Asian underdog & global biggies hit accelerator when Musk dodges desi market challenge

As India’s EV race heats up, global auto companies from Skoda to Kia and Vietnamese giant Vingroup are throwing their hats into the ring — just as Elon Musk’s Tesla, after years of sitting on the fence, is "not interested" in manufacturing in the country.

“Tesla only wants to open showrooms and sell imported cars,” said Heavy Industries Minister Kumaraswamy on Monday.

VinFast is the newest entrant joining global auto giants like Europe’s Mercedes-Benz, Skoda-Volkswagen (VW), and South Korea’s Hyundai and Kia, all of whom have expressed interest in manufacturing EVs in the world's third-largest car market.

India’s electric vehicle market is rapidly growing, with electric passenger vehicle sales rising from just 5,000 units in 2020 to over 113,000 in 2024. While EVs currently make up less than 3% of total car sales, the central government’s ambitious goal to increase this share to 30% by 2030 underscores the sector’s tremendous potential.

The latest player, VinFast, a small and unprofitable EV maker, briefly became the world’s third most valuable automaker in 2023, behind Tesla and Toyota, after its Nasdaq debut sent shares soaring nearly 700%. Now, the company plans to open a car assembly plant in India by the end of June.

Formed in 2017, VinFast began making EVs in 2021. It is backed by Vingroup, Vietnam's largest conglomerate. VinFast in January last year signed an agreement with Tamil Nadu to invest as much as $2 billion in the country. Work on the plant started soon after, with an initial investment of $500 million.

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The introduction of its VF7 and VF6 models, expected before the upcoming festival season, will mark the official desi debut of the company.

The loss-making startup had initially planned to focus on America for its foreign sales, but slow progress in the United States, even before growing uncertainty caused by U.S. tariffs, pushed the company to change strategy. VinFast's entry in itself may not be a significant challenge for Tesla in India, but it points at a crowded EV space, which might make it hard for Tesla to cruise into the Indian market.

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Musk is late to the India party
Moreover, Musk’s company may have lost much of its sheen, novelty and competitive edge. VinFast is not the only challenge Tesla will face in India. VinFast has joined a host of local and Asian EV makers in India, which have crowded the EV space.

Tesla’s reluctance to enter India — it had registered a local unit more than four years ago — has given competitors a head start in the country’s nascent but rapidly expanding EV market. If all the carmakers are going to converge in India and participate, Tesla should have “a little bit of FOMO in coming days,” Amit Bhatt, India managing director at the International Council for Clean Transportation told Bloomberg in January.

Competition in the Indian market
VinFast is set to enter the Indian market at a time when both local and global players are already establishing their presence, yet significant opportunities remain in this rapidly growing sector.

Capitalising on this opportunity, major players like Suzuki Motor Corporation’s India unit, MG Motors, Hyundai, and BYD are aggressively expanding their footprint in India’s EV market.

VinFast Asia CEO Pham Sanh Chau has stated that the company does not see Tesla—or even BYD—as direct competitors. However, the Indian market poses its own unique challenges.

BYD, a global rival to Tesla, currently sells imported EVs in India and is reportedly considering setting up a local manufacturing facility, with media reports indicating a potential plant in Telangana. Meanwhile, Tesla’s prolonged hesitation in entering India may have cost it a crucial first-mover advantage in one of the world’s fastest-growing auto markets.

Domestic powerhouse Maruti Suzuki is also gearing up to enter the EV segment. As India’s largest carmaker by volume, Maruti Suzuki has a proven ability to capture substantial market share—even as a late entrant—demonstrated by its past successes with diesel vehicles and compact SUVs.

For VinFast, the challenge extends beyond international competitors like Tesla and BYD. It must also navigate a complex domestic landscape shaped by established Indian incumbents, pricing sensitivities, and evolving consumer preferences.