VinFast reported to sell E2Ws and E4Ws in India in 2H24

VinFast, which revealed its intent to set up a manufacturing facility in southern India, is reportedly looking to replicate Tesla's strategy to sell vehicles before making them in India.

Mint quoted sources saying that VinFast was talking with potential dealers to build its distributor network in India and import two- and four-wheelers in India in the completely built unit (CBU) form and sell them in India, with operation expected in the third or fourth quarter of 2024. Sources said VinFast is eyeing large cities before entering smaller cities and towns. Besides, VinFast is building its leadership team and hiring workers for the operations in Gurugram.

Although VinFast's electric vehicles (EVs) are priced much lower than its peers, such as Tesla, EVs imported in CBU form are imposed 70% or 100% import duties by the Indian government.

Compared with Tesla, VinFast is more active in entering India, where EV sales are growing rapidly despite being from a low base. Suppose the Mint rumor is credible. VinFast is willing to sell cars with higher retail prices due to the import customs duty before making cars and components in India.

VinFast signed an MoU with the government of Tamil Nadu to set up a US$500 million integrated facility in Thoothukudi with an annual production capacity of 150,000 vehicles. Besides, Reuters quoted sources saying VinFast may establish a battery manufacturing facility in Thoothukudi.

According to a company filing released in December 2023, VinFast plans to establish local manufacturing facilities in strategic markets, including the US, Indonesia, and India, to take advantage of local tax benefits and local sourcing, adding that commissioning of the Indonesia and India facilities is expected in 2026 with a total capacity of up to 50,000 cars a year in phase 1 for each facility.

VinFast and Tesla are eyeing the large potential offered by the Indian market. In contrast, since setting up a subsidiary in India in 2021, Tesla has been negotiating with the South Asian country, arguing with the Indian government for the reduction of import customs duty before selling the car.

Source: Mint, January 2024