Tesla’s Rival VinFast To Get Its India Factory Going in June: 2 Electric Car Launches This Year

Vietnamese electric vehicle (EV) maker VinFast is set to kickstart production at its Tamil Nadu plant by 30 June 2025, marking a strategic pivot towards Asian markets amid challenges in North America and Europe. The Thoothukudi facility, part of a $2 billion investment plan, positions India as a key hub for domestic sales and exports to regions like South Asia, the Middle East, and Africa. Here’s a detailed look at what this means for India’s EV landscape and how VinFast aims to compete with rivals like Tesla.

Why India?

VinFast’s shift to India comes after slow progress in Western markets, where high logistics costs and regulatory hurdles delayed its North Carolina factory until 2028. Founder Pham Nhat Vuong highlighted India’s growing middle class, cost-effective manufacturing ecosystem, and untapped EV potential as primary reasons for the pivot. The Tamil Nadu plant, with an initial annual capacity of 50,000 units (scalable to 150,000), will produce right- and left-hand-drive models, including the compact VF3 SUV and the mid-sized VF7. The state’s existing automotive clusters in Chennai, Krishnagiri, and Coimbatore—coupled with port access in Thoothukudi—make it ideal for exports. Tamil Nadu’s Industries Minister noted that the facility strengthens the state’s position as India’s EV manufacturing leader.

Factory Setup and Local Strategy

Construction at the Thoothukudi site is 90% complete, with production expected to begin by May 2025 and formal inauguration in June. VinFast plans to source components locally to reduce costs, partnering with Tamil Nadu’s network of 400 auto suppliers to achieve 70–80% localisation. The factory will also house a supplier park and create 3,500 jobs, boosting the regional economy. To ease market entry, VinFast has sought a temporary reduction in India’s 100% import duty on fully built EVs, mirroring Tesla’s requests. However, domestic automakers oppose this move, and the government has yet to decide. Until the plant ramps up, VinFast will import 2,000 containers of parts from Vietnam’s Hai Phong port.

Models and Market Approach

VinFast will adopt a top-down strategy, launching premium models first to establish brand credibility. The VF7 electric SUV, priced competitively in the mid-premium segment, will debut around October 2025, followed by the VF6 and the affordable VF3 in 2026. The VF7’s design and performance target the creamy layer of the middle class, while the VF3 aims to democratise EV access.

At the 2025 Bharat Mobility Expo, VinFast showcased its global lineup, including the VF7 and VF6, signalling intent to disrupt India’s EV space dominated by Tata and MG. However, consumer sentiment remains mixed—some buyers praise VinFast’s build quality and acceleration, while others worry about reliability and competition from Chinese giants like BYD.

Challenges and Competition

VinFast faces hurdles beyond tariffs. India’s EV adoption remains nascent, with charging infrastructure gaps and range anxiety deterring buyers. Parent company Vingroup plans to address this by introducing its charging network subsidiary, V-Green, and exploring battery manufacturing partnerships.

Meanwhile, Tesla’s India plans loom large. Elon Musk’s firm is scouting locations for a factory and has leased office space in Pune, though VinFast’s head start in Tamil Nadu could give it an edge. Domestic players like Tata and Mahindra are also accelerating EV launches, intensifying the race.

The Bigger Picture

VinFast’s India bet isn’t just about sales—it’s about leveraging the country’s manufacturing prowess for global exports. The Thoothukudi plant’s port connectivity enables cost-effective shipments to Africa and the Middle East, where EV demand is rising. VinFast leadership emphasises that India’s supplier ecosystem is critical for the company’s supply chain resilience.

While the company remains unprofitable globally, founder Vuong’s personal investments of over $1.4 billion since 2023 underscore his commitment. Success in India could stabilise VinFast’s finances and redefine its role in the EV race against Tesla and traditional automakers. For Indian consumers, VinFast’s entry promises more choices and potential price drops as competition heats up. For Tamil Nadu, it solidifies a reputation as Asia’s emerging EV hub—one that’s now on the radar of global automakers.