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According to the Economic Times, VinFast, a Vietnamese electric vehicle manufacturer, has decided to enter the Indian market with domestically assembled cars, instead of their initial plan to sell imported vehicles in the country.
Per the Economic Times report, VinFast’s first domestically assembled model is expected to be launched during the festive season in 2025, with prices ranging from 25-30 lakh rupees (approximately 761 to 914 million VND), positioning it in the rapidly growing affordable electric vehicle segment in India.
In fact, the VF e34 test cars have been spotted multiple times in India and seem to have minimal changes from the global version. This month, the VinFast VF e34 was spotted on Indian streets on three separate occasions.
By opting for a completely knocked-down (CKD) approach, VinFast can avoid high import duties and offer competitive pricing in the Indian market.
Currently, the billion-people country imposes a 100% import duty on cars with a CIF (cost, insurance, and freight) value exceeding 40,000 USD and 70% duty on cars with a CIF value below 40,000 USD. In contrast, CKD units attract only a 15% tax.
VinFast’s plans for India (Source: ET)
VinFast expects that domestic car assembly and competitive pricing can help it achieve a maximum output of 50,000 units in its first year of operation. The company predicts that India’s nascent electric vehicle market will end 2024 with 150,000 in sales, up from 90,000 in 2023.
VinFast is expected to announce its plans for India at the Bharat Mobility Global Exhibition, which will take place from January 17 to 22, 2025.
“Domestic assembly of cars gives more confidence to suppliers, dealers, and buyers. With the plant expected to be ready in the first quarter of next year, opting for CKD instead of CBU (completely built unit) makes sense,” said the source to Economic Times.
Although VinFast’s plans for India are not dependent on the new government electric vehicle policy announced on March 15, the company is waiting for policy guidelines to determine if it can take advantage of incentives, according to the source.
The first meeting between electric vehicle companies and government officials to discuss the new electric vehicle policy took place on April 19, with a representative from VinFast in attendance alongside other industry leaders.
India’s electric vehicle subsidy policy offers import duty benefits to carmakers that set up manufacturing facilities in the country with a minimum investment of 500 million USD, allowing them to import up to 8,000 cars annually with a reduced import duty of 15% for models priced at a minimum of 35,000 USD. The benefits will be valid for five years from the date the brand is approved by the government.
In line with this policy, VinFast has announced its intention to invest more than 4,150 crore rupees (500 million USD) over the next five years to build a manufacturing facility near Chennai, in the Thoothukudi district.
The 400-acre factory will have an annual production capacity of 150,000 units. During the initial phase of operations, the company expects to employ between 3,000 and 3,500 workers, according to the memorandum of understanding with the Tamil Nadu state government. The plant is expected to be operational in the first half of 2025, six months ahead of schedule.
Reference: The Economic Times
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