Special Articles Tamil Nadu

Dravidian Model Global Investors Meet: What The DMK And Dravidian Stock Media Won’t Tell You About VinFast Investment

January 9, 2024
The Commune

The Tamil Nadu global investors meet (TNGIM) 2024 happened on 07th and 08th January 2024 to attract global investors to the state. The DMK IT Wing has been boasting about the investments so far and sharing the big numbers the meet has attracted. Ironically, the DMK, which has opposed corporatization since 2014, has no issues sharing Ambani’s quotes praising Tamil Nadu for being a business friendly state.

One of the investments which the Dravidian Model DMK government has been selling off as a victory for Tamil Nadu is the investment made by Vinfast Auto Ltd.

VinFast Auto Ltd. is an Electric Vehicle (EV) manufacturer headquartered in Vietnam. The company is rapidly expanding globally. The company went public in 2023.

However, the company has been in the global news for all the wrong reasons.

Trust Issues

Even their own country people (Vietnamese) have trust issues with the EVs that VinFast produces. The company faces challenges regarding local consumer trust in its EVs, attributed to product issues, negative publicity, and a lack of confidence.

There have been numerous complaints about construction quality and vehicle software problems, which compound the difficulties of promoting EVs in a region with underdeveloped charging infrastructure.

Loss Making

Despite incurring a net loss exceeding $600 million in the third quarter, of 2023 VinFast continues to expand. In the quarter concluding in September 2023, the company reported net losses of $623 million, marking a more than 30% increase compared to the previous year. This loss comes despite a substantial 159% growth in revenue, reaching $343 million during the same period. On NASDAQ, the company has lost 81% of its valuation in the past 6 months. A forecast says that the company will face substantial difficulty as the EV industry growth is slowing down in the US. The company is also trying to sort out its tax situation by establishing a manufacturing unit in the US.

Poor Sales

VinFast had not yet achieved half of its goal of selling 50,000 cars in 2023. As of October 2023, it had reportedly sold around 21,000 cars for the year. Vinfast is a small company which sells only 1070 EV cars and 60% of it was sold to VinGroup owned taxi service, GreenSM. The company sells only 420 cars to the public.

Hoodwinking By DMK?

Vinfast will start their operations in Thoothukudi, where in 2018 a major copper manufacturer – Sterlite industries, was closed after a troubled history. The DMK, Dravidian Stocks and NGOs with ties to the Church were elemental in instigating and sustaining the protests which resulted in violence. Since Sterlite’s closure, the people and small industries of the region which were dependent on Sterlite have been experiencing economic strain. In order to compensate for the economic downfall of the region, the DMK government seems to be bringing in some company to revive the economic fortunes of the region. The DMK government claims that Vinfast has invested ₹16,000 crore, but in reality the company has earmarked only ₹4,000 crore for the initial five years of investment.

Is The Tamil Nadu Administration Friendly Towards EVs?

Tamil Nadu is one of the states that does not give any subsidy to the end user for EVs except for a 100% discount on road tax. However, the newly drafted Tamil Nadu EV policy aims to promote the adoption and development of EVs in the state. The policy also has announced incentives for the EV sector, but it is for the manufacturers and not the buyers.

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