India, the ‘land of opportunity’ to absorb demand for factory construction, this time it is ‘Vietnam Tesla’

‘Half-price Tesla’ Vietnam’s Vinfast to build new $20 billion factory in India
Targeting the ‘global market’ rather than the domestic market, spurring expansion of production base
Will the stock price, which fell after its ‘sparkling’ Nasdaq listing, take a leap forward with increased production?

VinFast, a Vietnamese electric vehicle manufacturer, is expanding its plans to enter the Southeast Asian market and establishing a new electric vehicle production plant in India. According to foreign media such as Bloomberg and Reuters on the 6th (local time), VinFast signed an investment contract with the southern Indian state of Tamil Nadu to establish an electric vehicle production plant with an annual production capacity of 15 units. Befitting its nickname of ‘Vietnam’s version of Tesla,’ it appears to be focusing its efforts on targeting the global market in earnest.

VinFast India investment, Bet on a promising future market?

VinFast’s investment in India is interpreted as an attempt to expand into the global market. In an interview with Bloomberg last October, VinFast CEO Le Thi Thu Thuy said that the company is actively seeking to enter the Southeast Asian market, saying, “We are also planning to establish a factory in Indonesia.” He also revealed his intention to invest more funds for ultimate global market expansion.

The amount of money being invested in this Indian factory is up to 6,320 million. Work to establish a local factory in India is scheduled to begin this year, but specific plans, such as when the factory will operate, are not yet known. The government of Tamil Nadu, where the factory will be built, is committed to providing factory land and actively providing electricity and infrastructure support for the establishment of the VinFast factory.

Why did VinFast choose ‘India’? India is currently the third largest automobile market in the world. The Indian government has announced a plan to increase the proportion of electric vehicles from the current 3% to 2% by 2030 and is actively attracting investment from electric vehicle manufacturers. From the perspective of new electric vehicle companies, it is a ‘land of opportunity.’ Meanwhile, VinFast is also establishing a $30 billion electric vehicle manufacturing complex in North Carolina, USA. Vietnam has its own electric vehicle factory capable of producing 20 vehicles per year.

Could it be a ‘game changer’ in the electric vehicle market?

VinFast is an electric vehicle startup founded by Vietnamese conglomerate Vingroup in September 2017, and is often nicknamed ‘Vietnam’s version of Tesla.’ The biggest characteristic of VinFast is that it focuses on overseas exports rather than the domestic market, where the main means of transportation is two-wheeled vehicles. This is also the reason why the company is growing in size by making large-scale investments all over the world. The strategy was successful, and VinFast succeeded in being listed on the U.S. stock market in just four years after launching its first electric vehicle in 9. Due to the tremendous growth, some even predict that the next major electric vehicle manufacturing country’s competitor will be Vietnam, not China.

The secret to VinFast’s survival in the fierce competition in the electric vehicle market is ‘price.’ VinFast is taking advantage of Southeast Asia’s unique low labor costs to sell vehicles at half the price of Tesla, the leader in the electric vehicle market. Another feature is that the price burden has been further reduced through its own battery subscription service. The focus was on batteries, which account for the largest portion of the price of electric vehicles. VinFast reduces the burden of initial purchase costs by allowing customers to subscribe monthly to batteries instead of purchasing batteries.

VinFast, which has shown extraordinary progress, easily surpassed the market capitalization of major automakers on the first day of listing on the U.S. Nasdaq in August last year. At the time, VinFast’s market capitalization was 8billion (approximately KRW 850trillion), far exceeding Ford(113 billion) and GM (633 billion). However, thestockprice, which exceeded 480 per share at the beginning of listing, has now slipped to $460. As numerous automakers continue to compete fiercely, insufficient sales volume and profitability have acted as a negative factor. After experiencing a bitter taste, VinFast is waiting for a leap forward by establishing production bases around the world.