Vietnamese electric carmaker VinFast expands across Asia, opening new factories in India and Indonesia, despite challenges in the competitive EV market and slowing global demand.
Vietnamese electric carmaker VinFast Auto Ltd. pushes ahead with its expansion across Asia. Founder Pham Nhat Vuong remains undeterred by slowing global EV demand and a tepid start to the company’s US foray. VinFast plans to open its India factory in the first half of next year, six months earlier than planned.
In January, VinFast signed an agreement with the Indian state of Tamil Nadu to invest as much as $2 billion in the country. The company seeks to break into one of the world’s biggest auto markets. Work on the plant starts in February with an initial investment of $500 million.
These ambitious growth plans come as VinFast struggles to gain a foothold in the competitive EV market. The automaker delivered just 9,689 cars in the first three months of the year, far off the pace to meet its annual target of 100,000. In 2023, it sold 34,855 vehicles, most of which went to related parties. After a spectacular US market debut in August, when the stock soared more than 700% in just two weeks, the shares crashed back to earth, down more than 90% from their peak.
Production at the Indonesia site is planned to begin by the end of 2025, ahead of the original schedule of 2026. Vuong says both factories will initially have a production capacity of 50,000 vehicles and can ramp up to 300,000 yearly depending on market demand.
VinFast, which began deliveries in the US last year, faces challenges in becoming a profitable global brand. Chinese competitors are increasing their exports of cheaper EVs, and Tesla is slashing prices amid waning interest in electric vehicles.
The company remains on track to start building cars at its North Carolina factory, where construction began in July last year. Production at the plant, expected to have an initial capacity of 150,000 vehicles a year, is set to start in 2025. However, VinFast weighs investor concerns about the factory’s costs amid high interest rates and considers whether to delay the opening. Vuong adds that there are no plans to reduce the factory’s production capacity or scale down its footprint.
At the end of March, VinFast had a net debt of about $2.9 billion. Cash and cash equivalents stand at $123.3 million. The company estimates 2024 capital expenditures to be $1 billion to $1.5 billion, financed through debt and equity.
Vuong says the company is in talks with financial investors and would consider an industry partner to help it grow. However, he isn’t looking to raise funds “carelessly” and won’t accept financing with high interest rates.
The company has a state-of-the-art factory in Haiphong, Vietnam. VinFast also plans an Indian battery manufacturing plant and has set up a Vietnam battery joint venture with Gotion High-Tech Co.
