As part of its globalisation strategy, Vietnamese electric vehicle maker Vinfast is exploring acquiring Ford’s factory in Chennai, among other options, to set up an India base.
- Vinfast was founded in 2017 by Vietnamese Vingroup
- Has a plant in Vietnam; USA, Indonesia next in line
- VF 8 EV SUV was spotted testing in India
Who is Vinfast?
Vinfast Auto was founded in 2017 by Vingroup, one of the largest private conglomerates in Vietnam owned by Vietnamese billionaire Pham Nhat Vuong. The group is active in a wide variety of sectors ranging from real estate to retail and technology.
Vinfast is headquartered in Singapore, and began operations by partnering with General Motors to build and sell Chevrolet cars in Vietnam. The company also partnered with BMW to sell 5 Series and X5-based models with Vinfast branding and unique styling. While the company began by selling combustion engine vehicles, it announced last year that it is now an EV-only auto brand.
The company introduced the VF 8 electric SUV in the United States in 2021, along with the VF 9, a three-row electric SUV. While initial sales have been subpar, with less than 1,00,000 units sold globally, Vinfast announced that it is building an EV factory in the US – its second after Vietnam – where it will start building the all-new VF 6 and VF 7 SUVs for the North American market from 2025.
Beyond America, the brand has begun exploring other markets like India, Indonesia and other ASEAN regions for introducing its EV line-up. Vinfast recently announced that its third plant will be in Indonesia, where it plans to assemble EVs from 2026.
Vinfast: top-down approach for India
Closer home, the brand has already begun hiring for some positions in India. While timelines are not clear at the moment, sources indicate that the company is moving quickly and will likely begin operations next year via the CBU route, later going for locally assembly of models using CKD kits. A few months ago, the VF 8 was also spotted testing in India.
While other EV makers wait in the wings to enter India, Vinfast’s plans will likely materialise soon given that it will not face challenges like the China hurdle, nor is it angling for any special concessions like Tesla. Its challenges, however, could likely be the products themselves. In the US, opinion is far from encouraging with a lot of feedback centred on the fact that the cars still appear to be ‘works-in-progress’ as far as fit and finish and software are concerned.
According to sources, Vinfast is likely to take a top-down approach and start with CBU units and CKD kits, before moving to local manufacturing later in the decade. People in the know also say that Vinfast has made the initial enquiry for Ford's Chennai factory and talks may be at a preliminary stage.
Ford plant could be acquired at a much lesser value
The spokesperson at Ford said, "We continue to explore alternatives for the Chennai plant and have nothing further to add." Ford India has a capacity of 2.1 lakh units in Chennai, whereas the capacity Vinfast is looking at is much lesser with the EV volumes in the country yet to mature. However, the acquisition of Ford’s factory is likely to come at a much lesser price than investing in a greenfield facility – a facility that’s undeveloped and marked for commercial activity.
Ford’s modern Sanand factory in Gujarat was sold to Tata Motors at Rs 725 crore – less than USD 100 million – and its over 25-year-old factory in Maraimalai Nagar may go for a significantly lower value as the workers' settlement also has to be executed, said people in the know.
Vinfast to build cars for India and export markets
“The company is exploring a minimum of a 1 lakh unit facility in the country and has already explored multiple alternatives in Gujarat and Tamil Nadu,” added a source. “The plan is to go top-down – but eventually Vinfast products manufactured in India are likely to be in the core B segment where the majority of volumes may come from in the future.”
The plan is not only to cater to the domestic market but to also use India as a base for exports for right-hand-drive markets in the latter half of the decade.
The sale of the Maraimalai Nagar facility will mark a complete manufacturing exit for Ford from India, even as it keeps the chances of brand re-entry alive through a CBU, CKD route.
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Viraaj Bhatnagar
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