On Saturday, December 6, VinFast, a Vietnamese manufacturer of electric vehicles (EVs), signed a Memorandum of Understanding (MoU) with the Tamil Nadu government to set up an EV manufacturing facility in the state.
In accordance with the agreement, VinFast will invest $500 million in the project’s first phase, which will take five years to complete. The EV manufacturer stated in a statement that it will “work towards” investing up to $2 billion in the state overall.
VinFast and the state government plan to invest a maximum of $2 billion together, with a $500 million commitment for the project’s initial phase, which will take five years to complete. The EV manufacturer stated, “This action represents a critical milestone in VinFast’s entry into the third-largest car market in the world.
According to the corporation, the unit will be located in Thoothukudi and generate between 3,000 and 3,500 jobs in the area. The facility is a component of VinFast’s plan to improve its supply chain capabilities, with an annual capacity of up to 1.5 lakh units.
The announcement indicates that the project’s construction is expected to start in 2024. The news was made only a few days after it was revealed that VinFast intended to build its first plant in Tamil Nadu, India, to produce EV batteries.
The deputy chief executive officer (CEO) of sales and marketing at VinFast Global, Tran Mai Hoa, commented on the most recent development, saying, “We believe that investing in Tamil Nadu will not only bring considerable economic benefits to both parties, but will also help accelerate the green energy transition in India and the region, “
In response, Thallikotai Raju Balu Rajaa, the minister of industry for Tamil Nadu, stated, “We are thrilled that VinFast has chosen to invest in Tamil Nadu to develop its integrated EV factory. With its strong capabilities and steadfast dedication to a sustainable future, VinFast is poised to become a dependable economic partner and a significant contributor to the long-term development of Tamil Nadu.
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The Tamil Nadu government would provide land permissions, a continuous power supply, and other infrastructure support for the planned plant’s establishment as part of the MoU. The manufacturer of EVs continued by saying that the two will work together on “opportunities for charging stations and other allied infrastructure.”
It is anticipated that the project will strengthen the strategic alliance between Vietnam and India. In accordance with the MoU, VinFast also plans to build a nationwide network of dealerships in order to strengthen its brand recognition and take a piece of the growing Indian EV market.
Still unclear, though, is whether VinFast intends to use the new plant to produce cars, electric scooters, or both.
Making EVs In India
When VinFast started hiring in India in September of last year, it became apparent that the company had intentions to expand into the country for back-office, sales, and legal positions. VinFast then declared in October that it will invest up to $200 million in building assembly plants in Indonesia and India.
At about the same time, a top business official stated in the open that VinFast-supported taxi service Green SM was getting ready to launch in India. It has refined plans and settled in Tamil Nadu in the months since then.
The Centre’s plethora of production-linked incentives (PLIs) and the state governments’ generous welcome packages have played a major role in driving the relocation to India. Local governments have done all in their power to entice EV players, from expediting site clearances to providing round-the-clock power.
Global behemoths like Elon Musk’s Tesla and Gogoro, a big Taiwanese battery company, have also lined up to invest in the nation as a result of this. While numerous other businesses have already formed local partnerships to establish bases in the nation, the former is still in negotiations with the Center for tax sops.
This “Made in India” pitch revolves around the potential Indian EV market, which is expected to reach an estimated value of $110 billion by 2029. Global firms aspire to be first to market in a market as large as India, where electric vehicles (EVs) are becoming more and more popular among Indians.