Vietnamese automaker VinFast (VFS.O) will develop two new electric vehicles for the Indian market, five sources told Reuters, in a change of direction after it suspended plans to make some of its global models there. The move marks a shift from VinFast’s previous attempt to modify existing vehicles for India, a market the money-losing carmaker sees as a potential growth opportunity after failing to scale up its operations in the United States and Europe. VinFast has pledged to invest $2 billion in India, where it opened its first factory outside Vietnam last year in Thoothukudi, Tamil Nadu and wants to build a regional manufacturing base that will supply South Asia, the Middle East and Africa.
The company has begun preliminary talks with suppliers in India for the two new models, codenamed VF X and VF Y internally, although talks are at an early stage, two of the sources said. The sources, who asked anonymity as the discussions are confidential, said the plans were still under review and could change. In July, VinFast suspended plans to manufacture three of its current global models – the VF 3, VF 6 and VF 7 – in India after realizing that it could not reduce costs enough to get its targeted prices.
The company currently sells the VF 6 and VF 7 in India, imported as kits from Vietnam and assembled locally, but VinFast has said it will continue assembling the two models. In August, VinFast executives flew in from Vietnam to meet roughly 200 Indian suppliers to discuss plans for the world’s third-largest car market. To avoid repeating past cost overruns, VinFast is engaging Indian suppliers from the start of the new models’ development to work through pricing and costs, one source said. The automaker wants to create a compact, affordable model smaller than its current VF 6 crossover but a little bigger than its two-door VF 3 SUV to better match local consumer preferences for a spacious vehicle.
Design work is still being refined with one challenge being the balance between vehicle size and cost, according to a source. VinFast is targeting the VF X as an entry-level offering for India and wants to price it below $12,000, two sources said, in line with the price of the VF 3 in Vietnam. That would place it in India’s largest and most competitive EV segment currently dominated by players such as Tata Motors. The shift showcases VinFast’s determination to succeed in India as it seeks volume growth and a path toward profitability in the face of challenges in more mature Western markets. The company has not publicly detailed timelines for the new models.