Vietnamese auto manufacturer VinFast will invest $2bn in south India's Tamil Nadu state to develop the electric vehicle (EV) sector, including building a plant to produce 150,000 units/yr.
VinFast, a subsidiary of private-sector firm Vingroup, and the Tamil Nadu state government have signed an initial agreement, with VinFast investing $500mn in a first phase to set up an integrated EV facility that will be built over five years.
Construction of the plant, located in Thoothukudi district, is likely to begin this year, VinFast said on 6 January. Completion timelines were undisclosed. VinFast and the state government did not outline what the remaining $1.5bn will be spent on.
The Tamil Nadu government announced an EV policy in February 2023 to transform the state into a preferred destination for EV manufacturing in southeast Asia.
"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," said VinFast's deputy chief executive of sales and marketing Tran Mai Hoa.
Tamil Nadu is a major automobile market with the third-largest number of vehicles in India. Tamil Nadu aims to generate 500bn rupees ($6.02bn) of investment in EVs over a period of five years from 2023, it had said in February last year.
The policy declares six cities — Chennai, Coimbatore, Tiruchirappalli, Madurai, Salem and Tirunelveli — as pilot cities for EV adoption. The Tamil Nadu government will develop EV charging infrastructure in these six cities through partnerships between state-controlled and private-sector firms. The state will also provide subsidies for new and expansion projects in the production of EVs, EV components and charging infrastructure.
The EV industry in India is fast growing, with production forecast at 10mn units/yr by 2030, government think tank Niti Aayog adviser Sudhendu Sinha said in September last year.
Indian EV sales have been robust despite a subsidy cut in June last year. Indian manufacturers sold 140,842 EVs in December, down by 8.2pc from a revised 153,441 units in November but up by 42pc from 99,480 units in December 2022, data from government website Vahan show. The Indian government aims for EVs to comprise 30pc of all new vehicle sales by 2030.
