

Overdependence problem? 

 

However, it still is overdependent on its domestic market. In electric cars, VinFast nearly doubled its global sales in CY 2025 to 196,912 vehicles year-on-year — but 89 per cent of sales came from Vietnam. In Vietnam, it not only has a monopoly of the electric car market, but also controls a third of all car sales — both ICE and electric.

 

However, its US sales in CY 2025 have plummeted by 57 per cent to a mere 1,413 vehicles. Neither did the business tick in Europe. Indonesia is its largest overseas market, where it sold 10,890 VinFast electric cars in 2025.

 

A VinFast representative said that a key learning from the US was that EV adoption requires much more than just quality vehicles — it requires a complete and reliable ecosystem of charging infrastructure, localised service support and innovative financial models.

 

To fund its aggressive expansion in Vietnam and abroad, Vingroup and its companies have taken on large debts even as losses grew. VinFast auditors EY in April this year raised doubts about the company’s ability to “continue as a going concern.” In CY 2025 VinFast saw net losses hit $3.9 billion on a revenue of $3.6 billion with margins at a negative 42.5 per cent and accumulated losses at $12.3 billion.

 

VinFast defends its position. “The going concern disclosure reflects the application of accounting standards rather than deterioration in VinFast’s liquidity position or access to funding,” a company representative said.

 

He argued that in June, VinFast just divested key manufacturing assets in Vietnam — which according to analysts will shift $7 billion of debt to the buyers — and has transformed it into an asset-light company which is expected to become Ebitda- breakeven by 2027. Ebitda, or earnings before interest, taxes, depreciation and amortisation, is a key indicator of a firm’s profitability.

 

The VinFast executive cited above said funding for India will come from a combination of shareholder support, local financing and external borrowings.

 

Indian barriers

 

However, even if it manages to surmount its financial challenges, it faces tough barriers in India. In electric cars, the market is already dominated by three players — Tata Motors, M&M, and JSW MG Motors — which accounted for over 87 per cent of electric car sales in FY26. To break into this club with a reasonable share will not be easy.

 

The competitive scenario in the EV play is only getting more intense — with the entry of MG Motors which has announced plans to launch 15 new energy vehicles in four years and at least one new model every three months as it plans to launch its first electric vehicle at the end of this year. And Hyundai as well as Maruti Suzuki are upping the EV game. According to analysts, as many as 50 new electric car models are expected to hit the market by 2030.      

 

Similarly, in electric two wheelers, home-grown big boys Bajaj, TVS, Ather Energy and Hero MotoCorp and Ola Electric controlled over 84 per cent of the market in FY26. Global player Honda Scooter and Motorcycles India, which once dominated the ICE scooter market with the Activa, has not been able to make a dent in the EV space. So, can VinFast squeeze in and grab a reasonable share in the game?

 

In the ride hailing business, SM Green India faces Uber, Rapido and partly Ola Electric, which dominate the passenger car mobility market with an over 92 per cent share. The Vietnamese company, however, currently is offering only its premium service through the electric seven-seater Limo Green — which competes with Uber Black’s fleet of 4,000 vehicles in three cities.

 

But SM Green is in no hurry. Said Bach Tuan Anh, CEO of Green SM India: “Ride-hailing is a natural starting point because it serves everyday mobility needs and allows us to build direct trust with customers and drivers. Over time, there may be opportunities in areas such as airport transfers, corporate mobility, subscription services and specialised solutions. However, we will only consider these value addings when the core service is stable.”

 

A senior executive at a competing company said: ”It’s not a sustainable model as the price offered, based on our estimates, leads to a -30 per cent margin on each ride. Also, customers in India have eschewed buying a car which is also used for taxi services. To build scale, one needs an asset-light model — not like SM Green which controls the entire chain, including owning the cars and hiring drivers on its payrolls.”  

 

He said overdependence on captive sales from Green SM (in CY25 Vietnam accounted for 27 per cent of its global sales) could impact the business.

 

Vingroup’s clear path

 

Despite all these challenges, Vingroup has charted out a clear path ahead. VinFast has promised to introduce a new model every six months and there is already a buzz that it would be launching the VF 3 compact SUV sometime at the end of the year at a price below ₹10 lakh, which could bring them large volumes and shake up the market.

 

It has also upgraded its earlier plan and is now looking at a network of 75 dealers across 60 cities in 2026, out of which they have already hit 50.

 

The electric car company also wants to push localisation in phases–from 15 per cent currently to 40 per cent. But there is no clear time-frame — currently, speed to market and product positioning are taking priority over localisation. But the VinFast representative said it already has a dedicated team of experts in battery research and is working with global battery research and manufacturing companies.

 

Clearly, the Vietnamese giant’s entry into the country and its initial success are encouraging. The big question is whether it will be able to sustain the business in what is a hyper-competitive market.

 

The speed of Vingroup entry in India

 

• January 2024: VinFast signs first MoU with Tamil Nadu government to set up an EV plant
• February 2024: Ground breaking ceremony for the plant is held in Thoothukudi
• July 2025 : Booking for its two electic cars announced
• August 2025 : Plant ready for commercial production
• October 2025: Started delivery of its models
• December 2025: Follow up MOU signed with TN Govt for additional 500 acres to assemble electric buses, electric two wheelers etc
• April 2026: Announces the delivery of its third electric car VF MPF 7
• June 2026: Group launches SM Green, its electric mobility services, taking on Uber