VinFast plans to construct a second manufacturing facility in Vietnam‘s Ha Tinh province, aiming to double its production capacity to 300,000 units annually. The Vietnamese automaker announced the expansion as part of its strategy to meet international demand, particularly for its smaller VF 3 and VF 5 models, reports Reuters.

The new plant, scheduled to begin operations in July 2025, represents a significant scaling up of VinFast’s domestic manufacturing footprint. However, this ambitious expansion comes at a time when the company faces considerable challenges in meeting its current delivery targets. Through the first nine months of 2024, VinFast delivered just 44,773 vehicles globally—barely half of its 80,000-unit annual goal.

This production expansion arrives as VinFast shows some signs of financial improvement. The company reported a narrowed third-quarter net loss of $550 million, attributed to reduced material costs and increased production efficiency. Nevertheless, the substantial gap between current delivery numbers and planned capacity raises questions about the timing of this expansion.

The Ha Tinh facility’s strategic location, co-located with VinFast’s battery plant, suggests an effort to streamline operations and reduce logistics costs. The company plans to leverage parts from its existing Haiphong factory, indicating an attempt to create manufacturing synergies between its domestic facilities.

Meanwhile, VinFast’s international manufacturing plans have seen significant adjustments. The company recently delayed its North Carolina plant launch to 2028, while simultaneously announcing assembly operations in Indonesia and India. This shifting focus toward Asian manufacturing hubs might signal a strategic pivot in the company’s global expansion strategy.

The emphasis on producing the VF 3 and VF 5 models at the new facility is particularly noteworthy. These smaller, more affordable vehicles could prove crucial in penetrating price-sensitive markets across Southeast Asia and other developing regions. The VF 3, in particular, represents VinFast’s entry into the mini-EV segment, a category seeing growing demand in urban Asian markets.

For context, VinFast’s expansion occurs against a backdrop of increasing competition in the global EV market. While established players like Tesla and BYD continue to dominate, newer entrants are rapidly scaling up their operations. The company’s focus on smaller, more affordable models could help differentiate it in markets where price sensitivity remains a crucial factor in EV adoption.

The success of this expansion will likely depend on VinFast’s ability to address several critical challenges: improving production efficiency, strengthening its supply chain, and most importantly, closing the substantial gap between its current delivery numbers and targeted production capacity. As the global EV market continues to evolve, VinFast’s ability to execute on these fronts will be crucial in determining whether this ambitious expansion proves prescient or premature.