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Vietnamese EV maker VinFast aims to turn its $2billion manufacturing plant in Tuticorin, Tamil Nadu, to a fullfledged manufacturing setup. VinFast Asia CEO Pham Sanh Chau tells Narayanan V that decision to scale up the facility will be based on volumes.

Plans to upgrade to fullfledged manufacturing: Of course, we have plans to upgrade the facility. At the end of the day, if you want to bring down the cost and be a champion in the Indian market, we need to shift to a fullfledged manufacturing setup. 

Fullscale local manufacturing tied to EV demand

At this stage, we have only the body shop, paint shop, and assembly line — so it’s somewhere between CKD and local manufacturing. 

Full local manufacturing will happen only when we bring in the stamping shop. But that requires a huge investment, because stamping parts and welding them locally is capitalintensive. So, we will take that decision based on volume. 

Right now, India’s EV market is just 2–3%. Despite 400,000 car sales per month, only 10,000 are EVs. We can scale up local manufacturing once EV adoption picks up. 

We need to test the market, test consumer preferences, build out our network and aftersales service, and bring in local partners. Once all of that is in place, we can move to fullfledged manufacturing.

Exploring exports and policy clarity

On domestic vs exports mix: We have a very good prebooking and online reservation. I think the moment will explode the day we launch the car —when we announce the feature list and the price. That moment, I believe, will be the explosion of truth. And then, that will determine the ratio between domestic consumption and export consumption. 

I am in discussion with some dealers and buyers from neighbouring countries on how they can get the car. We are looking at export opportunities to the Middle East, Africa, and neighbouring countries like Sri Lanka, Bangladesh, and Nepal.

On the shortage of rare earth magnets: Car companies don’t use rare earth magnets directly. It is their suppliers who will be impacted. But in our case, our suppliers from Vietnam have a very good stock reserve—for up to 50,000 capacity. At present, we are not impacted by rare earth shortage because our suppliers are confident that they can meet our volume.

On progress on EV subsidy from the Indian government:  There are three EV policie — production linked incentive (PLI), FAME, and the scheme to promote manufacturing of Electric Passenger Cars in India (SPMEPCI). PLI and FAME are already completed. The SPMEPCI is suitable for CBU cars for companies that don’t have a factory. We are still in discussion with the Indian federal government. It’s a very long discussion but we are patient.

They say we had already started the factory, and the scheme came out after that. According to the scheme, you should not start the factory before you register. But we couldn’t wait. We already have a factory—we don’t need CBU. We have informed the concerned minister and industry officials. This is a challenge in the application. We are discussing it, and we will get better visibility on the policy soon.