VinFast Auto Ltd plans to invest US$2bn to build a battery electric vehicle (BEV) plant in India, as the Vietnamese automaker looks to play a major part in the country’s transition to zero-emission vehicles.

The automaker, which last year began construction of a BEV plant in the US, has signed a memorandum of understanding (MoU) with the Tamil Nadu State Government in which it agreed to build an integrated BEV production facility near the port city of Thoothukudi.

VinFast said it will invest US$500m in an initial five-year phase, with construction of the plant scheduled to start later this year. Ultimately the facility will have a production capacity of 150,000 BEVs per year, once the full investment is carried out, employing up to 3,500 people directly. The investment also includes establishing component manufacturing facilities that would also help strengthen its global supply chain, as well as establishing a local dealer network.

Tamil Nadu’s Industry Minister Minister, Dr Thallikotai Raju Balu Rajaa, said in a statement “we are delighted that VinFast has chosen to invest in Tamil Nadu to establish its integrated EV facility. Possessing robust capabilities and unwavering commitment to a sustainable future, I believe that VinFast will emerge as a reliable economic partner and substantial contributor to Tamil Nadu’s long-term development”.

Tamil Nadu is already home to a number of foreign automakers including BMW, Hyundai and Renault-Nissan and BYD as well as a number of domestic manufacturers including local truck-maker Ashok Leyland.

India last year was the world’s third-largest vehicle market with an estimated 4.5 million sales, although BEVs accounted for just a small fraction of this total. Indian cities have among the highest levels of air pollution in the world and the Indian Government has put sales incentives in place in the hope the segment will grow to 30% of total passenger vehicle sales by 2030. Local automaker Tata Motors currently dominates this segment, but South Korea’s Hyundai-Kia, BYD and other Chinese automakers have begun to make inroads.

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By GlobalData

VinFast is estimated to have sold around 30,000 vehicles worldwide last year, all produced at its plant on Cat Hai island in Vietnam’s northern province of Hai Phong. Most were sold domestically.