A company burning cash this fast shouldn’t be able to afford a second miscalculation in a market it calls central to survival. By Stewart Burnett
Vietnamese automaker VinFast plans to develop two new electric vehicles (EVs) exclusively for the Indian market, internally codenamed VF X and VF Y, five people familiar with the discussions have told Reuters. The move comes just weeks after VinFast suspended plans to manufacture three of its existing global models, the VF3, VF6 and VF7, in India after determining it could not bring costs down enough to hit its targeted prices.
VinFast will continue to assemble the VF6 and VF7 largely unchanged at its Thoothukudi, Tamil Nadu plant, where both are currently imported as kits from Vietnam. Rather, the pause applies specifically to deeper localisation and development work rather than existing sales. Executives flew in from Vietnam in August to meet roughly 200 Indian suppliers, and the EV maker is looping suppliers into the new models’ development from the outset specifically to avoid repeating the cost overruns that forced the earlier pause.
VinFast is targeting the VF X, sized between the two-door VF3 and the larger VF6 crossover to match local preference for a spacious cabin, as an ultra-affordable entry model priced below US$12,000, roughly what the VF3 costs in Vietnam. That would place VinFast in India’s largest EV segment, currently dominated by Tata Motors, but also its most fiercely contested. As it stands, the VF6 sells in India from around US$19,000 and the VF7 from US$24,250.
VinFast has reiterated on multiple occasions how important India is to its global expansion plans. The company has pledged US$2bn toward its Indian operations, and wants to build its Thoothukudi plant into a regional manufacturing hub serving South Asia, the Middle East and Africa. It has already received investment approval to expand the site’s capacity from an initial 50,000 units a year toward 150,000. VinFast has retailed roughly 10,000 vehicles in India since entering the market a year ago.
India is also experiencing something of an EV boom, although the market remains very small and concentrated around domestic brands. Western incumbents and Chinese players have been slow to ramp their presence—in part due to steep import tariffs and geopolitical matters—leaving an opportunity on the table for VinFast to step in and establish a commanding local presence. Both Volkswagen and Nissan have previously struggled to build meaningful share in India against entrenched players including Suzuki, Hyundai and Tata, a precedent VinFast’s own affordability push is aimed squarely at avoiding.
Meanwhile, VinFast’s attempts to penetrate Western markets have not gone well, with stalled manufacturing plans and substantial quality control problems keeping sales low. What began as a splashy US$4bn investment announcement in 2022, for a plant in South Carolina, has subsequently unraveled into major delays, severe scaling back, and mounting legal battles between VinFast and the state.
It cannot be ignored that the India pivot follows genuine financial strain at the group level. VinFast’s trailing twelve-month net loss reached roughly US$4.2bn as of the first quarter, up about 33% year-on-year, and the company relies heavily on funding from its Vietnamese parent Vingroup, creating dilution risk for other shareholders. A company memo reportedly asked suppliers to identify spending that could require payment or reimbursement, suggesting the budget pressure behind July’s pause ran deeper than VinFast’s public statements indicated.
The wider business is not contracting, even as the India localisation plan is reworked. VinFast’s global EV deliveries rose 96% year-over-year to 70,085 units in the second quarter, and its electric two-wheeler business, scooters and e-bikes, delivered 286,039 units in the same period, up 311%.
Despite efforts both in Vietnam and India to localise supply chains, VinFast continues to lean heavily on Chinese suppliers including CATL and Gotion High-Tech for batteries. To that end, its Vietnamese branding may carry a meaningful practical advantage in India specifically, since New Delhi maintains considerably tighter restrictions on direct Chinese investment than on other Asian manufacturers. That positioning alone could matter as much to VinFast’s India strategy as pricing.