Investment in cell manufacturing is expected to exceed $9-billion (around ₹70,000-crore) by 2030 in India. Given the incremental demand from various applications and future growth prospects, the battery manufacturing segment remains a critical cog in the overall electric vehicle (EV) development ecosystem and is garnering a lot of attention.
In addition to the robust demand from EVs, the annual battery demand for stationary applications (like grid storage and telecom towers) is also likely to grow at a rapid pace and be substantial, credit ratings agency, ICRA said in a report on Thursday.
The EV battery demand in the domestic market is estimated to touch around 15 GWh by 2025 and around 60GWh by 2030, the report said, adding that the two-wheelers and commercial vehicle application segments would lead the electrification transition, given the favourable economics.
It said that, given the need to invest in cell manufacturing units to keep pace with the expected surge in battery demand for both EV and stationary applications, numerous entities have already committed significant investments in this segment.
‘Develop battery cells locally’
The government also recently signed agreements with three companies — Rajesh exports (Karnataka), Ola Electric (Tamil Nadu) and Reliance New Energy Solar (Gujarat) — under its Production-Linked Incentive (PLI) Scheme for advanced chemistry cell’s battery storage. The policy emphasises on enhancing domestic value addition and is expected to support capability development in this sunrise, the report added.
Shamsher Dewan, Senior Vice President and Group Head, Corporate Ratings, ICRA, says, “In EVs, advance chemistry batteries remain the most critical and the costliest component, accounting for almost 35-40 per cent of the vehicle price. At present, battery cells are not manufactured in India, and thus most OEMs rely on imports, and manufacturing operations in India are limited to the assembly of battery packs. However, to achieve mass scale penetration of EVs and a competitive cost structure, India will need to create its own ecosystem of developing battery cells locally.”
Multiple challenges exist on the road to the establishment of a cell manufacturing ecosystem, primary ones being technology complexity, high capital intensity and raw material availability, he added.