VinFast explores Ford Chennai factory as part of its India entry plans
Vietnamese electric carmaker believed to be actively looking at the Ford India plant in Chennai to kick off its India operations in a top-down approach with completely built imported units and knocked-down kits before moving to local manufacturing.
As part of its globalisation strategy, Vietnamese electric vehicle manufacturer VinFast, is exploring the Ford India factory in Chennai amongst the multiple alternatives it is studying to set up an India manufacturing base.
The acquisition of Ford India's factory in Chennai is among many greenfield alternatives being explored by Vinfast in the country. Sources in the know say that VinFast’s strategy, which is likely to be a top-down approach, is likely to start India operations with the completely built import units and knocked-down kits before moving to local manufacturing in the latter part of the decade.
Industry sources say the VinFast has made the initial enquiry for Ford's Chennai factory and the talks may be at a preliminary stage. The spokesperson at Ford said, "We continue to explore alternatives for the Chennai plant and have nothing further to add."
While the Ford India plant in Chengalpattu, near Chennai, in Tamil Nadu has a manufacturing capacity of 210,000 units, VinFast would be looking at much lesser capacity what with the EV volumes in India yet to mature. However, the acquisition of the Ford factory is likely to come at a much lesser price than a greenfield facility.
In January this year, the US carmaker's modern Sanand plant in Gujarat was sold at Rs 725 crore, which is less than $100 million, to Tata Motors.
VinFast could use India as a base for global exports
"The company (VinFast) is exploring a minimum of a 100,000-unit facility in the country and has already explored multiple alternatives in Gujarat and Tamil Nadu. The plan is to go top down – but eventually products manufactured in India are likely to be in the core B segment where the majority of volumes may come from in the future, " added one of three people in the know.
The plan is not only to cater to the domestic market, but use India as a base for exports for right-hand drive markets in the latter part of the decade.
The move to make EVs in India by VinFast, which is listed on the Nasdaq, could be seen from a perspective of global investors pushing for a part of the booming electric car market, especially in low-cost, high-volume Asian cars from Chinese carmakers like BYD Auto, Great Wall Motors and SAIC.
VinFast, which has enjoyed huge success in its home market of Vietnam, launched its cars in the US and also Europe last year, selling cars in France, Germany and the Netherlands. Its portfolio of EVs includes the VF e34, VF 8, VF 5, VF 9 electric cars.
The VinFast VF 8 is an electric SUV designed for global markets.
The VinFast VF 8 is an electric SUV made for global markets with a 5-seat configuration and two versions – Eco and Plus. The VF 8 Eco version is equipped with a 260 kW electric motor reaching a maximum torque of 500 Nm that sustains a range of up to 260 miles / 416km after each full charge. The VF 8 Plus version is equipped with a 300 kW electric motor reaching a maximum torque of 620Nm with a range of up to 248 miles / 400km.
Last week, at its Q3 CY2023 results meeting, Vinfast had revealed plans for its future global growth strategy which includes the key markets of India and Indonesia, which are among the seven new market clusters the Vietnamese carmaker has identified for potential establishment of manufacturing facilities for its EVs and batteries. Each CKD facility has a planned capacity of up to 50,000 cars per year and an estimated total capital expenditure of US$150 million to US$200 million in Phase 1.
Tamil Nadu’s matured automotive component ecosystem as well as the fast-emerging EV components manufacturing in the state, makes it a strong case for VinFast to set up shop there. What’s more, a number of key Ford India employees, both from manufacturing operations and the Business Centre, have joined VinFast over the last five years when the US carmaker significantly pruned its India exposure.
For Ford, the sale of its Chennai plant will mark its complete manufacturing exit from India, even as it keeps the chances of brand re-entry alive through a CBU, CKD route.
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