VinFast Suspends Local Manufacturing Plans for Three Electric Vehicle Models in India

Vietnamese electric vehicle manufacturer VinFast has suspended plans to locally manufacture three vehicle models in India, instructing suppliers to halt work on the projects while the company reassesses its costs. The move comes roughly a year after the automaker entered the Indian market as part of its broader growth strategy following difficulties gaining market share in the United States and Europe.

According to a company memo reviewed by Reuters and information from sources familiar with the matter, VinFast has asked suppliers to hold all activities on three specific programs. These include the two-door VF3 SUV, which was expected to be its most competitive model in the market, along with the VF6 and VF7 SUVs that the company currently imports as kits from Vietnam for assembly in India.

In a July memo, the automaker stated that it decided to temporarily put on hold all development work related to the VF3, VF6, and VF7 models. The memo instructed suppliers to provide detailed breakdowns of total investments made to date, including cost categories such as tooling, engineering, and materials, alongside supporting documentation for potential payment or reimbursement.

A source familiar with the matter indicated that VinFast stopped the work because it did not meet its planned costs for developing parts locally in India for the three vehicles. Locally developing and sourcing parts would have allowed the company to avoid expensive imports and price its cars more competitively.

VinFast did not directly address whether it suspended local manufacturing plans for the three models when queried. However, a company representative stated that plans for the VF6 and VF7 models currently on sale have not changed or been suspended, and assembly will continue at its factory. The company also emphasized that India remains an important market in its long-term strategy, and it is making appropriate adjustments based on market research and consumer feedback to better meet customer needs.

Backed by Vietnam's largest conglomerate, Vingroup, VinFast launched in India in September 2025. The company opened its first factory outside Vietnam in southern India last year with an initial annual production capacity of 50,000 cars, scalable to 150,000 units, and pledged to invest $2 billion to build a regional manufacturing base serving South Asia, the Middle East, and Africa. To date, the automaker has sold about 10,000 cars in India, which includes sales to an affiliate ride-hailing company, Green SM. VinFast has also stated plans to develop India-specific models in the future rather than solely relying on existing global models.

"Entering the Indian electric vehicle market requires precise cost management and deep localization to achieve sustainable scale. VinFast's decision to pause certain manufacturing programs highlights the financial complexities foreign automakers face when balancing global models with local pricing pressures. For new market entrants, aligning development costs with realistic consumer price points is critical before scaling heavy capital expenditures." — Dr. Shishir Gupta, Founder & CEO, StartupLanes