VinFast eyes Asia expansion even as EV growth slows, India to play a key role

Vietnamese electric carmaker VinFast Auto Ltd. is pushing ahead with expansion across Asia, with founder Pham Nhat Vuong undeterred by slowing global EV demand and a tepid start to the company’s foray into the US.

VinFast expects to open its India factory in the first half of next year — six months earlier than initially planned — and begin construction of an Indonesia plant within the next two months, Vuong said in an interview at the Hanoi headquarters of parent company Vingroup JSC on Wednesday.

The ambitious growth plans come even as VinFast struggles to gain a foothold in the highly competitive EV market. The automaker delivered just 9,689 cars in the first three months of the year, well off the pace to meet its annual 100,000 target. It sold 34,855 vehicles in 2023, 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 have crashed back to earth to be down more than 90% from their peak.

However, Vuong brushed aside concerns about slowing global demand for EVs, which has roiled more established rivals from Tesla Inc. to Volkswagen AG.

“I’m not worried about electric vehicle sales," he said in the interview. “The growth of electric vehicles will be inevitable."

VinFast in January signed an agreement with the Indian state of Tamil Nadu to invest as much as $2 billion in the country as it seeks to break into one of the world’s biggest auto markets. Work on the plant started in February, with an initial investment of $500 million.

Production at the Indonesia site is planned to begin by the end of 2025, ahead of the original schedule of 2026, he said.

Both factories will initially have production capacity of 50,000 vehicles with the ability to ramp up to 300,000 a year, depending on market demand, Vuong said.

VinFast, which began deliveries in the US last year, faces headwinds to become a profitable global brand. Chinese competitors are increasing exports of ever cheaper EVs and Tesla has slashed prices amid waning interest in electric vehicles.

For now, the company remains on track to start building cars at its North Carolina factory — where construction began in July last year, Vuong said. Production at the plant, which is expected to have an initial capacity to make 150,000 vehicles a year, is set to start in 2025, the company said last year.

However, it’s weighing investor concerns about the factory’s costs amid high interest rates and whether to delay the opening against the benefit of sticking to the current timetable to meet growing US demand for EVs, Vuong said. There’s no plan to reduce the factory’s production capacity or scale down its footprint, he added.

VinFast had a net debt of about $2.9 billion at the end of March, according to a company filing. Cash and cash equivalents were at $123.3 million. The company estimates 2024 capital expenditures will be $1 billion to $1.5 billion and financed through a combination of debt and equity financing.

The company is in talks with financial investors and would consider an industry partner that can help it grow, Vuong said. However, he isn’t looking to raise funds “carelessly" and won’t accept financing with high interest rates, he added.

At home, the company has a state-of-the-art factory in Vietnam’s northern port city of Haiphong. VinFast is also planning an Indian battery manufacturing plant and has set up a Vietnam battery joint venture with Gotion High-Tech Co.

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