VinFast Considers Ford Chennai Factory For India Entry

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Vietnamese EV maker reportedly eyes Ford Chennai plant to start India operations, beginning with imports and assembly kits, then transitioning to local production.

VinFast is exploring multiple greenfield options in India, including acquiring Ford India’s Chennai-based factory. Insiders familiar with the matter indicate that VinFast’s strategy may adopt a top-down approach. The company is expected to begin its India operations with fully built import units and knocked-down kits. Subsequently, the focus would shift to local manufacturing towards the latter part of this decade.

Early discussions suggest that VinFast has expressed interest in Ford’s Chennai factory, though these talks are still nascent. Meanwhile, Ford’s spokesperson has noted that they’re continually examining potential alternatives for the Chennai facility without providing further details.

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Ford India’s plant, located in Chengalpattu, near Chennai, Tamil Nadu, boasts a production capacity of 210,000 units. However, considering the still-evolving EV market in India, VinFast’s requirements might be considerably less. Acquiring the Ford factory might prove more cost-effective for VinFast than establishing a greenfield facility. For context, earlier this year, Tata Motors purchased Ford’s Sanand plant in Gujarat for Rs 725 crore (less than $100 million). Given this precedent, Ford’s older Chengalpattu factory might be available for a significantly reduced amount.

VinFast’s vision for India isn’t limited to addressing local demand. The company aims to use India as an export hub, targeting right-hand drive markets later in the decade. This aligns with global investors’ interest in the rapidly expanding electric car market, especially the affordable, high-volume offerings from Asian manufacturers like BYD Auto, Great Wall Motors, and SAIC.

Originating in Vietnam, VinFast has seen substantial success in its domestic market. It expanded its operations to the US and several European countries last year, including France, Germany, and the Netherlands. Their electric vehicle range consists of models like VF e34, VF 8, VF 5, and VF 9. Notably, the VF 8, designed for global markets, is available in two versions, Eco and Plus, each offering impressive electric motor capabilities and ranges.

The VinFast VF 8 is a globally-targeted electric SUV.

During their Q3 CY2023 results discussion, VinFast outlined plans for global expansion, focusing on key markets such as India and Indonesia. They’ve pinpointed these nations, among others, for potential establishment of manufacturing units for their EVs and batteries. The company’s planned Complete Knock Down (CKD) facilities are projected to have a production capacity of up to 50,000 cars annually, with a Phase 1 capital expenditure estimated between US$150 million and US$200 million.

With its mature automotive component ecosystem and burgeoning EV component manufacturing sector, Tamil Nadu presents a compelling case for VinFast. Additionally, several former Ford India manufacturing and business operations employees have transitioned to VinFast in the past five years.

For Ford, divesting its Chennai facility would signify its departure from manufacturing in India. However, the brand might consider re-entering the market through Complete Built-Up (CBU) and CKD avenues.

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